topic How to file with Excess 401K Contributions in Retirement tax questions

How to file with Excess 401K Contributions

mckohler96 — Mon, 03 Mar 2025 16:44:26 GMT

I made excess contributions to my 2024 401K in the amount of $1144. I have requested a return of excess contributions and received a check for 1343 (1144 excess + 199 in gains) I was told I would not receive a 1099-R for the 2024 tax year to reflect this deferral but would receive it in 2025. Fidelity Net Benefits is the administrator. Under payment activity I see the following

Payment Date: FEB 2025 | Taxable amount: $1343 | Non-Taxable Amount: $0 | distribution code: E

My main questions are:

How do I report the excess contribution as taxable income for 2024.
Do I need to report 1343 or 1144. I read elsewhere that I only report the excess for 2024 and report the gains as income in 2025. But It looks like Fidelity is going to report it all in one sum? I should note that I do not have an official 1099-R from them so I don’t know what it will end up having

Re: How to file with Excess 401K Contributions

MinhT1 — Mon, 03 Mar 2025 16:53:11 GMT

Report excess salary deferrals (excess 401k contributions) returned to you after the end of the tax year but by April 15th of the following tax year on your 1040 as Wages. Do not create your own 1099-R for this situation.

Your excess deferral is $1,144. not $1,343. $199 is the amount of earnings.

Page 11 of IRS Pub 525 under Excess deferrals (the IRS term for 401K contribution is deferral) tells us:

If your deferrals exceed the limit, you must notify your plan by the date required by the plan. If the plan permits, the excess amount will be distributed to you. If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. The plan must then pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. You must include the excess deferral in your income for the year of the deferral. File Form 1040 or 1040-SR to add the excess deferral amount to earned income on line 1h.

What you earned will be covered by a 1099-R for the following tax year and will be entered then as a normal 1099-R.

Below is how to do this in TurboTax Online:

Click on Federal in the left-hand column, then on Wages & Income
Navigate to the list of income categories
Locate the section Less Common Income
Select Miscellaneous Income and click Start
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 through the questions till 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 "2024 Excess 401K Deferrals" and click on Done

Re: How to file with Excess 401K Contributions

mckohler96 — Mon, 03 Mar 2025 17:37:45 GMT

In the uncommon income part you are saying I report just the excess not the excess + gains correct?

If I report the excess as income but it wasn't part of my W2, how does the IRS know in 2026 when I file for 2025 taxes that I did pay income tax on the amount reported in the 1099-R I expect to receive from the deferral?

Re: How to file with Excess 401K Contributions

DanaB27 — Tue, 04 Mar 2025 14:48:20 GMT

Yes, you will only enter the excess deferral amount of $1,144 on your 2024 return. The earnings will be taxable in the year of the distribution and therefore you will report them on your 2025 return.

Please note for the Tax Year 2025 tax filing due April 15, 2026:

2025 Form 1099-R with Code P in box 7 can be ignored if you reported the excess as described by MinhT1 above in 2024.
However, the earnings on 2025 Form 1099-R with Code 8 in box 7 should be reported in 2025.

The IRS will get the 2025 Form 1099-R with code P and know that this is reported on your 2024 return. The IRS can see that you reported the excess deferral on line 1h of your 2024 Form 1040.

Re: How to file with Excess 401K Contributions

LMoney23 — Thu, 16 Apr 2026 16:25:28 GMT

If the excess was distributed before April 15, but the original amount was reported on the W2 (25,000 for someone under 50), does the employer have to also issue a W2c?

Re: How to file with Excess 401K Contributions

AmyC — Thu, 16 Apr 2026 17:10:31 GMT

No, the employer is not required.

@LMoney23