1099R issued for over contribution to 401K

[ncebalo]

I switched jobs near the end of the year and the new job told me to let them know if I had met my limit and they would not start contributions until the following year.  

Well it did not happen and after several paychecks they finally corrected it.  Fidelity issued a refund and issued a 1099R.  I uploaded the information/form into turbo tax but it is still giving me a message that I over paid my 401K. How do I fix this?  Am I going to get a penalized for dipping into my 401k early?  

I am guessing this is going to have to be considered as "Income" since my employer considered this as pretax income?  

Do I need to do anything else besides upload the 1099r?  I am  just concerned I am getting the message that I "over contributed"

Help Please. Thank you in advance!

[MinhT1]

In fact, you have technically over-contributed to your 401(k) and the excess (plus-earnings) has been returned to you within the year 2021.

In this case, your form1099-R should have code 8 in box 7 (meaning Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2021}.

You must enter the form 1099-R in your tax return.

You will pay income tax on that amount because it had been previously exempt from taxation. But you will not pay the 10% early withdrawal penalty.

[fanfare]

What is your distribution code?

the extra contribution subtracted from your W-2 wages should cancel out the "refund" showing on the 1099-R.

you want to avoid any early withdrawal issues (10% penalty).

[ncebalo]

It does say 8.

[ncebalo]

I did enter the 1099r into turbo tax but it is still saying I overpaid.  That is the part that is concerning to me.

[fanfare]

You did not overcontribute ; the 1099-R shows that.

You should ignore that warning.

[macuser_22]

Just because you had the excess returned and got a 2099-R does not mean the over payment didn't happen.   The refund does not change the W-2's and over payment   If there was no over payment then you would not have a 1099-R.. 

[ncebalo]

Thank you!