Yes you can withdraw the excess deferrals and Yes you need to withdraw also any earnings on the excess amount contributed.
No your employer does not need to issue you a new W-2. Since the excess contribution is going to be reported on your return as taxable income.
Report the excess deferral and earnings as a substitute 1099-R with a code 8 for Box 7
- Open (continue) return if you don't already have it open.
- Inside TurboTax, search for 1099-R and select the Jump to link in the search results.
- Answer Yes on the Your 1099-R screen, then select Continue
- Click On I need to Prepare Substitute 1099-R
You will receive a 1099-R for 2020 showing the distribution, but this information does not need to be included with your 2020 tax since you have included it with your 2019 return.
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