401K overcontribution in 2021 question

[SaraEliz21]

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 I contacted the administer and the excess amount (minus the loss) was withdrawn and I received a check a few days ago.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!

[MinhT1 · Accepted solution]

Code P should be on the 1099-R that you will receive for tax year 2022 (next year) as this excess contribution was for the previous year (2021).

Please read this TurboTax Help topic on how to handle your excess contribution.