Excess Deferral

[Dado]

I have to report an excess deferral on my tax return. I will not receive a 1099-R this year.  I have entered the name and address but Turbo tax is requiring the ein for my investment company.  I don't know that.  Says it is required if I want to e-file.  How can I get around this?

[DanaB27 · Accepted solution]

To report a 2020 excess 401(k) deferral which was distributed in 2021:

1. Login to your TurboTax Account 
2. Click "Federal" from the left side of your screen
3. Scroll down to "Less Common Income" and click "Show More"
4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
5. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
6. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
7. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
8. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
9. On the "Any Other Earned Income" screen enter "2020 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

Please note for the Tax Year 2021 tax filing due April 15, 2022: 

2021 Forms 1099-R will be issued reporting the excess.

• Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2020. 
• However, the earnings on Form 1099-R with Code 8 in box 7 should be reported in 2021.

[vinrim]

Your answer is different than what's in the software.

Steps to Take to Remove an Excess Salary Deferral

1. Figure out which retirement account you want to remove the excess salary deferral from. You can use IRS Publication 560, Retirement Plans for Small Business, to help you decide.

2. Notify the plan administrator (the company or broker that handles your retirement account) that you have an excess salary deferral as soon as possible.

3. Withdraw the funds no later than May 17, 2021 to avoid paying additional taxes on the excess deferral.

4. Report the excess deferral on your 2020 return in the Income section for Retirement Plans and Social Security whether or not you received a Form 1099-R before you file your return. Enter as much information as you can. Report the excess deferral amount in boxes 1 and 2a, and use code P in box 7. Indicate that this is a 2021 Form 1099-R.

5. In 2021, you will probably receive two Forms 1099-R. One reports the excess deferral amount. The other reports the earnings on the excess deferral. Enter both of these forms in your 2021 return, and we'll only add the earnings to your 2021 income.