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I have an excess contribution to 401K account in 2019 which has not been withdrawn by plan sponsor as yet. How best can I show the excess contribution on my returns?

I have not received a 1099R and the excess shall not be returned to me prior to the tax deadline. How can I best address this in my 2019 returns to avoid any penalties
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2 Replies

I have an excess contribution to 401K account in 2019 which has not been withdrawn by plan sponsor as yet. How best can I show the excess contribution on my returns?

The deadline to remove it was not changed and was by April 15, 2020.     It is now too late to remove it at all, but you still must pay tax on the excess which will be taxed a 2nd time when finally distributed after you retire.

 

(There are several screens to click through to get to the right place)

Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.

 

This will add the returned excess to your 2019 wages on line 1 as required.

 

For information see IRS Pub 525 page 10  (that also explains the double tax when the excess is not returned by Apr 15.)
https://www.irs.gov/pub/irs-pdf/p525.pdf

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
dmertz
Level 15

I have an excess contribution to 401K account in 2019 which has not been withdrawn by plan sponsor as yet. How best can I show the excess contribution on my returns?

If the distribution of the excess is made now, it it must be done by make a regular distribution.  As indicated by macuser_22, not only will the excess contribution amount be reportable on your 2019 tax return as income, the distribution will also be subject to ordinary income tax and, if you are under age 59½ and no other penalty exception applies, it will also be subject to an early-distribution penalty.  It would be far better to just leave the excess in the 401(k).

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