CBost
New Member

How do I report the refund that I received after over funding my 401k?

I over contributed to my 401k in 2017, notified the plan admin, and then in January 2018 was issued a refund for over payment + earnings.  The over contribution was $515 and earnings were $20, so the total refund was $535.

As I understand it, TurboTax calls this an Excess Salary Deferral.  Is this the correct classification?

The TurboTax help has a section called "Examples of Excess Salary Deferrals", where "Example 1" most closely aligns to my situation.  TurboTax also has a section "Steps to Take to Remove an Excess Salary Deferral", which is what I understand that I need to do (low confidence).  Step #4 in this section directs me to report the excess deferral using a Form 1099-R.  Since I did not receive a 1099-R, do I need to mock one up?

If I use Code P in box 7, this indicates "Return of contributions taxable in 2016", but obviously this is taxable in 2017.   Is this the correct code?  

Any guidance would be greatly appreciated!  Thank you,

Rachel_W
Expert Alumni

Retirement tax questions

Yes, over contributing to your 401(k) is considered an "Excess Salary Deferral".

No, you should not create a mock Form 1099-R. 

You can report the refund of the excess contributions to your 401K on Line 7 of your 2017 Tax Return without Form 1099-R by following these steps: 

  • Click on the "Federal Taxes" Tab
  • Click on the "Wages & Income" Tab
  • Click on "I'll choose what I work on"
  • Scroll down to "Less Common Income"
  • Select "Miscellaneous Income" and click Start or Update
  • 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 until 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 "2017 Excess 401K Deferrals" and click on Done

You will receive a 2018 Form 1099-R in 2019 with a code P in box 7 which you can ignore if the excess deferral is reported as suggested above.  However, the earnings will be reported on a separate 2018 Form 1099-R with a Code "8" in Box 7 that should be reported on your 2018 tax return.

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CBost
New Member

Retirement tax questions

Thank you Rachel!