I have read other TurboTax FAQs and I am seeing conflicting information on how I should respond to my exact situation. My employer over contributed to my 2019 Roth 401K by $2,000.97. They caught the error and sent me a Participant 402(g) Tax Coding Summary. It shows the $2,000.97 excess contribution and the $484.32 of earnings. I was then sent a check for $2,485.29 minus federal taxes of $48.83, state taxes of $24.70, and a $20 distribution fee.
My W-2 shows box 12a as 'D' with $2000.97, and box 12b as "AA" with $19,000.
The 402(g) form states that "the excess deferral ($2,000.97) must be reported as income on your 2019 income tax return. This distribution will be reflected on IRS Form 1099-R which will be sent to you in January 2021. The tax code reported is a distribution code "P", a prior year (2019) taxable event.
The earnings attributable to the excess deferral ($484.32) are to be reported as income on your 2020 income tax return, which is reportable in the tax year in which the distribution occurred. This distribution will be reflected on IRS Form 1099-R which will be sent to you in January 2021. The tax code reported is a distribution code "8", a current year (2020) taxable event."
After reading TurboTax FAQs, Google searches and IRS Publication 525 (2019) page 10 "Excess distributed to you", I am very confused as to what to do this year and next. Do I create a "fake" 1099-R this year? If so, what do I put in the various boxes, especially the top and bottom item 7 boxes (which are the source of the most conflicting recommendations)? I looked in creating a "fake" 1099-R, but code 'P' references 2018 which doesn't match what form 402(g) states above.
Let me know if I can provide more information to inform a confident response. Thank you in advance.
