401k Excess contribution in 2024

[sr3333]

Hello,

I have over contributed towards my 401K for 2024

The over contribution was by $1024.  There was investment losses of $30.19

I have received a check from my 401k Plan Empower in the amount of $993.81 ($1024 - 30.19)

How do i report this on TT premier MAC download

I was reviewing in 1099 R page it is asking for

Payer Name and address - What should i enter in these fields

What code should i chose in box7

How and where do i enter the loss of $30.19?

do i enter this as negative number?

I really appreciate step by step directions on entering these and what needs to be entered and if there is note to be added that this is a 401k excess contribution for year 2024

[MaryK4 · Accepted solution]

You do not pay a penalty for an excess deferral. But if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan. This happens once when you contribute it (with the steps below) and again when you receive it as a distribution (reported on Form 1099-R). You can't include the excess amount in the cost of the contract even though you included it in your income

You must include the excess deferral in your wages in the year the excess deferral happened. 
 

1. Login to your TurboTax Account 
2. Click "Federal" from the left side of your screen
3. Scroll down to "Less Common Income" and click "Show More
4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
5. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
6. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
7. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
8. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
9. On the "Any Other Earned Income" screen enter "2024 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

[sr3333]

@MaryK4 

hi Mary thank you for your advise.

what shall I do with the loss of $30.19 and where do I enter this in TT?

[DanaB27]

The $1,024 excess deferral will be reported in your 2024 tax return as MaryK4 explained in her response. 

The loss will have to be reported next year on your 2025 tax return:

1. Login to your TurboTax Account 
2. Click "Federal" from the left side of your screen
3. Scroll down to "Less Common Income" and click "Show More"
4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
5. Select "Other reportable income" and click "Start"
6. Answer "Yes" to "Any Other Taxable Income?"
7. Enter "Loss on Excess Deferral Distribution” and enter the loss as a negative number (-$30)

Please see Pub 525 for additional information.

[sr3333]

@MaryK4 @DanaB27 

many thanks 

would like to clarify 

do I enter $1024 or $993.19 (1024-30.19) for the excess 401k contributions 

[DanaB27 · Accepted solution]

On the 2024 return you will enter $1,024 for the excess 401(k) contribution. 

[sr3333]

@DanaB27 

Thank you so much for your responses.

clarifying your note, i don't enter my loss of $30.19 in 2024 tax returns?

Therefore your steps is to be done in my 2025 tax returns.

[DanaB27]

Yes, that is correct the loss will be reported on your 2025 return. 

Pub 525: "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."