Handling excess deferral to 401K for 2019 - confused with employer and plan administrator responses

[Anonymous]

In 2019, I made an excess salary deferral to my Roth 401K plan. I spoke to the plan administrator and they sent me a check (before 2019 tax filing deadline) for the excess amount (let’s say: $100) and the earnings generated (let’s say: $15). I was under the impression they would send me a 1099-R for 2019 (corrective distribution of $100) immediately and a 1099-R for 2020 (income of $15) in early 2021. But they said that they would not issue any 1099-Rs and I should ask my employer to issue a corrected W2 for 2019.

Upon contacting my employer, they told me that they had discussed with the plan administrator. My employer will not issue any corrected W2 for 2019 since the plan administrator refunded the excess contribution directly to me (via a check). My employer also added that I would receive 1099-R form(s) in early 2021 reflecting the taxable income that I must report as a result of the distribution.

I am confused and have the following questions:

1. So what action do I take for 2019 filing? My current W2s show the excess deferral. TurboTax is saying that even if I did not receive a 1099-R for 2019, I should still mention the $100. Where, how and why?
2. What will be the amount on the 1099-R form(s) that I will receive in early 2021? Only the earnings generated ($15) or also for the excess deferral ($100). Would I then need to do anything retroactively for my 2019 tax filings?
3. Anything that I am missing and should be aware of?

Please advise.

Thanks,
JS

[DavidD66 · Accepted solution]

You will receive a 1099-R in 2021 for the earnings on the excess deferral -$15.  You will enter that on your 2020 tax return.  Because you contributed to a Roth 401(k), you don't need to recognize any income for the return of the excess contribution, as it was after-tax money.  Therefore, you don't need to add any income to your 2019 tax return.  Had you contributed to a regular 401(k) you have had to add "other income" of $100 for the excess deferral.