401k excess contribution and 1099-R

Forum|Forum|3 years ago
February 27, 2023
6 replies
67 views

Hello,

I had excess 401k contribution between two employers in the year 2021. I withdrew excess contribution amount in early Jan 2022 and filed that $$ amount as deferral income for the year 2021 (filed before April 2022).

Now, Fidelity sent me TWO 1099-R forms, one with code "P" (for excess contribution withdrawal) and 2nd 1099-R with code "8" (for the gain on excess contribution)

Since I already included excess contribution $$ in 2021 year filing...should I ignore 1099-R with code P OR I have to file amendment for 2021?

The Turbotax software says, I have to file amendment...but in reality I think it is not needed.

Can you please clarify? If my above understanding is correct (meaning I should ignore 1099-R) then I wish Turbotax change the language and provide better explanation to avoid further confusion.

For 2nd 1099 with code 8, I have to file that as income for 2022.

Thank you for your help in advance!

Best answer by DanaB27

Yes, as fanfare stated you can ignore the 2022 Form 1099-R with code P since you already included it on your 2021 return. Only include the 2022 Form 1099-R with code 8 on your 2022 tax return.

Pub 525 states "If the distribution was for a 2021 excess deferral, your Form 1099-R should have code P in box 7. If you didn't add the excess deferral amount to your wages on your 2021 tax return, you must file an amended return on Form 1040-X." You already added it to your wages on your 2021 return therefore you can ignore it. The IRS can tell that you reported it on your 2021 return when they look at your Form 1040.

@Cooldudude20

fanfare

Level 15

P is for prior

it is telling you to amend your 2021 return for that amount.

but you already reported that amount, so there is nothing to do.

@Cooldudude20

Cooldudude20Author

Level 2

Thank you! So, should I ignore the 1099-R form I received from Fidelity? If yes, will it flag into IRS system for not reporting? Appreciate your help! Thank you!

DanaB27

Answer

Employee Tax Expert

Yes, as fanfare stated you can ignore the 2022 Form 1099-R with code P since you already included it on your 2021 return. Only include the 2022 Form 1099-R with code 8 on your 2022 tax return.

@Cooldudude20

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"