The amount that you received from the 401(k) that was in excess of what you were eligible to receive and that you rolled over to the IRA constituted an excess contribution to the rollover IRA to the extent that you were not eligible to make a regular contribution to a traditional IRA. Any such excess contribution due to inaccurate rollover information should have been returned to you as a nontaxable return of contribution after the due date of your tax return. Such a return of contribution is properly reported on a Form 1099-R with the amount distributed shown in box 1, a blank box 2a, box 2b Taxable amount not determined marked, code 1 in box 7 (since you were under age 59½ at the time of the distribution from the IRA), and the IRA/SEP/SIMPLE box marked. When entering this Form 1099-R into TurboTax, it's necessary to enter a zero in box 2a instead of leaving box 2a blank. This will cause TurboTax to prompt for an explanation statement. Under Deductions & Credits -> Retirement and Investments -> Traditional and Roth IRA Contributions you must also indicate the amount of excess IRA contribution carried into the tax year and the amount of that excess that you had returned to you after the due date of your tax return. TurboTax will use these entries to prepare Form 5329 Part III with the excess shown on line 9 and the amount returned shown on line 12.
If your Form 1099-R shows an amount in box 2a equal to the amount in box 1, the distribution was made as a regular distribution instead of properly being made as a return of contribution after the due date of your tax return. Fidelity's IRA Return of Excess Contribution Request form has a specific box to mark to indicate that the return of contribution is being made after the due date of your tax return. You should contact Fidelity and indicate that this was to be made as a return of contribution after the due date of your tax return and request a corrected Form 1099-R. If Fidelity refuses, you can prepare a substitute Form 1099-R indicating as I described above.
The amount of excess that you received from the 401(k) probably should have been reported as income in the year that it was received and your return of that money would be deductible as a claim of right deduction, either subject to the 2% of AGI floor if under $3,000 or not subject to the 2% of AGI floor if over $3,000. If over $3,000, you also have the option of calculating a tax credit for the claim of right instead of claiming a deduction. However, since excess was never reported as income and since an amount equal to the amount of excess received form the 401(k) was returned to the plan, you may be able to just not report it as income or a deduction.
For each year that there was an excess contribution in the account, you are subject to a 6% excess contribution penalty on that year's tax return. Each year you are permitted to apply a portion of that excess as a regular traditional IRA contribution for that year up to the amount of a regular traditional IRA contribution that you are eligible to make. If you made no other traditional or Roth IRA contributions for those years, it's entirely possible that your excess could have been resolved in this manner without making any distribution of a return of contribution. You'll need to file a Form 5329 for each year that the excess was in your IRAs and pay the penalty.
