Excess 401k Contributions

[Joearby]

Have a situation where I contributed to my Solo 401k but business ended up taking a net loss, so contributions are being considered as excess contributions. However, in the same year I took some withdrawals that exceeded the contributions, which I believe then negates any penalty or need to withdraw excess amount. The question I have is how to report that on in Turbotax. When I import the 401k info from my financial institution, will that be offset?

Thanks in advance.

[ReneV4]

No. The excess contribution will not be offset automatically when you import your 401(k) information.

TurboTax will see the contributions on one side and the withdrawals (distributions) on the other, but it won't link them to solve the "excess" issue. 

If you took a regular distribution, your financial institution will likely issue a standard Form 1099-R with Code 7 (normal distribution) or Code 1 (early distribution) because they are not aware of your financial situation.

The Form 1099-R has to have specific codes. Therefore, if you were issued a standard Form 1099-R with one of the above codes, you will need to contact your financial institution to request that they issue you a revised Form 1099-R with a Code reflecting a "Return of Excess Contributions", which are primarily Code 8 (current year), or Code P (prior year).

While you wait to receive your revised Form 1099-R, you will be able to enter your transactions by creating a substitute Form 1099-R, by doing the following:

1. Go to Wages & Income on the left panel within your TurboTax account
2. Click on the +Add more income box
3. Scroll down to Retirement Plans and Social Security and click the down arrow to expand
4. Click Start to the right of IRA, 401(k), Pension Plan Withdrawals (1099-R)
5. Click on +Add a 1099-R (Here, you may import or type in by selecting the Change how I enter my form box
6. On the next screen, you can select Type it in myself, or other options, then Continue
7. Select the box on the top left for Financial institution or other provider (1099-R), then Continue
8. Enter the provider's information, then Continue
9. Enter the deatils from your Form 1099-R, checking for which Distribution Code was used in Box 7 (or review if imported), then Continue
10. Continue answering the questions, pressing Continue to advance
11. When you reach, "Do any of these situations apply to you?", select the third box down "I need to file a substitute 1099-R", then Continue
12. You will then enter the calculations for the substitute amounts, as well as an explanation, then Continue
13. Select Skip when complete if you are e-filing your return, or select Print Form 4852
14. Answer the remaining questions, then Continue

[Joearby]

thank you so much for the detailed reply.  I will wait until I can import my 1099 from my bank and then see if that doesn't clear things up. Not sure if it makes a difference but since I am past retirement age, it would be considered a "normal" distribution.  I was really just trying to put back some funds that I took out but since I didn't do it in the 60-day window it's obviously treated differently than a "replenishment.

Joe