For excess deferral on a 401k, what year do you pick for the 1099-R, as it says to enter it "like I received one". Is it 2024 or 2025?

[bfong22]

The TurboTax prompt is asking "what year is on your "bank [hidden]" 1099-R? I don't actually have a 1099-R with the information as I'm trying to correct the overfunding/distribution.

[DanaB27 · Accepted solution]

You would select 2025 because you will get a 2025 Form 1099-R with code P to report the excess deferral if you withdrew it by April 15th. 

Another option to report the excess deferral on your 2024 return instead of using Form 1099-R:

1. Login to your TurboTax Account 
2. Click "Wages & Income" (under Federal) on the left side of your screen
3. Scroll  down to "Less Common Income" and click "Show More"
4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
5. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
6. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
7. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
8. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
9. On the "Any Other Earned Income" screen enter "2024 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

If you receive the distribution of the excess deferral and earnings by April 15th then please note for the Tax Year 2025 tax filing due April 15, 2026: 

• Form 1099-R with Code P in box 7 can be ignored if you reported the excess in your 2024 return. 
• However, the earnings on Form 1099-R with Code 8 in box 7 should be reported in 2025.

Please be aware, if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan.  This happens once when you contribute it and again when you receive it as a distribution. You can't include the excess amount in the cost of the contract even though you included it in your income.