Excess Contribution: Report both Excess Deferral and 1099-R?

[mrcrull]

I mistakenly over contributed to my 401k plan for 2022.  I caught this mistake before the end of the year and had the excess deferral withdrawn in December of 2022.  In January, I received a 2022 1099-R from the plan manager (Fidelity) that is less than what I originally contributed because my contribution lost value while invested in the plan.  Do I need to enter both the 2022 1099-R (Distribution code 😎 and the excess deferral (entered as miscellaneous income) on my 2022 tax return?

Thank you for your help.

[tagteam]

Perhaps @dmertz can help here. Otherwise contact Support.

How do I contact TurboTax? (intuit.com)

[dmertz]

For some reason the post shows an emoji instead of the distribution code; I assume that the code is 8.

Is the amount shown in box 2a of the Form 1099-R $0, equal to the amount in box 1, or something else?

[mrcrull]

Thank you for your help.  You are correct the distribution code is 8.  Not sure how it turned into an emoji. 

The same amount is entered in box 1 and 2a.  Box 4 (Federal Income tax withheld) has an amount entered in it as well. 

[dmertz · Accepted solution]

See IRS Pub 525, page 11 which indicates that the total amount of the excess deferral is to be included on form 1040, line 1a (as if the money was never deferred from your wages) and the loss is to be included as a negative number on Schedule 1, line 8z:  https://www.irs.gov/pub/irs-pdf/p525.pdf

With regard to entering into TurboTax, enter the Form 1099-R as is which TurboTax will include on Form 1040, line 1a.  So that the remaining amount of the excess deferral is also included on line 1a, enter the amount of the loss into TurboTax as a positive amount of Miscellaneous income -> Other income not already reported on a W-2.  Also enter the loss as  a negative amount of Miscellaneous income -> Other reportable income and identified as "Loss on Excess Deferral Distribution" so that it is included on Schedule 1, line 8z, to be subtracted from your taxable income.

[mrcrull]

Thank you!