How to fix 401K over-contribution due to company split?

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Due to the company split, I have over contributed to my 401k plans for the year 2020. I received the excess contribution from my plan admin in Feb- 2021. How / Where to include the excess contribution?

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DanaB27Answer

Employee Tax Expert

The 401k excess in #1 you report as mentioned above with your wages on your 2020 tax return.

The 401k Roth excess in #3 don’t add this amount to your wages.

For #2 and #4 you will get a 1099-R 2021 with code 8 and will enter this on your 2021 tax return.

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DanaB27

Employee Tax Expert

To report the excess 401(k) contributions and subsequent distributions, a 2020 plan excess distributed in 2021 is reported on line 1 of your 2020 Form 1040.

Please follow the steps below:

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

Please note for the Tax Year 2021 tax filing due April 15, 2022:

2021 Forms 1099-R will be issued reporting the excess.

Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2020.
However, the earnings on Form 1099-R with Code 8 in box 7 should be reported in 2021.

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