We are dealing with a an excess contribution that was a mix of contribution to a traditional 401k and a Roth 401k.
I have read through past Q&As and understand the basics for handling an excess 401k contribution. We notified the plan and received disbursement prior to the deadline. I know the steps to report the excess contribution on our 2021 taxes (we filed an extension so haven't filed yet) and the allocable income on the 2022 taxes. And I understand we will receive two 1099-Rs in January 2023.
When it comes to reporting the excess contribution on our 2021 taxes, I just want to confirm that my understanding is correct: I should report the (distributed) excess contribution to the traditional 401k but not the (distributed) excess contribution to the Roth 401k, right? I know that next year I will report the allocable income for both as tax year 2022 income.
Thank you for the help!
I'll assume that these were contributions reported with codes D and AA on a W-2. The only portion that is to be added to 2021 income is the portion returned from the traditional 401(k) account, originally reported with code D on the W-2. This needs to be added to 2021 income because it was not included in the amount in box 1 of the W-2. (The amount contributed as Roth contributions was included in box 1 and therefore has already been included in income.)