What should I do with the elective deferral and the loss on the over-contribution?

[yongzhou]

I over-contributed to my 401k in 2018. by $2852 and Fidelity got my excess contribution back, but only for $2,644.

[Rachel_W]

You need to include the over-contribution to your 401(k) as wages on your 2018 Tax Return. (See instructions below)

Next year, you can include the $208 loss as a negative amount on Schedule 1, line 21 of your 2019 Form 1040. You can identify the loss as “Loss on Excess Deferral Distribution.” 

To add your $2,852 401(K) overcontribution to your 2018 Wages, please follow these steps:

• Login to your return
• Click "Take Me To My Return"
• Click "Federal" on the left side of your screen
• Scroll down to "Less Common Income" (You may need to click "Show All" to get this option to pop up)
• Select "Miscellaneous Income, 1099-A, 1099-C" and click "Start or Update"
• Select "Other income not already reported on a Form W-2 or Form 1099" and click on "Start"
• Answer "Yes" to the Question "Did you receive any other wages?" 
• Click "Continue" through the questions until you get to the section "Any Other Earned Income"
• Answer "Yes" to "Did you earn any other wages?"
• Indicate "Other" as Source of Other Earned Income and click "Continue"
• For the description enter "2018 Excess 401K Deferrals", enter the amount, and click on "Done"

[yongzhou]

Thank you for the clear answer!!!

[Rachel_W]

You're welcome!

[mick]

Good luck eFiling that return 🙂

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[ningz]

Hi, I followed above steps, but TurboTax doesn't allow me to efile: it is stuck at the "check this entry" page, with description "Forms W2 & W2-G summary: elective deferrals - TP $23669 is more than the allowed $18500 for a qualified plan. Please check your entries on your W2 for qualified plans". I tried modifying the 12b elective deferrals to qualified plans entry to 18500 but it doesn't stick. What should I do? Should I modify my W2 entry instead?

[mallik]

When I enter negative amount as described above, Turbotax is not allowing me to eFile my Federal tax returns. It says I need to fix the return and 'Wages, Salaries & Tips worksheet: TP other earned inc shouldn't be less than zero." Please help!!