kirkz
New Member

How to report 401(k) excess contribution made in 2015 and included in my 2015 return but now receiving a 1099-R for 2016?

 An excess contribution was made in 2015 to my 401(k) acct through work.  I was notified of the excess in January 2016 and was provided the dollar amount of the overage.  When I filed my 2015 taxes I included this amount in the overall wages so was taxed on it as normal income.  A month later I received a disbursement.  Both Federal and State taxes were withheld.  This January I received a 1099-R listing the disbursement and taxes withheld.  I've entered the 1099-R into my 2016 tax form, but I'm wondering where I can mark this as an exception so that I don't get taxed a second time and to possibly get back some of the withheld taxes?

DDollar
Expert Alumni

Retirement tax questions

If you received a refund of the excess amount, plus earnings, by April 18, 2016 then you should not have received a Form 1099-R. According to the IRS:

The only way to correct the mistake, avoid double taxation and potential plan disqualification is to have the excess amount, plus earnings, refunded to the employee by the tax-filing deadline for the year in which the deferrals were made (for example, by April 15, 2007 for excess deferrals made during calendar-year 2006). In that case, the excess deferral need only be reported as taxable income for the year the deferral was made. Refunded earnings attributable to an excess deferral must also be reported as income; losses attributable to an excess deferral can reduce reported income in the refund year.

You should contact the 401(k) administrator and have them issue you a corrected 1099-R with No distribution.


B_T007
Returning Member

Retirement tax questions

where do you enter the loss attributable to my excess deferral. I did not receive a 1099 Misc

BillM223
Expert Alumni

Retirement tax questions

How to enter a loss on a corrective distribution – here is a very nice answer from MaryK1 from a previous year. The Search parameter and the navigation is still correct for 2019.

 

Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Include the loss as a negative amount on line 8 on Schedule 1 (1040) and identify it as “Loss on Excess Deferral Distribution.” Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions.

How to do this in TurboTax:

The easiest way to get to the interview questions is to type "excess salary deferrals" in the search box and click on Jump to Excess Salary Deferrals

You can also get to the same place by going to the Miscellaneous Income, 1099-A, 1099-C  line at the bottom of the Wages & Income screen  .

On the Other Wages Received screen click Yes to the question:
Did you receive any other wages?
Click Continue.

On the Wages Earned as a Household Employee screen, Enter nothing and Click Continue.

On the Sick or Disability screen, Enter nothing and Click Continue.

On the Any Other Earned Income screen click Yes to the question:
Did you earn any other wages?
Click Continue.

On the Enter Source of Other Earned Income screen click Other and Click Continue.

On this Any Other Earned Income screen,  enter a Description such as "201X Excess 401K Deferrals" Enter the amount of your loss and click Done.

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