Sole Proprietorship here. In early March 2020 I made an employee (self) 401k contribution of $15,000 for the year 2019 (which is permitted) and a couple of weeks later discovered a computational error so the contribution was $3,000 to high. I called Fidelity and they took the $3,000 out of the solo 401K and deposited it back into the taxable account. The solo 401k is cash and no income was earned on the $3,000 while in the solo 401k. On the 2019 tax return I showed a $12,000 contribution, which was the correct net.
Now a year later and I have a 1099-R from Fidelity showing the $3,000 as as distribution out of the solo 401k and checking the box 2a and taxable and leaving 2b (taxable amount not determined) blank. Box 7 is E, which is Distributions Under Employee Plans Compliance Resolution System (EPCRS).
1. Do I need to ask Fidelity to check box 2b?
2. Am I correct that this "correction" is in fact not taxable (which my research indicates is the case)?
3. How to handle in TT. I assume I cannot just ignore it since there is a 1099-R?
4. Other?
Thank you!
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You do ignore the 1099-R (do not enter it into the TurboTax program) since it is only reporting the correction for the excessive contribution for the previous year.
Please see additional answer linked below:
You do ignore the 1099-R (do not enter it into the TurboTax program) since it is only reporting the correction for the excessive contribution for the previous year.
Please see additional answer linked below:
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