I overfunded my 401k in 2020. 2 different employers and ended up over funding. I followed the instructions on Turbo tax and reported the overage in 2020 and now I got a 1099-r for the overage. How do I indicate on my 2021 taxes that I already reported the money and paid the taxes last year or do I have to amend last years and report the 1099-r information in 2021
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If you have already reported the over-contribution in 2020, then you do not report it again in 2021 even if you receive a form 1099-R. In 2021, you should only report any earnings on the over-contribution if applicable. You do not have to amend your 2020 return.
Pages 10 and 11 of IRS Pub 525 under Excess deferrals (the IRS term for 401K contribution is deferral) tells us to include the excess deferrals as income on line 1 of Form 1040 if the money was returned after the end of the tax year but by April 15th of the following tax year. You need to report only the excess contribution, not any money generated by the investment of the excess contribution. What you earned will be covered by a 1099-R for the following tax year and will be entered then as a normal 1099-R.
Does the April 15th deadline still apply sine the tax deadline was moved in 2020 to July 15.
My issue is that my disbursement was cut on 4/20/21. I started communicating with Principal (our 401K people) and my HR department on 2/9 and was assured the disbursement would happen prior to 4/15 Alll emails, calls and requests for information are documented in Principal's system. They acknowledge that I requested action in Feb. They are blaming a third-party administrator for not providing the information in time. I was assured it would be disbursed by the deadline BUT it was not and not I am seeing tax ramifications.
Thoughts?
Your deadline for the removal was the due date of the tax return including extensions.
You should enter this in 2021 the exact same way you entered it in 2020. You adjust the entries from the 1099-R to fit reality. If you reported the income on your 2020 return already and have already paid taxes on it then you do not report it again in 2021.
Do be prepared in case you receive a letter from the IRS and have to provide an explanation for the differences - the IRS may ask questions. Just write a letter with an explanation and include the 1099R and the relevant pages from your 2020 return.
I over contributed ~$1,200 to my 401K in 2020. I worked with HR to have that returned to me from 401K administrator and received an updated W2 for 2020 with additional $1,200 in wages that I used to file 2020 taxes. I then received a distribution from 401K of ~$1,800 ($1,200 + gains). I have now received a 2021 1099R for the full $1,800. Do I only report the ~$600 in gains even though my 1099R says $1,800? Will I have to pay any type of early withdraw penalty as well?
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