dmertz
Level 15

Retirement tax questions

In the other post, the amount in question was the result of the plan failing nondiscrimination testing.  If that's the same in this case the amount rolled over to the new 401(k) is an excess contribution that must be removed from the new 401(k) because that amount and the attributable earnings ended up being ineligible for rollover.  Your old plan should have provided you with a corrected 2023 Form 1099-R, one with code G for the portion that was eligible for rollover, a code P 2024 Form 1099-R with code P for the portion that was the excess contribution, and a 2024 Form 1099-R with code 8 if there were any attributable earnings that need to be reported on your 2024 tax return.

 

The code-P amount should appear on your amended 2023 Form 1040 line 1h as other earned income.

 

You should already have all of the Forms 1099-R that you need to complete your amended 2023 tax return and your 2024 tax return.

 

The corrective distribution from the new 401(k) should be nontaxable except for any investment gains that occurred in the new 401(k) on the amount that ineligible for rollover to the new 401(k).  Those gains should be taxable on your 2025 tax return, so there should be no need to amend your 2024 tax return as long as it includes the amount from the code-8 2024 Form 1099-R.