Excess 401k contribution taxable twice?

[fred1986]

Question - my client contributed in excess to his 401k in 2019. Turbotax caught the excess and i picked it up manually as taxable income on the 2019 tax return. The 401k administrator issued a 2020 1099-R with the distribution amount in box 1 and box 2a and listed code 8 as the distribution code.

Since i already picked up this amount as taxable income on the 2019 tax return, do I also pick it up again on the 2020 tax return? Do I ignore the 1099-R (put a statement in the tax return stating it was picked up in 2019)?

[MinhT1]

As the excess contribution (and earnings) has already been reported and taxed in 2019, you do not report in again in 2020.

The plan administrator should have reported code P in box 7 of the 1099-R. You could try and ask for a corrected 1099-R.

[fred1986]

Thanks. The amount in box 2a should have been just the increase in the contribution, right (a much lower amount)? Would code P, if they would revise it, make that so?

[MinhT1]

As the 1099-R covers the return of the excess contribution, it only report the excess contributions (and any related earnings), and not the whole contribution.

Code P in box 7 of the 1099-R means Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2019.

A 1099-R with code P does not need to be reported on the 2020 tax return as the excess contribution has already been reported and taxed in 2019.