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?

Forum|Forum|7 years ago
June 3, 2019
5 replies
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1. I made $3600 excess Roth 401K contribution for 2018 through my employers' plan.

2. I requested my employer make a request to withdraw excess contributions from my retirement account.

3. Fidelity sent me the check and a 1099R in March 2019.

4. My W2 includes the excess contribution.

Do I need a corrected W2 in order to file my taxes?

TurboTax Premier Online

macuser_22

Alumni - Champ

No. The 1099-R should take care of that.

What code is in box 7?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

bmirwin89Author

Level 2

Sorry, I misspoke. I got a distribution statement that says they will be sending a 1099R in 2020.
What do I need to do to file this year?

trek5200

Level 2

I have the same thing. How did you enter your w2 box 12. If you enter what is on your w2 it will be more than 18500 and you can't file.
Should I get a corrected w2 or just enter the correct value in box 12 D

macuser_22

Alumni - Champ

You do not need to wait for a 1099-R next year that will probably require you to amend your 2018 tax return to report the excess on line 1 of your tax return - it can be entered this way and then ignore the 2019 1099-R with a code P in box 7 when it comes.

There are two methods to do this:
1) Enter a 1099-R with the returned contribution amount (not including earnings) in box 1 & 2a, and a code "P" in box 7. When asked what year 1099-R say 2019.

or 2)
Excess 401(k) deferrals should be reported in:
(There are several screens to click through to get to the right place)

Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.

This will add the returned excess to your 2018 wages on line 1 exactly the same way that the 1099-R would. The only information that is sent to the IRS is the line 1 amount.

[Note: If there were any earning that were returned in 2019 then the earnings will be reported on a separate 2019 1099-R with a code 8 that goes on your 2019 tax return - do not enter the earnings here.]

Both methods will add the returned excess to your 2018 wages on line 1 exactly the same way that the 1099-R would. The only information that is sent to the IRS is the line 1 amount.

For information see IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

BobinCT

Level 8

It's a Roth. Box 1 wages were not reduced for it. Same advice?

macuser_22

Alumni - Champ

TurboTax has released a FAQ on this issue - the answer is to print and mail the return.

Excess 401(k) Contribution Preventing e-File

https://ttlc.intuit.com/replies/7327357

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

sr9984

Level 2

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/01/1158297#M88047

macuser_22

Alumni - Champ

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.

@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.

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

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**