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tax-kd
Level 1

Report 401k excess deferral before receiving 1099-R, earnings and form 4852

I contributed an extra $750 to my 401k account in the year 2019. I worked with plan admin and received excess deferral back with earning in Feb 2020 and plan admin confirmed, I will receive 1099-R in Jan-2021. Now I am preparing taxes for year 2019 and I know, I am going to receive 1099-R in Jan 2021. Since I am still working on 2019 tax return, I want to report $750 excess deferral now rather than amend 2019 tax return after receiving in 2021.  My questions are

 

  1. Here I am reporting excess deferrals before receiving 1099-R, to avoid return amendment later. In this case, should I have to call to IRS and file form 4852.  (Turbo Tax Deluxe, asking confirmation about talking to IRS). 
  2. The money I got back, also has earnings of $1.5, will I receive two 1099-R?  One for excess deferrals and another for earnings.
  3. If yes, should I have to report earnings in the tax year 2020?

 

Thanks a lot in Advance!!

4 Replies
Country Apple
Level 4

Report 401k excess deferral before receiving 1099-R, earnings and form 4852

My opinion is that you should not include the excess deferral as income for 2019, as you will need to include it in your 2020 income, once you receive the 1099-R in January 2021.  You will NOT be amending your 2019 return.  Instead, the excess deferral and its earnings will be treated as income in 2020.  

tax-kd
Level 1

Report 401k excess deferral before receiving 1099-R, earnings and form 4852




@Country Apple wrote:

My opinion is that you should not include the excess deferral as income for 2019, as you will need to include it in your 2020 income, once you receive the 1099-R in January 2021.  You will NOT be amending your 2019 return.  Instead, the excess deferral and its earnings will be treated as income in 2020.  


Thanks for your time. But I have found deferral should be reported in the year of deferral. For reference

https://www.irs.gov/pub/irs-pdf/i1099r.pdf  -  Page 7 

 

Excess deferrals under section 402(g) can occur in section 401(k) plans, section 403(b) plans, or SARSEPs. If distributed by April 15 of the year following the year of deferral, the excess is taxable to the participant in the year of deferral (other than designated Roth contributions), but the earnings are taxable in the year distributed. Except for a SARSEP, if the distribution occurs after April 15, the excess is taxable in the year of deferral and the year distributed. The earnings are taxable in the year distributed. ......

 

tax-kd
Level 1

Report 401k excess deferral before receiving 1099-R, earnings and form 4852

I called IRS and as per them, I don't need 1099R or 4852 form. Just include excess deferral and earnings to the income.  And then later I found following answer.

 

https://ttlc.intuit.com/community/taxes/discussion/re-excess-deferral-to-401k-for-2019-taxes/01/1258...

 

@MinhT1 Can you please help?  You have mentioned, "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".   The earnings $1.5, I have received, is interest income without any investment activity. What should I do?

MinhT1
Expert Alumni

Report 401k excess deferral before receiving 1099-R, earnings and form 4852

@tax-kd

 

The following year you will receive a 1099-R with code P in box 7. The amount will include the excess contributions (which you have already reported this year and the earnings on the excess contributions). You will then report only the earnings part (whether interest or other earnings).

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