401K excess contribution - disbursement after tax deadline

[aravind-jeruband]

Hello, in FY23 my wife contributed 6K with employer-A. And then she changed her job to employer-B and maxed out her 401K with employer-B, i.e. she contributed 22.5K with employer-B. I realized this when filing taxes in the second week of April and wanted to correct this before I file my taxes. So I extended my tax filing date. Now we disbursed the additional amount 6K from her 401K account.

Since we disbursed the excess amount after the tax filing date, I believe I have pay taxes on that additional contribution amount twice, both in FY23 and FY24.

Now should I report this as additional amount (under " Other Earned Income") in FY23 filing? And then I'm assuming I'll get 1099-R next year from the employer and show the disbursed amount again when filing FY24 taxes.

[Mike9241 · Accepted solution]

Click through the questions till you get to Misc income>Other Income Not on w-2>other wages received Answer Yes.  continue to Any Other Earned Income answer Yes. for source   check other. enter "2023 Excess 401K Deferral" and amount.  Done

yes doubled taxed in 2023 and 2024

by the way you are also supposed to withdraw any income earned on the excess. 

[aravind-jeruband]

Thanks for the prompt response. How do I calculate the income earned?

by the way you are also supposed to withdraw any income earned on the excess. 

[dmertz]

"by the way you are also supposed to withdraw any income earned on the excess."

That's incorrect.  Because the distribution was not made by April 15, there is no requirement that the earnings on the excess (or the excess itself) be distributed at any particular time.