I made excess 2018 Roth 401K contribution. I requested a return of excess from my employer and received a check with a 1099R. Do I need a corrected W2 to file in 2019?

[sr9984]

When I go to the link above I get a 'Turbo Tax support has moved' error. Do you know where the article is in the new Turbo Tax support?

Also, I've noticed on Turbo Tax 2019 I'm not getting any unresolved over-contribution error despite having over contributed to a Roth 401(k). Has this error been resolved? Is Turbo Tax silently adding a fee or penalty somewhere I need to take care of?

I have received my excess 401(k) contribution back from Fidelity, but not sure what I do next. Since it was a Roth, I don't need to report excess income as I've already paid tax on the contribution. How do I indicate to the IRS that I overcontributed to a Roth, but I've corrected the issue?

[sr9984]

I found another article that claims we should create a 1099-R in the current tax year: https://ttlc.intuit.com/community/retirement/discussion/reporting-excess-roth-401k-contribution/01/1...

[macuser_22]

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@sr9984 wrote:

When I go to the link above I get a 'Turbo Tax support has moved' error. Do you know where the article is in the new Turbo Tax support?

Also, I've noticed on Turbo Tax 2019 I'm not getting any unresolved over-contribution error despite having over contributed to a Roth 401(k). Has this error been resolved? Is Turbo Tax silently adding a fee or penalty somewhere I need to take care of?

I have received my excess 401(k) contribution back from Fidelity, but not sure what I do next. Since it was a Roth, I don't need to report excess income as I've already paid tax on the contribution. How do I indicate to the IRS that I overcontributed to a Roth, but I've corrected the issue?

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1) The link for the 2018 error does not exist and that was only a problem in the 2018 software and has been fixed.

2) Nothing about 401(k) Roth contributions go on your tax return other than the amount shown on yiur W-2 box 12 by your employer.   You must resolve any over contributions with your employee.    You only report a return of that excess in TurboTax if you have removed it.  Usually you will receive a 1099-R in Jan. of the year following the removal.

3)  Depending on if the excess contribution and earnings were returned *in* 2019 or *in* 2020 determines what to do.    Since it is a after-tax Roth, there is not need to enter the contribution amount itself as income because you already paid the tax.    If returned *in* 2019 they you should have received a 2019 1099-R already.   If returned *in* 2020 the  you will receive a 2020 1099-R with a code 8 in box 7 that will go on your 2020 tax return next year.  Earnings are taxable in the year returned.

[macuser_22]

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@sr9984 wrote:

I found another article that claims we should create a 1099-R in the current tax year: https://ttlc.intuit.com/community/retirement/discussion/reporting-excess-roth-401k-contribution/01/1...

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That procedure is NOT correct for a designated Roth (401(k) Roth).

The returned *contribution* does not get entered as income. 

If this was a 2019 excess returned *in* 2020 then  you should receive 2 1099-R's in 2020.  One with a code "PB" on box 1, the returned amount in box 1, zero in box 2a.    That is reported in 2019, but will do nothing since the code B will not add it to your income - it simply reports it to the IRS.

The other 1099-R should have a code "8" in box 7 and the earnings in box 1 and 2a which will be taxable in the year returned, 2020.

The is explained in IRS Pub 525 page 10

https://www.irs.gov/pub/irs-pdf/p525.pdf

quote
"If the distribution was for a 2019 excess deferral to a designated Roth account, your Form 1099-R should have codes B and 8 in box 7. Do not add this amount to your wages on your 2019 return"

[sr9984]

In reading what @DianeC958 entered, she is not saying that you enter it as income. Since it was a Roth 401(k), you were already taxed, whether you over contributed or not.

What she does seem to be saying is that you need to tell the IRS that you had an excess contribution in the current tax year (2019 here). When I followed the steps in Turbo Tax and created my own 1099-R for the 2019 tax year, I did not incur any additional taxes owed. Note that I selected code 8 in box 7 that she corrects herself further down the post.

The major question I had is: for a Roth 401(k) excess contribution in 2019, do I tell the IRS in 2019 or in 2020 (when I get the physical 1099-R from Fidelity) about my excess contribution in tax year 2019. According to @DianeC958, the answer seems to be you tell the IRS in 2019. 

[macuser_22]

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@sr9984 wrote:

In reading what @DianeC958 entered, she is not saying that you enter it as income. Since it was a Roth 401(k), you were already taxed, whether you over contributed or not.

What she does seem to be saying is that you need to tell the IRS that you had an excess contribution in the current tax year (2019 here). When I followed the steps in Turbo Tax and created my own 1099-R for the 2019 tax year, I did not incur any additional taxes owed. Note that I selected code 8 in box 7 that she corrects herself further down the post.

The major question I had is: for a Roth 401(k) excess contribution in 2019, do I tell the IRS in 2019 or in 2020 (when I get the physical 1099-R from Fidelity) about my excess contribution in tax year 2019. According to @DianeC958, the answer seems to be you tell the IRS in 2019. 

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What Diane posted was for a Roth *IRA* not a 401(k) Roth - totally different things.  The "J" in code "PJ" means Roth *IRA* and Diane even says: "this avoids you paying the 6% penalty for over contributing to your Roth IRA.".    It appears that she confused Designated Roth and Roth IRA.   The 6% penalty does not apply to 401(k) because the earnings are taxed it the year returned, not the year contributed - unlike IRA's where it is the year contributed.

A designated Roth must include a code "B" in box 7 along with any other code that applies.

As I said, it the contribution and earnings were  returned in 2020 then the 2020 1099-R with a code PB will do nothing in a 2019 tax return.    Only if both the contribution and earnings were returned *in* 2019 would the earnings be taxable in 2019 and would be reported in 2019.     Nothing about a 2020 1099-R with a code PB will go on your 2019 tax return even if you enter it.    The IRS is informed by the 1099-R copy that the 401(k) trustee sends to the IRS