excess contribution 403b

[whenwillimakemoney]

Hi, I had made an excess contribution to my 403b plan in 2020. I didn't catch it until May 2021 (as the tax filing deadline was extended); but by this time, the deadline to request a ROE (Apr 15) has already passed. So I filed the taxes as it is - the IRS didn't flag the excess contributions. 

If a 1099 had been issued, I would have included it in the 2021 income. Since no 1099 was issued, I am trying to figure out what I should do.

option 1: Should I just report the excess and hope the IRS would figure it out? If yes, where should I report it in turbotax? And how should I figure out the gains on that amount - since it was 403b, the money was periodically deposited/investment - how will I determine which amount to take for the excess contribution? 

option2: If I cannot just report the excess contribution (without a 1099), then what should I do... my holding company and the employer cannot help. 

I will appreciate any guidance. 

[DanaB27]

You will still have to include the excess in your wages on your 2020 tax return with the steps below.

1. Click "Federal" from the left side of your screen
2. Scroll down to "Less Common Income" and click "Show More"
3. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
4. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
5. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
6. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
7. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
8. On the "Any Other Earned Income" screen enter "2020 Excess 401(k) Deferrals" for the description, enter the excess contribution amount and click "Done".

Please be aware, that since you did not take out the excess amount by April 15th  you are taxed twice on the excess deferral left in the plan.  This happens once when you contribute it (with the steps above) and again when you receive it as a distribution (get Form 1099-R). You can't include the excess amount in the cost of the contract even though you included it in your income.

[whenwillimakemoney]

Thank you for explaining this. The problem is that I haven't received the excess money. How can I request the money from the financial holding firm; they will withhold some amount at source. How can I navigate this part? 

[DanaB27]

Please be aware, that since it is after April 15th, 2021, you are not required to remove the excess. You can take it now or at a later time, you will be taxed on it twice either way.

If you take a distribution in 2022, it would be handled like a regular distribution. You will get a 2022 Form 1099-R and enter it on your 2022 tax return. Any taxes withheld will be listed on your Form 1099-R and applied to 2022.

@whenwillimakemoney