401K Over Contribution

[johnc1949]

Hello,

I over contributed to my 401K.  I have not filed my State or Federal returns yet and have sent in the request to the broker to have the overpayment amount withdrawn and returned to me.  It looks like I have a refund coming from both Federal and State.  Should I file for a extension while the over contribution is being worked or file now and submit a amended return once it is settled?   

[DanaB27]

You can go ahead and file now. You will have to include the excess in your wages. Please follow the steps below:

1. Click "Federal" from the left side of your screen
2. Scroll  down to "Less Common Income" and click "Show More"
3. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
4. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
5. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
6. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
7. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
8. On the "Any Other Earned Income" screen enter "2021 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

Please note for the Tax Year 2022 tax filing due April 15, 2023: 

2022 Forms 1099-R will be issued reporting the excess.

• Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2021.  
• However, the earnings on Form 1099-R with Code 8 in box 7 should be reported in 2022.

Please be aware, if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan.  This happens once when you contribute it (with the steps above) and again when you receive it as a distribution (report the 1099-R). You can't include the excess amount in the cost of the contract even though you included it in your income.