I have put more than $19,000 in my 401k plan. What should I do?

[masscircle]

I am working on my 2019 tax return with Turbo Tax. I have job changed in 2019. I did not realize that the total dollar amount I put into 401k (two accounts from two employers) is $1166 more than what is allowed. What should I do next to resolve this before submitting the tax return? 

Thanks in advance!

[Anonymous]

contact a trustee., explain what happened.  then you must withdraw the excess + the earnings thereon (calculated by the trustee)  before 4/15/2020.  you will not get hit with penalties but you will be taxed in 2020 on the income included in the distribution 

[masscircle]

Thanks for replying. When yous say trustee, are you referring to the brokerage that manages my 401k plan? 

Sounds like I do not need to include this in 2019 tax return, do I understand right?

Thanks again! 

[AnnetteB6]

The trustee is the manager of one of your 401k plans. 

The trustee may or may not distribute the excess amount to you and report it on a Form 1099-R.  If it is distributed, then you will include the Form 1099-R on the return for the year of the distribution.

You do need to report the excess amount on your 2019 return since the excess deferral took place in 2019.  Use the following steps:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “excess salary deferrals” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to excess salary deferrals”
• Click on the blue “Jump to excess salary deferrals” link
• Answer Yes to the question about receiving other wages
• Skip the next screens until you see the question ‘Did you earn any other wages?’ and answer Yes
• Select Other for the source of the other wages then click Continue
• Enter ‘excess salary deferral’ as the description and enter the amount of excess deferral and click Done

[edited 3/22/2020 | 12:37 pm PST]