I switched employers in 2018 and, due to a calculation error on my end, over-funded my 401k. My plan sponsor's deadline to provide an excess contribution distribution was March 1st and says I am too late to go through that process.
It is clear that I will be double-taxed (it's too bad, but fine) and I will keep pushing my plan sponsor to see if they can make an exception for me, but I am having trouble understanding how I need to fill out my 2018 tax return, assuming I CAN'T get the distribution and amended W-2 before 4/15/18.
I'm guessing the step is something like going back to my W-2 information and reclassifying my income so that less of it is tax-free and I don't exceed 18,500 in the 401k distribution box on my tax forms. Then do I also need to pursue a 1099-R in parallel to distribute the difference (which I will declare on my 2019 tax return). Is there something else i need to do?
I am clear that I will be taxed twice, but am not sure how to do the proper accounting in 2018 and forms to fill out to make sure everything goes through appropriately... my plan sponsor is not being helpful.
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Whether or not your plan sponsor meets the 4/15/19 deadline, you need to include the excess 401(k) contribution to your wages on your Form 1040, using the instructions below.
If the plan sponsor is unable to make the distribution by 4/15/19, you will end up paying taxes on the amount twice...first on your 2018 Tax Return and then again when you withdraw the money during retirement.
You should not make any changes to your W2, it needs to be input exactly as it appears so that the IRS can match the information to your return.
You should report the excess contributions on Line 1 of your 2018 Tax Return by following these steps:
If your Plan Sponsor ends up making the distribution by 4/15/19, you will receive a 2019 Form 1099-R in 2020 showing the refund with a code "P" in box 7 which you can ignore if the excess deferral is reported as suggested above. However, the earnings will be reported on a separate 2019 Form 1099-R with a Code "8" in Box 7 that should be reported on your 2019 tax return.
Whether or not your plan sponsor meets the 4/15/19 deadline, you need to include the excess 401(k) contribution to your wages on your Form 1040, using the instructions below.
If the plan sponsor is unable to make the distribution by 4/15/19, you will end up paying taxes on the amount twice...first on your 2018 Tax Return and then again when you withdraw the money during retirement.
You should not make any changes to your W2, it needs to be input exactly as it appears so that the IRS can match the information to your return.
You should report the excess contributions on Line 1 of your 2018 Tax Return by following these steps:
If your Plan Sponsor ends up making the distribution by 4/15/19, you will receive a 2019 Form 1099-R in 2020 showing the refund with a code "P" in box 7 which you can ignore if the excess deferral is reported as suggested above. However, the earnings will be reported on a separate 2019 Form 1099-R with a Code "8" in Box 7 that should be reported on your 2019 tax return.
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