Hi
@DanaB27 (sorry for directly asking you the question but you seem to have a good handle on this subject per a recent question on a Roth IRA Excess Contribution), and I was hoping you could help with my
2023 401k excess contribution. Thank you.
Situation:
- My wife has two concurrent jobs with two different companies, and each issues a W2 and has a 401K plan
- Turbotax picked up last week (i.e., in 2024) that my wife had inadvertently contributed beyond the $22.5K limit in 2023
- She elected to fix the situation with one of her jobs and filled out the Return of Excess Contributions (ROE) asking for a 35% federal withhold as well as state taxes withhold (i.e. Massachusetts)
- HR has already submitted the ROE to Fidelity
- HR has indicated that if Fidelity process her ROE this week, they will have payroll issue a corrected W2
- It is unclear that Fidelity will have sufficient time before 4/15 (i.e., a week from today) to issue a 1099-R and a refund
Given the above:
- Does it make sense for her employer to amend the W2? Shouldn't they leave it as is and TurboTax (TT) handles the correction process?
- Presumably Fidelity will cut her a check for the excess deferral amount, and upon entering that info in TT, TT will make sure that my wife gets taxed for that excess still in 2023's taxes. Correct?
- Presumably Fidelity will also cut me a check for any earnings accrued on the excess deferred amount, minus the taxes we asked them to withhold. Correct?
- Fidelity will issue a 1099-R in 2024 and box 4 and box 14 will include the amounts they withheld on the earnings accrued by the excess deferred amount. I will then report these amounts in tax year 2024, and indicate I received a 1099-R. Correct?
- Insofar as (2) above and entering info in TT for my 2023 taxes, is the info referenced below correct? Presumably TT will ask me for the excess deferred amount somewhere? (note: I lifted and adapted it from a 2022 answer)
- Preparing for the worst case scenario. What happens if Fidelity is unable to complete the ROE request before 4/15? Should I ask for a filing extension? Other?
Thank you again. Trying to get ahead of the curve here (albeit clearly already late in the game!)
- Click on Federal in the left-hand column, then on Wages & Income
- Continue and locate the section Less Common Income
- Select Miscellaneous Income and click Start
- Select Other income not already reported on a Form W-2 or Form 1099 and click on Start
- Answer the question "Did you receive any other wages? Yes
- Click through the questions till you get to Any Other Earned Income
- Answer Yes to Did you earn any other wages?
- Indicate Other as Source of Other Earned Income and click Continue
- For the description enter "2023 Excess 401K Deferrals" and click on Done
