I changed jobs last year. I over contributed to my Roth employer plan since I contribute to both employer plans. I have removed the excess amount. How to fix in TurboTax

[nqju165451]

I removed the excess amount of contribution including the estimated gains.  This is for 2023. How do I fix this in TurboTax

[dmertz]

Assuming that the corrective distribution was made in 2024, there is nothing to report about it on your 2023 tax return.  Contributions to the designated Roth account were not excluded from the amount in box 1 of your W-2 , so there is no income to be added back as there would be if the distribution was instead to correct an elective deferral to the traditional account .  The taxable gains distributed in 2024 will be taxable on your 2024 tax return by entering the 2024 Form 1099-R that you will receive near the end of January 2025.

[nqju165451 · Accepted solution]

Thank you so much.  The overage was $515. Vanguard was contacted and they took out $562.  I assume $53 was the gain?  So I will get taxed on that amount in January of 2025 with the 1099R? Forgive me if I'm being redundant since I'm pretty naive on these things but I'm learning. 

[dmertz · Accepted solution]

Yes, you'll be taxed on the $53 on your 2024 tax return.

[agm1420]

What if it is a pre tax contribution (not a Roth). How do you handle that?

[dmertz]

An excess pre-tax employee elective deferral must be included in income on the tax return for the year for which the deferral was made.  Any investment gains distributed with the returned excess contribution are taxable on the tax return for the year that the distribution was made.

[agm1420]

Thank you.

So, how do we show it? A substitute 1099-R or just add it to the W2? What should I do, when I receive 1099-R next year? Do I need to pay taxes on this year and next year ??

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[DanaB27]

The excess deferral will be included in your 2023 taxable income and the gains will be included in your 2024 taxable income.

Please follow the steps below to report the excess pre-tax deferral:

1. Login to your TurboTax Account 
2. Click "Wages & Income" (under Federal) on 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 "2023 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

If you receive the distribution of the excess deferral and earnings by April 15th then please note for the Tax Year 2024 tax filing due April 15, 2025: 

2024 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 2023. 
• However, the earnings on Form 1099-R with Code 8 in box 7 should be reported in 2024.