topic What do I need when removing 401k over contribution? in Retirement tax questions

What do I need when removing 401k over contribution?

Anonymous — Mon, 03 Jun 2019 17:44:29 GMT

hi! I checked the forums and didn't find a similar question that pertains to my situation, so I figured I'd ask here:

My spouse overcontributed to her 401k in 2018 due to a job change and miscalculation. We have notified her employer and they have sent a request to Fidelity to return the excess, which will come in the form of a refund check.

In order to properly process this in TT so I don't get double taxed on the 401k excess deferral, what documents do I need? Do I need an amended 2018 W2? Do I need a new 2018 1099R to pay tax in 2018 on the excess deferral and a 2019 1099R for next years filings to pay tax on the interest/earnings?

If your spouse overcontributed to a 401(k) in 2018 and th...

Rachel_W — Mon, 03 Jun 2019 17:44:31 GMT

If your spouse overcontributed to a 401(k) in 2018 and the excess will be distributed by 4/15/2019, you need to include the excess contribution to your 401(K) on line 1 of your 2018 Form 1040. (See instructions below)

You do not need a corrected/amended W2.
You will not need or receive a 2018 Form 1099-R because the distribution will be in 2019 (See last paragraph which explains the Form 1099-R's that you will receive for 2019 and what to do with them)

Follow these steps to report the excess 401(K) contribution on your 2018 Tax Return:

- Click on the "Wages & Income" Tab
- Click on "I'll choose what I work on"
- Scroll down to "Less Common Income"
- 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 "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" 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. However, the earnings (if any) will be reported on a separate 2019 Form 1099-R with a Code "8" in Box 7 that should be reported on your 2019 tax return.

Please comment below if you need further clarification.

thank you! So my HR said it should be delivered to me in...

Anonymous — Mon, 03 Jun 2019 17:44:32 GMT

thank you! So my HR said it should be delivered to me in 2 weeks, but I still see no movement in my Fidelity 401k account. If I follow the above instructions under the assumption that the excess will be removed before April 15th, but in reality it doesn't actually happen, what should I do?

Basically, I'm trying to figure out if I can file my taxes now under the assumption that the excess will be removed before April 15th, but also want a back up plan in case Fidelity is slow to move and actually takes the excess out a little after April 15th...

hi TurboTaxRachelW - I followed your instructions and put...

Anonymous — Mon, 03 Jun 2019 17:44:33 GMT

hi TurboTaxRachelW - I followed your instructions and put in the excess deferral into the Source of other Earned Income. However, when I do the Smart Check on the Federal part, it still points out that there is an excess 401k contribution.

Is this normal and can I ignore that if I have followed your instructions?