topic Reporting excess Roth 401k contribution through Mega backdoor in Retirement tax questions

Reporting excess Roth 401k contribution through Mega backdoor

vrpvrp — Fri, 30 Apr 2021 18:22:59 GMT

This is regarding Mega backdoor Roth 401k. By mistake I contributed excess of $2000 (After Tax) to Roth 401k in year 2020. Fidelity returned the excess money along with "earnings" on that excess contribution on March 1st of 2021. ($2000 + $500)

(1) Do I report the excess earning ($500) for the tax year 2020 ?

(2) I'm hoping Fidelity will send me 1099-R noting the withdrawal of excess contribution + earnings for year in tax year 2021, so I can just file for the tax year 2021 and not do anything for tax year 2020

(3) Since $2000 is after tax, I'm assuming I don't need to do any further reporting for this

Thanks

--vrp

Re: Reporting excess Roth 401k contribution through Mega backdoor

macuser_22 — Fri, 30 Apr 2021 18:58:19 GMT

For a 401(k) Roth (Designated Roth) contributions it is not necessary to report anything on your 2020 tax return. The earnings will be reportable on your 2021 tax return.

However, your question is confusing since you said "mega-backdoor Roth". Was the excess actually to a Traditional 401(k) prior to the conversion? That would be a different answer and require entering the returned 401(k) contribution as taxable income on your 2020 tax return, but not the earnings that are taxable in 2021.

Re: Reporting excess Roth 401k contribution through Mega backdoor

vrpvrp — Fri, 30 Apr 2021 19:09:49 GMT

Thanks for your quick answer. very helpful

The excess was contributed to "after tax IRA" and then converted same day to ROTH 401K.

Pls clarify if the excess base contribution($2000) needs to be considered taxable for year 2021 ? I would assume not because, its after tax money.