I changed jobs in 2017 and contributed too much to my 2nd 401k, resulting in total contributions over $18,000. I just received an excess distribution. What do I do next?

[joon3211]

I followed the instruction above and added misc. income but when I try to e-file, it keeps rejecting with error as my w2 elective deferrals still shows I am over the limit. Was any steps missing above or do I take out the 401k contribution amount from w2?

[joon3211]

I followed the instruction above and added misc. income but when I try to e-file, it keeps rejecting with error as my w2 elective deferrals still shows I am over the limit. Was any steps missing above or do I take out the 401k contribution amount from w2?

[joon3211]

I followed the instruction above and added misc. income but when I try to e-file, it keeps rejecting with error as my w2 elective deferrals still shows I am over the limit. Was any steps missing above or do I take out the 401k contribution amount from w2?

[maglib]

seems like there may be a TT issue .  I'm not their employee.  Sorry, I just looked and found many are having this issue.  <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/7327357">https://ttlc.intuit.com/replies/7327357</a>

[brauercpa]

Turbo tax is automatically adding the excess back into wages! I too tried to complete a 1099R and it then doubles the amount added back to wages. So the wages on my tax return do not match W-2 wages but it does reflect the additional 401k income in wages on line 1 of the return  

[maglib]

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/7327357">https://ttlc.intuit.com/replies/7327357</a>  fixed

[maglib]

You will receive a Form 1099-R with Code "8" in Box 7 for the earnings or losses.  If you withdrew the excess in 2019, this will go on your 2019 Tax Return.  Only report the excess contribution in 2018

[cynthiajlee]

when you enter the amount under "sources of other income"---should you report the full amount that was withdrawn, or the amount distributed by the 401k sponsor, in which case my 401k sponsor automatically removes 20% for federal taxes

[cynthiajlee]

when you enter the amount under "sources of other income"---should you report the full amount that was withdrawn, or the amount distributed by the 401k sponsor, in which case my 401k sponsor automatically removes 20% for federal taxes

[alvaro]

I am on the same boat... TT won't let me file because I am $65  over the $18500 limit, I added the $65 as "Other" as indicated and will submit a paper file. Hope it works out. None of the employer plans want to refund the $65, I wonder if that will have any effect other than double taxation when I retire and withdraw. Thanks for hte help

[maglib]

@alvaro  they have to refund you the 65 plus earnings.  you will continue to be penalized.

[alvaro]

Thanks for the heads up! I will try and talk them again!

[alvaro]

@maglib If you don't mind can you point out how would I continue to be penalized? I was hoping to pay the tax on my 2018 return, and pay it again with I withdraw at retirement and that would be the end of it.   

Folks at the previous employers are claiming it was my responsibility to let them know before April 1st (which I understand, the burden is on me at they had no way of knowing) and are refusing to issue a refund and corresponding 1099-R.

Thanks!

[maglib]

Well the issue is the excess continues to earn income that is truly taxable to you...  it will be a mess and you have till 4/15 to take the excess out, not 4/1 as per your employer.  It is the 2nd employer where you created the excess and should be removing from.  <a rel="nofollow" target="_blank" href="https://www.doughroller.net/retirement-planning/happens-contribute-401k/">https://www.doughroller.ne...>

[snackiesmores]

Thanks for all the advice. Trying to wrap this up once and for all... when I visit the 401k web site (Fidelity), the data they show (which is NOT a 1099-R form, but shows like so (non important parts snipped):

===================================
Tax Detail
---------------
Distribution Type Withdrawal
Tax Year 2019
Tax Form 1099R
IRS Code PB
Gross Amount $3,876.35
Total Taxable Amount $0.00
Total Non-Taxable Amount $3,876.35
===================================

So I suppose that's a preview of the 1099-R I'll get in January 2020, for taxable year 2019. Sorry, I'm an engineer -- good at math but not tax speak.

What I've gathered from all of this is, file a 1099-R THIS YEAR (even though I dont have the official one in hand, that comes next January), and fill it out as best I can (per TT directions).

I'm confused on the IRS code PB as stated on the web site, as code P is return of excess in **2017** (where as code 8 is return of excess in **2018**). Code B indicates this is a roth distribution, which makes sense. Trying to decide on code P vs code 8 - I am inclined to pick code 8 since this overage occurred in tax year 2018, yet the web site says code P... though I'm assuming next year, when I receive the 1099-R, code P will be updated to be tax year 2018, and code 8 will become 2019.

Ugh.

So what I think I should do, since the overcontribution happened in tax year 2018, is:

THIS YEAR - 2018 tax year - create 1099-R and fill out as best as i can with:
Box 1 is $3,876.35 since that was returned to me
Box 2a is $0 since (1) it's a roth 401k and the money was already taxed and (2) it's a negative gain so no earnings to tax anyway.
Box 7 indicate code 8 for tax year 2018 and code B to indicate a roth distribution.
Indicate in subsequent screens that this is a 2019 1099-R since that's what it says on Fidelity's web site (snippet above) - this confuses me though..

NEXT YEAR - 2019 tax year - create another 1099-R using the one Fidelity finally sends me with:
Box 1 is $0 (there are no 2019 taxable gains incurred during this refund)
Box 2a is $0 (there are no 2019 taxable gains incurred during this refund)
Box 7 indicate code P+B

Or maybe I don't need to do a 1099-R in tax year 2019 at all since the gains were negative and therefore nothing to tax.

Does that make any sense?

Thanks!!