@sr9984 wrote:
In reading what @DianeC958 entered, she is not saying that you enter it as income. Since it was a Roth 401(k), you were already taxed, whether you over contributed or not.
What she does seem to be saying is that you need to tell the IRS that you had an excess contribution in the current tax year (2019 here). When I followed the steps in Turbo Tax and created my own 1099-R for the 2019 tax year, I did not incur any additional taxes owed. Note that I selected code 8 in box 7 that she corrects herself further down the post.
The major question I had is: for a Roth 401(k) excess contribution in 2019, do I tell the IRS in 2019 or in 2020 (when I get the physical 1099-R from Fidelity) about my excess contribution in tax year 2019. According to @DianeC958, the answer seems to be you tell the IRS in 2019.
What Diane posted was for a Roth *IRA* not a 401(k) Roth - totally different things. The "J" in code "PJ" means Roth *IRA* and Diane even says: "this avoids you paying the 6% penalty for over contributing to your Roth IRA.". It appears that she confused Designated Roth and Roth IRA. The 6% penalty does not apply to 401(k) because the earnings are taxed it the year returned, not the year contributed - unlike IRA's where it is the year contributed.
A designated Roth must include a code "B" in box 7 along with any other code that applies.
As I said, it the contribution and earnings were returned in 2020 then the 2020 1099-R with a code PB will do nothing in a 2019 tax return. Only if both the contribution and earnings were returned *in* 2019 would the earnings be taxable in 2019 and would be reported in 2019. Nothing about a 2020 1099-R with a code PB will go on your 2019 tax return even if you enter it. The IRS is informed by the 1099-R copy that the 401(k) trustee sends to the IRS
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
