I did excess payment to my 401k, since I had 2 jobs in 2023. Now it is too late to do a distribution. I am trying to d 2023 Tax return now. What do I do ?

[Joesanko]

I have changed from both those jobs now. There is no way to get them fix this. what to do ?

[dmertz · Accepted solution]

You'll need to add that excess as Less Common income -> Miscellaneous Income, 1099-A, 1099-C -> Other Income not already reported on a Form W-2 or Form 1099.  Answer Yes to receiving other wages, Yes to Any Other Earned Income, select Other, then enter the excess salary deferral.  This amount will then appear on Form 1040 line 1h to make it taxable.  This amount will be taxed a second time when eventually distributed from the 401(k) as a regular distribuiton.

[Joesanko]

Is TURBOTAX smart enough to generate this new 1099R for the excess 401k contribution amount, while I do the Tax-Return-2023. ?

(I am currently working on my 2023 tax return, being very late)

The help on TurboTax is not saying anything like that, but it never suggested anything about creating a new manual 1099R either. I do not want this to be doubled, if I do one on top of the automated one, if any.

[Opus 17]

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@Joesanko wrote:

Is TURBOTAX smart enough to generate this new 1099R for the excess 401k contribution amount, while I do the Tax-Return-2023. ?

(I am currently working on my 2023 tax return, being very late)

The help on TurboTax is not saying anything like that, but it never suggested anything about creating a new manual 1099R either. I do not want this to be doubled, if I do one on top of the automated one, if any.

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There is no 1099-R.  Re-read the instructions above.  You can't remove the contribution, it's too late.  So there won't be a 1099-R.  You just leave the money in the 401k plan.

The consequences are,

1. Because the excess deferral reduced your taxable income you have to add it back to your taxable income as "other income."  @dmertz  gave you the procedure.

2. When you withdraw money in the future (usually retirement) you will pay tax like any other 401k withdrawal, meaning this part of your account will be taxed twice, once now and again when you withdraw.  That's just how it will be. 

[Joesanko]

Sorry I misunderstood.

I think my question is still valid, same case of entering the exess as the "OTHER INCOME".

Will TurboTax create an automatic OTHER INCOME, even if I do a manual entry for the same.?

[Opus 17]

If you enter the item as other income as instructed, Turbotax will put it on the correct spot on your form 1040. No other forms are needed.  

[dmertz]

TurboTax does not create the entry automatically when it informs you that there is an excess deferral.  You must make the entry yourself as I described.