2017:Overfunded 401K by $1850. Reported on 1099-R in 2018 - Code P. 2019:1099-R for $2007.94 rec'd. Should I amend last year's return? Or incl the gain on 2018 return?

[vedaram]

Hello and thanks for your help. In 2017, my husband overfunded his 401k by $1850. We reported this on form 1099-R in 2018, Code P in Box 7. Code P indicates that this is a 1099-R for Year 2018. This is the instruction given, even if no 1099-R was actually received. Fast forward to 2019 - we received the 1099-R. Unfortunately, it includes a different amount: $2007.94, which is $1814.74 + Gain of $193.20. It indicates Code 8 in Box 7 - "Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2018." Should I amend the 2017 tax return filing to show $2007.94? Or, can I just include the gain of $193.20 when I file this year for 2018? 

[MinhT · Accepted solution]

You filed correctly for 2017 and do not need to amend your 2017 return.

For this year, you only report the gain on your 2018 tax return as you have already reported the excess contribution in 2017.

[vedaram]

Thank you Minh! Is it okay that the 1099-R doesn't show the gain separately? It just has one number - $2007.94. I understood that it was a gain after reaching out to the plan administrator.

[MinhT]

Yes.

[macuser_22]

If the earnings were $193.20 that was returned in 2018 then  that is the amount that is taxable in 2018 and should be in box 1 and box 2a on the 1099-R with the code 8.

[vedaram]

Thank you so much for your help!

[vedaram]

@macuser_22 Thank you! That's what I was thinking. Just got thrown off because the 1099-R just showed $2007.94, and didn't break it down....

[macuser_22]

If the 2018 code 8 1099-R has the $2007 amount in box 2a then it is incorrect and the issuer needs to issue a corrected 1099-R with only the earnings as the taxable amount in 2018 - the excess itself, if a 2017 excess is reported as wages on the 2017 tax return with a code "P"  that you seem to have already done.