401k return of excess distribution

Forum|Forum|5 years ago
April 1, 2021
1 reply
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Brief summary: I am 55 years old. I switched jobs and I rolled over my old employer 401k to my IRA with a check in the amount of $86000 in June 2020.

The amount I received was in error because old employer did not factor in that I was not fully vested. The amount I should have received was $47000

The rollover was $39,000 more than I was entitled to.

I was instructed to have my IRAreturn the overage amount to them. I contacted the The IRA company in October and they told me that they could only send me the check and the amount had to include current value of the $39000. Therefore, Fidelity sent me a check for $44,000 , which was $5000 above the requested amount. I never kept this money. I wrote a check to the old company 401k for the exact same amount, 44000.

My 1099-R from old company was for $86000 nothing taxable.

My 1099-R from my IRA has distribution of $44,000. Box 2a has value of $5000. which is taxable to me. I never kept the money and it was sent back to the old 401k.

Based on TurboTax, I have to pay $1700 in taxes and 10% penalties.

Do I have to pay this tax?

How do I configure my tax return so I do not have to taxes on money that I do not have? (returned to old company 401k)

ThomasM125

Level 15

When you enter the 1099-R form in TurboTax, you can indicate that you rolled over the entire distribution and that should eliminate the tax and penalty, even though there is an amount in box 2, taxable income.

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ReneeM7122

Level 9

Yes, you are correct, you can indicate that you rolled over the entire distribution and that should eliminate the tax and penalty, even though there is an amount in box 2, taxable income. Here's a thread that explains how to do it, and a TurboTax link about RMDs.

@ThomasM125