401K overcontribution in 2021 question
In 2021, I overcontributed to my 401K due to a job change. I contacted the administer and the excess amount (minus the loss) was withdrawn and I received a check a few days ago. According to TurboTax I should enter this as if I received a 1099-R and in box 7 choose “P”. However, P is “Return on contribution taxable in 2020” and doesn’t impact my refund. This doesn’t make sense to me as none of this occurred in 2020. It seems like the appropriate box 7 is selection “8” – “Return of contribution taxable in 2021.” When I choose this my refund decreases, which makes sense as this is income I should have been taxed on. My question is the Turbo Tax advice incorrect (or I am applying it incorrectly) and I should choose “8” instead of “P” for box 7? Thanks!
