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Hiout1968
New Member

How to report 401k excess deferral refund when the provider levies a fee?

Due to switching jobs, I contributed in excess to my 401k by around $550.

I requested a refund from my 401k provider, which has a $50 fee. They removed $550 from my 401k account and mailed me a check for $500.

Am I now in compliance? How do I report this? Is my income ("Other income") $500, or $550?

1 Reply
hbl3973
Level 8

How to report 401k excess deferral refund when the provider levies a fee?

Assuming you are talking about 2018 401(k) contributuons then your employer or their agent is required to report the $550 as a (taxable) withdrawal, including any earnings, on Form 1099-R. It will not be subject to the any 10% early withdrawal penalty.  If you haven't received that 1099-R, go ahead and ask if it will be issued for your 2019 tax season or if they should be/have sending/sent a 2018 1099-R.  It will go under retirement income and there will be a code

See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-what-happens-when-a... for the IRS discussion and, in particular, the discussion on page 17 of IRS publication 560 (https://www.irs.gov/pub/irs-pdf/p560.pdf).  The Form 1099-R instructions (https://www.irs.gov/pub/irs-pdf/i1099r.pdf) will also be helpful in decoding the Box 7 entry to see what tax year(s) to report that income.




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