I am 70+ of age and I retired on 1/1/2022. Prudential is managing my employer Deferred comp account (457b). As per their adivise, I deposited (26000+13000 (extra catchup) = 39000) before the end of Dec 2021.
After I reached to 26000 limit, my employer deducted additional 13000 and Prudential accepted also. Now in 2021 they refunded as excess contribution of $11977 plus earnings on it. It is not my fault. Still I didnot deposited that refund check. Please guide me what I should do? How I can report it on my 2022 return to avoid any tax or penalty. They send 1099-R for 2022
Yes, you will have to amend your 2021 return. No, you cannot add it to your 2022 tax return.
You have to report it on your 2021 return no matter if you cash the check or not. These were pre-tax excess contributions and they will have to be added to your wages in 2021. "You must include the excess deferral in your income for the year of the deferral" (Pub 525).
You will have to add the 2022 Form 1099-R with code P to your 2021 tax return. Please see How do I amend my federal tax return for a prior year?
The excess deferral should have to been added to your 2021 tax return with these steps:
If you receive the distribution of the excess deferral and earnings by April 15th, 2022, then please note for the Tax Year 2022 tax filing due April 18, 2023:
2023 Forms 1099-R will be issued reporting the excess.
If you didn't add the excess deferral on your 2021 tax return with the steps above then you have to enter the Form 1099-R with code P on your 2021 tax return.
Please see Pub 525 and How do I amend my federal tax return for a prior year? for additional information.
Thank you very much. My concern is still I did not deposited that check in my account. So it is not considered as received in year 2022. Yes they send me 1099-R for 2022 and "P" in box 7. So if I deposit in my account this year,
shall I have to report now in 2022 or wait for next year return?
Shall I file Amended return for 2021 ?
Shall I add to this year return will have any problem?
Yes, you will have to amend your 2021 return. No, you cannot add it to your 2022 tax return.
You have to report it on your 2021 return no matter if you cash the check or not. These were pre-tax excess contributions and they will have to be added to your wages in 2021. "You must include the excess deferral in your income for the year of the deferral" (Pub 525).
You will have to add the 2022 Form 1099-R with code P to your 2021 tax return. Please see How do I amend my federal tax return for a prior year?