If you overcontributed to your 401(k) in 2018 and the excess was distributed in 2019, you need to include the excess contribution to your 401(K) on line 1 of your 2018 Form 1040 by following these steps: (Report $2,070)
- Open your return
- Click on the "Federal Taxes" Tab
- Click on the "Wages & Income" Tab
- Click on "I'll choose what I work on"
- Scroll down to "Less Common Income" and click "Show More"
- Select "Miscellaneous Income" and click "Start or Update"
- Select "Other income not already reported on a Form W-2 or Form 1099" and click on "Start"
- Answer the Question "Did you receive any other wages? Yes"
- Click "Continue" through the questions until you get to "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" and click on "Done"
You will receive a Form 1099-R in 2019 with a code P in box 7 which you can ignore if the excess deferral is reported as suggested above.
Regarding the $1,962 loss on your corrective distribution, you can include it as a negative amount on Form 1040, Schedule 1, line 21 (Other Income) and identify it as “Loss on Excess Deferral Distribution” on your 2019 Tax Return.
