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!
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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.
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).
It does say 8.
I did enter the 1099r into turbo tax but it is still saying I overpaid. That is the part that is concerning to me.
You did not overcontribute ; the 1099-R shows that.
You should ignore that warning.
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..
Thank you!
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