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Retirement tax questions

Regardless of whether your HR Department is able to distribute your excess contribution, you should report the excess contributions on Line 1 of your 2018 Tax Return by following these steps in TurboTax Desktop:

  • Open your return
  • 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" and click "Show More"
  • 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 "Continue" 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 "2018 Excess 401K Deferrals" and click on "Done"

If your excess is distributed, you will receive a 2019 Form 1099-R in 2020 showing the refund 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 2019 Form 1099-R with a Code "8" in Box 7 that should be reported on your 2019 tax return.

NOTE: There is currently an e-filing issue within TurboTax related to excess contributions so you will need to mail in your return. You can check out this TurboTax FAQ for more information: Excess 401(k) Contribution Preventing E-filing