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New Member
posted May 14, 2021 2:35:41 PM

I contributed over the federal limit of $19,500 into my 401k in 2020. Where and what do I need to modify in my 2020 return?

Plan administrator is not responsive to get an exact amount of what will be returned to me (including forfeitures).

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1 Best answer
Expert Alumni
May 14, 2021 2:52:18 PM

Please be aware, the deadline to return excess deferrals was April 15th. If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Therefore, you will be taxed twice on the same amount. If you wish you can leave the excess deferral in the account since a distribution after the April 15th deadline will be just a regular distribution and will be taxable income. 

 

You will have to include the excess deferral on your 2020 tax return:

  1. Login to your TurboTax Account 
  2. Click "Federal" from 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 "2020 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

4 Replies
Expert Alumni
May 14, 2021 2:52:18 PM

Please be aware, the deadline to return excess deferrals was April 15th. If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Therefore, you will be taxed twice on the same amount. If you wish you can leave the excess deferral in the account since a distribution after the April 15th deadline will be just a regular distribution and will be taxable income. 

 

You will have to include the excess deferral on your 2020 tax return:

  1. Login to your TurboTax Account 
  2. Click "Federal" from 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 "2020 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

New Member
May 14, 2021 3:05:12 PM

Thank you @DanaB27 for this information, it was very helpful. Only follow up is, for 2021, will I get a tax form to show this distribution I will be receiving? Or should I just follow the exact same steps in my 2021 return that I will be doing in my 2020 return?

Expert Alumni
May 14, 2021 3:21:46 PM

You will get a Form 1099-R early next year for the distribution of the excess contributions that you will report on your 2021 return.  

Level 1
Aug 29, 2022 9:03:51 PM

I am confused with Turbo tax instructions and examples. I made excess contributions in 2021. I missed the April 14th deadline. Turbo tax instructions asks me to file a 1099-R with the excess and indicate it as a 2022 1099-R. It also states that it won't include that income in the 2022 tax return. Does that mean that I won't be taxed twice?