1) I have a main job where I regularly max out my 403b contribution each year, including for 2025.
2) In 2025 I started a 2nd occasional side job. That employer auto-enrolled me into its 403b and deposited an elective deferral in its 403b plan on my first paycheck.
3) I immediately contacted the custodian for the 2nd job's 403b plan and asked for a corrective distribution of the entire account and to stop further contributions. I was advised that I should submit paperwork for a 90 day refund of the entire account, which was paid.
4a) My main job's 2025 W-2 shows 31,000 in box 12 with code E.
4b) The side job 2025 W-2 shows the $147 elective deferral from the first paycheck in box 12 with code E.
4c) The 1099-R shows a taxable distribution of $146 with code 2 in box 7 (i.e not a corrective distribution).
5) I called the custodian for the 2nd job's 403b plan and was told they did everything right and won't issue a corrected 1099-R showing the refund as a corrective distribution.
If I'm understanding everything correctly, the way the informational forms exist now the IRS is going to expect to see the $147 on line 1h AND the $146 included on line 5b. The IRS is also going to see a problem if I try claiming the $1 loss on schedule 1 line 8z.
How do I avoid being double taxed on the $146 dollar distribution?
It seems to me that a fair representation of my taxable income would be either :
a) including the $147 on line 1h with $1 loss on schedule 1 line 8z and omitting the $146
OR
b) just including the $146 on line 5b and leaving line 1h and schedule 1 line 8z blank.
However I suspect that either of those would get kicked out as an error.
