Thanks for your answer.
So I simply subtract the federal limit $22500 from my total contribution and report that amount as additional income (to pay taxes on it).
The fact that American Funds withheld federal and state taxes will be dealt with along with gains in next year's (2024) 1099R?
Thanks,
PS Turbotax instruction seem to recommend creating my own 1099R - see below from help section:
1. Figure out which retirement account you want to remove the excess salary deferral from. You can use IRS Publication 560, Retirement Plans for Small Business, to help you decide.
2. Notify the plan administrator (the company or broker that handles your retirement account) that you have an excess salary deferral as soon as possible.
Depending on the rules of your plan, and whether the plan administrator is notified sufficiently ahead of the tax return due date, you may be able to withdraw the funds to avoid paying additional taxes on the excess deferral. If you are able to withdraw the funds, here is how to report that:
1. Report the excess deferral on your 2023 return in the Income section for Retirement Plans and Social Security whether or not you received a Form 1099-R before you file your return. Enter as much information as you can. Report the excess deferral amount in boxes 1 and 2a, and use code P in box 7. Indicate that this is a 2024 Form 1099-R.
2. In 2024, you will probably receive two Forms 1099-R. One reports the excess deferral amount. The other reports the earnings on the excess deferral. Enter both of these forms in your 2024 return, and we'll only add the earnings to your 2024 income.
See Examples:
Example 1:
Jessica is 45 years old and changed jobs in 2023 She contributed $15,000 to her 401(k) plan at her first job. She contributed $16,000 to her 401(k) plan at her second job. Because the maximum she can contribute in 2023 is $22,500, Jessica put too much money into her 401(k) accounts. She figured this by taking the difference between her total contributions ($31,000) and the maximum she can contribute ($22,500). This overpayment (called an excess salary deferral) must be withdrawn as soon as Jessica discovers it, and no later than the filing deadline (normally April 15, 2024) to avoid additional taxes.
Jessica notifies the plan administrator of her second job, and they issue her a refund of the overpayment plus earnings. She reports this on her 2023 return as if she received a Form 1099-R with the overpayment amount in boxes 1 and 2a and code P in box 7.
On her 2024 return, Jessica enters the forms she received from the plan administrator. Only the earnings on the overpayment will be added to Jessica's 2024 income.
Example 2:
Assume same information as Example 1. But Jessica doesn't discover the overpayment until November 20, 2024, and she had already filed her 2023 return. She notifies the plan administrator immediately, and she withdraws the excess on December 5.
Jessica must pay additional taxes on the overpayment because she didn't withdraw the funds by the 2023 filing deadline. She amends her 2023 return to report the overpayment as if she received Form 1099-R (same as Example 1) and pays the additional taxes.
On her 2024 return, Jessica enters the forms she received from the plan administrator. Only the earnings on the overpayment will be added to Jessica's 2024 income.
Example 3:
Robert is 52 years old and changed jobs in 2023 He contributed $20,000 to his 401(k) plan at his first job. He contributed $16,000 to his 401(k) plan at his second job. Because the maximum he can contribute in 2023 is $22,500, Robert put too much money into his 401(k) accounts. He figured this by taking the difference between his total contributions ($36,000) and the maximum he can contribute ($22,500). This difference must be withdrawn as soon as Robert discovers it, but no later than the 2023 filing deadline (normally April 15, 2024) to avoid additional taxes.
Robert notifies the plan administrator of his second job, and they tell him he had a loss on his account, and $500 of the loss applies to his overpayment. They issue him a refund of the overpayment minus the $500 loss. He reports the net amount he received on his 2023 return as if he received Form 1099-R. He puts the net amount in boxes 1 and 2a and code P in box 7. He also must enter the $500 loss as an excess salary deferral in the section for Less Common Income, Miscellaneous Income. He uses the topic for Other income not already reported on a Form W-2 or Form 1099.
On his 2024 return, Robert enters the form he received from the plan administrator. Robert then reports the $500 loss in the Less Common Income, Miscellaneous Income topic for Other reportable income. He describes the income as "Loss on Excess Deferral Distribution" and reports the loss amount as a negative number. This will be subtracted from Robert's income on his 2024 return.
