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Level 1
posted Feb 20, 2025 5:58:27 PM

Over contributed to 401k by $4

Question for everyone since I'm getting conflicting information from Turbotax documentation and what I am reading online.

 

- My company's payroll accidentally over contributed to my 401k by $4.

- The company handling my 401k kicked back the money in early January.

 

Turbotax says "Report the excess deferral on your 2024 return in the Income section for Retirement Plans and Social Security whether or not you received a Form 1099-R before you file your return"

 

Online, people say I should wait until my 2025 return to report it.

 

To make things more complicated, the company handling my 401k says since it is only $4 and is considered "De_Minimis", they will not even generate a 1099-R.

 

Any ideas what I'm expected to do in this situation?

 

Thank you in advance for any advice!

0 3 3707
3 Replies
Expert Alumni
Feb 21, 2025 7:48:23 AM

You must include the excess deferral in your wages in the year the excess deferral happened. 

 

Please follow the steps below:

  1. Login to your TurboTax Account 
  2. Click "Wages & Income" (under Federal) on the left side of your screen
  3. Scroll  down to "Less Common Income" and click "Show More"
  4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
  5. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
  6. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
  7. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
  8. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
  9. On the "Any Other Earned Income" screen enter "2024 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

I assume you didn't have any earnings on this small amount and therefore this is all you need to do.

Level 1
Feb 21, 2025 2:10:26 PM

I realized when re-reading my post, I might not have been clear on my end.

 

I over contributed the 401k for 2024. The 401k plan sent me a check for $4 this January (2025).

 

And then, I'm assuming if I do this, I won't have to report it again for 2025 tax season, correct?

 

Sorry! Just want to make sure I'm doing the right thing.

 

Thank you!

Expert Alumni
Feb 22, 2025 3:59:27 AM

Yes, all you need to do is to you report the excess with the steps mentioned above. You don't have to report anything on your 2025 return since you didn't have any earnings.

 

"You must include the excess deferral in your income for the year of the deferral." (IRS)

 

"Any income on the excess deferral taken out is taxable in the tax year in which you take it out." (IRS)