1. I made $3600 excess Roth 401K contribution for 2018 through my employers' plan.
2. I requested my employer make a request to withdraw excess contributions from my retirement account.
3. Fidelity sent me the check and a 1099R in March 2019.
4. My W2 includes the excess contribution.
Do I need a corrected W2 in order to file my taxes?
No. The 1099-R should take care of that.
What code is in box 7?
Sorry, I misspoke. I got a distribution statement that says they will be sending a 1099R in 2020.
What do I need to do to file this year?
I have the same thing. How did you enter your w2 box 12. If you enter what is on your w2 it will be more than 18500 and you can't file.
Should I get a corrected w2 or just enter the correct value in box 12 D
You do not need to wait for a 1099-R next year that will probably require you to amend your 2018 tax return to report the excess on line 1 of your tax return - it can be entered this way and then ignore the 2019 1099-R with a code P in box 7 when it comes.
There are two methods to do this:
1) Enter a 1099-R with the returned contribution amount (not including earnings) in box 1 & 2a, and a code "P" in box 7. When asked what year 1099-R say 2019.
or 2)
Excess 401(k) deferrals should be reported in:
(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 2018 wages on line 1 exactly the same way that the 1099-R would. The only information that is sent to the IRS is the line 1 amount.
[Note: If there were any earning that were returned in 2019 then the earnings will be reported on a separate 2019 1099-R with a code 8 that goes on your 2019 tax return - do not enter the earnings here.]
Both methods will add the returned excess to your 2018 wages on line 1 exactly the same way that the 1099-R would. The only information that is sent to the IRS is the line 1 amount.
For information see IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf
It's a Roth. Box 1 wages were not reduced for it. Same advice?
Thank's for pointing that out - I misread the question. I believe a return of a 401(k) Roth excess would have the contribution in box 1 and zero on box 2a so there would be no taxable amount to report.
So I should file with the over-contribution amount included in the current W2 because it's already been taxed?
Yes you file the W-2 as is since the W-2 is reporting what already happened. The 1099-R says that it was returned.
Ok. And the 1099-R will be reported when I file my 2019 taxes next year, correct?
No, Not unless there were earnings, in which case the earning will be an a separate 2019 1090-R with a code 8 that does go on the 2019 tax return as stated in the answer.
you can't file (the software won't let) if the total for 12D is more than the limit.
I still think I'm missing something. TurboTax is still flagging that I have an unresolved over-contribution for 2018. It sounds like it wants me to enter in a 1099-R to show that I have completed a distribution of excess, but I won't be receiving a 1099-R from Fidelity until 2020. How do I fill out the 2018 1099-R form for a 1099-R I don't have? Everywhere I look I'm finding conflicting information.
See my answer above. However, that will not resolve the TurboTax error that is based on the W-2 box 12 amount and seems to have been introduced with an update a few days ago.
TurboTax support has told one user that after entering the "dummy" 1099-R to reduce the box 12 code D amount by the excess amount, but I have reservations about submitting a false W-2 and a W-2 where the box 12 amount cannot reconcile the difference between the W-2 box 1 amount and box 3 amount. The IRS computers might "red-flag" the return if the W-2 amounts do not add up.
So far TurboTax has not recognized this as a new bug.
You can contact customer support this way.
Here is a TurboTax FAQ for contacting customer support.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number">https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number</a>
TurboTax has released a FAQ on this issue - the answer is to print and mail the return.
When I go to the link above I get a 'Turbo Tax support has moved' error. Do you know where the article is in the new Turbo Tax support?
Also, I've noticed on Turbo Tax 2019 I'm not getting any unresolved over-contribution error despite having over contributed to a Roth 401(k). Has this error been resolved? Is Turbo Tax silently adding a fee or penalty somewhere I need to take care of?
I have received my excess 401(k) contribution back from Fidelity, but not sure what I do next. Since it was a Roth, I don't need to report excess income as I've already paid tax on the contribution. How do I indicate to the IRS that I overcontributed to a Roth, but I've corrected the issue?
I found another article that claims we should create a 1099-R in the current tax year: https://ttlc.intuit.com/community/retirement/discussion/reporting-excess-roth-401k-contribution/01/1158297#M88047
@sr9984 wrote:
When I go to the link above I get a 'Turbo Tax support has moved' error. Do you know where the article is in the new Turbo Tax support?
Also, I've noticed on Turbo Tax 2019 I'm not getting any unresolved over-contribution error despite having over contributed to a Roth 401(k). Has this error been resolved? Is Turbo Tax silently adding a fee or penalty somewhere I need to take care of?
I have received my excess 401(k) contribution back from Fidelity, but not sure what I do next. Since it was a Roth, I don't need to report excess income as I've already paid tax on the contribution. How do I indicate to the IRS that I overcontributed to a Roth, but I've corrected the issue?
1) The link for the 2018 error does not exist and that was only a problem in the 2018 software and has been fixed.
2) Nothing about 401(k) Roth contributions go on your tax return other than the amount shown on yiur W-2 box 12 by your employer. You must resolve any over contributions with your employee. You only report a return of that excess in TurboTax if you have removed it. Usually you will receive a 1099-R in Jan. of the year following the removal.
3) Depending on if the excess contribution and earnings were returned *in* 2019 or *in* 2020 determines what to do. Since it is a after-tax Roth, there is not need to enter the contribution amount itself as income because you already paid the tax. If returned *in* 2019 they you should have received a 2019 1099-R already. If returned *in* 2020 the you will receive a 2020 1099-R with a code 8 in box 7 that will go on your 2020 tax return next year. Earnings are taxable in the year returned.
@sr9984 wrote:
I found another article that claims we should create a 1099-R in the current tax year: https://ttlc.intuit.com/community/retirement/discussion/reporting-excess-roth-401k-contribution/01/1158297#M88047
That procedure is NOT correct for a designated Roth (401(k) Roth).
The returned *contribution* does not get entered as income.
If this was a 2019 excess returned *in* 2020 then you should receive 2 1099-R's in 2020. One with a code "PB" on box 1, the returned amount in box 1, zero in box 2a. That is reported in 2019, but will do nothing since the code B will not add it to your income - it simply reports it to the IRS.
The other 1099-R should have a code "8" in box 7 and the earnings in box 1 and 2a which will be taxable in the year returned, 2020.
The is explained in IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf
quote
"If the distribution was for a 2019 excess deferral to a designated Roth account, your Form 1099-R should have codes B and 8 in box 7. Do not add this amount to your wages on your 2019 return"
In reading what @DianeC958 entered, she is not saying that you enter it as income. Since it was a Roth 401(k), you were already taxed, whether you over contributed or not.
What she does seem to be saying is that you need to tell the IRS that you had an excess contribution in the current tax year (2019 here). When I followed the steps in Turbo Tax and created my own 1099-R for the 2019 tax year, I did not incur any additional taxes owed. Note that I selected code 8 in box 7 that she corrects herself further down the post.
The major question I had is: for a Roth 401(k) excess contribution in 2019, do I tell the IRS in 2019 or in 2020 (when I get the physical 1099-R from Fidelity) about my excess contribution in tax year 2019. According to @DianeC958, the answer seems to be you tell the IRS in 2019.
@sr9984 wrote:
In reading what @DianeC958 entered, she is not saying that you enter it as income. Since it was a Roth 401(k), you were already taxed, whether you over contributed or not.
What she does seem to be saying is that you need to tell the IRS that you had an excess contribution in the current tax year (2019 here). When I followed the steps in Turbo Tax and created my own 1099-R for the 2019 tax year, I did not incur any additional taxes owed. Note that I selected code 8 in box 7 that she corrects herself further down the post.
The major question I had is: for a Roth 401(k) excess contribution in 2019, do I tell the IRS in 2019 or in 2020 (when I get the physical 1099-R from Fidelity) about my excess contribution in tax year 2019. According to @DianeC958, the answer seems to be you tell the IRS in 2019.
What Diane posted was for a Roth *IRA* not a 401(k) Roth - totally different things. The "J" in code "PJ" means Roth *IRA* and Diane even says: "this avoids you paying the 6% penalty for over contributing to your Roth IRA.". It appears that she confused Designated Roth and Roth IRA. The 6% penalty does not apply to 401(k) because the earnings are taxed it the year returned, not the year contributed - unlike IRA's where it is the year contributed.
A designated Roth must include a code "B" in box 7 along with any other code that applies.
As I said, it the contribution and earnings were returned in 2020 then the 2020 1099-R with a code PB will do nothing in a 2019 tax return. Only if both the contribution and earnings were returned *in* 2019 would the earnings be taxable in 2019 and would be reported in 2019. Nothing about a 2020 1099-R with a code PB will go on your 2019 tax return even if you enter it. The IRS is informed by the 1099-R copy that the 401(k) trustee sends to the IRS