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Thanks.
I have almost identical situation this year. Made excess employee contribution of about $7361.38 to my Solo 401k in calendar year 2020. It was put into a money market fund and earned $0.20 income. Realized the mistake and asked Fidelity to return the amount $7361.58 to me in early 2021. Received the check from them. I reported the excess contribution as income on my tax return for year 2020, filed before April 2021.
Now I received a 1099-R from Fidelity for that amount. It has $7361.58 in both Box 1 (Gross Distribution) and Box 2a (Taxable Amount), and Code E in Box 7. When I entered it as is into TurboTax 2021, it counts the number as taxable income. But I already paid the tax last year, when I included the amount as income in my tax return.
What am I supposed to do with it? @macuser_22 @J295 Please help.
Your 2021 1099-R should bear code P in box 7.
Please see this TurboTax Help topic.
You should contact your broker to obtain a corrected 1099-R.
As you have already reported the excess contribution in 2020, there is nothing to report in 2021 and you can ignore the 1099-R with code P.
I run into the same situation this year when unexpected over contribute to my 401K account. The tax software instruction said :
1. need to notify the broker to get the refund and form 1099-R (already did)
2. enter the excess deferral in box 1 and 2a, enter code P in box 7 no matter we have received the 1099-R or not.
Is it all I need to do?
Thank you
Yes, this will be sufficient to report that you took back an excess contribution that you made in 2020.
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