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Level 2

401k gave me wrong excess deferral?

My wife overcontributed to her 401k by $2800 due to a job change (2 different 401k providers in 1 year). We contacted the 401k provider and they sent us a check for $2690. The slip that comes with the check says that all of the $2690 is taxable and has no reference to "$2800" or gains/loss.

I called the 401k provider to ask why it was $2690 taken out and not $2800 as we requested. They said that they removed the gain/loss associated with the $2800 and the result was $2690 and that the "excess takes care of it" (???).

What do I put in my "Other Wages Received" section in Turbo Tax to account for this excess deferral? if I put $2690, we will still be $110 excess overcontributed technically. I could put the $2800, but I don't have documentation that it was $2800 taken out, since the slip only says $2690.

1 Reply
Level 3

401k gave me wrong excess deferral?

You should include the full amount of the 401(K) excess deferral, $2,800, as wages on your 2018 Form 1040.  

On your 2019 Tax Return, you can include the $110 loss as a negative amount on Schedule 1, line 21 of your 2019 Form 1040. You can identify the loss as “Loss on Excess Deferral Distribution.” 

To include your wife's overcontribution of $2,800 on your 2018 Tax Return, please follow these steps:

  • 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"