401K Overcontribution for 2023 and Plan Won't Pay Money in Time

[jthjcc]

I'll admit it, I started my taxes late. I always use Turbo Tax and have had not issues. I changed jobs last year and rolled over my 401K into my new 401K. When I went to do my takes, I have an excess contribution to my 401K of $459. I contacted my plan administrator and they said I was past their April 4th deadline to be able to get that excess contribution returned to me. They said they can't do anything else for me and to contact a tax professional. What are my options now that I know I won't be able to get the money out before April 15? I've read some about the IRS taking away my 401K options and want to make sure that doesn't happen. I realize I'll have to pay taxes on the excess contribution but want to make sure I limit as much as possible what that will be and avoid any additional penalties that might affect my long term option of investing in a 401K. Thanks for any advice!

[dmertz]

You'll need to report the $459 as Other miscellaneous income.  Nothing else needs to be done.  The "penalty" will be that the $459 will be taxed a second time when eventually distributed as a regular distribution.  (The excess deferral does not become after-tax basis in the 401(k)).

[DanaB27 · Accepted solution]

Please follow these steps to report the $459 on your 2023 tax return in TurboTax Desktop:

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down "Less common income" and click "Start" next to "Miscellaneous Income, 1099-A, 1099-C"
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 "2023 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".