457 excess contribution nongovernmental

[mickycheeta]

Hello

I had an excess contribution to 457 nongovernmental in 2023. I got a check for the amount of the excess before April 15 2024. I reported it in my 2023 tax Fling as 1099 R code P as suggested by some of the prior posts. In January 2024 I received a W2 form for that excess amount. I did not get a 1099 R. Do I need to include this w2 in my 2024 taxes ? How do I report this in TurboTax? Do I need to amend my 2023 return? 

Thanks 

[dmertz]

[Deleted.]

[dmertz]

Distributions from nongovernmental 457(b) plans are reported on Form W-2, not From 1099-R.  Perhaps the employer corrected your 2023 W-2 to reflect that the excess was returned or it was added to your 2024 W-2 (or both, with the excess reflected on a corrected 2023 W-2 and the attributable earnings on your 2024 W-2).

From https://www.irs.gov/retirement-plans/issue-snapshot-457b-plans-correction-of-excess-deferrals

In a 457(b) tax exempt plan, the excess deferrals are taxable in the year of deferral and must be distributed prior to April 15th of the following year. Only the earnings on the excess deferrals are subject to income tax in the year of distribution, and such earnings should be reported on Form W-2 for the year of distribution. If an eligible plan becomes an ineligible plan under IRC Section 457(f) because excess deferrals aren't timely distributed, benefits become taxable in accordance with Reg. Section 1.457-11.

See Notice 2003–20, 2003–19 I.R.B. 894, for information regarding the withholding and reporting requirements applicable to eligible plans in general.

[mickycheeta]

Thanks dmertz for the prompt reply

I still have some doubts 

How would I know if the employer corrected the 2023 W2 to reflect the excess was returned? Do I look for an special code in the 2023 W2 form?

If the 2023 W2 reflects the amount was returned, do I need to amend the 2023 return?(I had input the amount as 1099R for 2023). 

Do I add the 2024 W2 in my 2024 return? If so, do I add it as regular W2 or under "other income" in TurboTax?

Thanks 

[SabrinaD2]

Here's how you can handle each of your questions:

How to Know if the Employer Corrected the 2023 W-2:

• If your employer corrected the 2023 W-2, you should receive a Form W-2c (Corrected Wage and Tax Statement). This form will show the corrected amounts. Look for any changes in the boxes that were previously incorrect. For more details, check out the TurboTax support page.

Do You Need to Amend the 2023 Return?:

• If the corrected W-2 (W-2c) reflects the excess amount was returned, you may need to amend your 2023 tax return. You can do this by filing Form 1040-X (Amended U.S. Individual Income Tax Return). For detailed instructions on how to amend your return in TurboTax, check out this TurboTax support page.

Adding the 2024 W-2 in Your 2024 Return:

• For the 2024 W-2, you will add it to your 2024 tax return as a regular W-2. In TurboTax, you can import or manually enter the W-2 information. Here’s a guide on how to enter your W-2 in TurboTax.

[mickycheeta]

👍 

I did not get a W2c for 2023.The 457 2024 W2 form for 900 dollars (excess contribution) I received was from Transamerica the account manager, not from my employer. 

As I mentioned before, I had reported these excess contribution of 900 dollars in my 2023 return but I entered it as 1099R with a code P. If I understand correctly I will input the 2024 W2 for 900 dollars in my 2024 return.

Do I need to amend my 2023 return then? If so, do I just remove the 900 dollars and 1099R from 2023 return when I amend it?

Thanks 

[dmertz]

Your other post mentioned an excess contribution to 403(b), not to a 457(b), so it seemed to me that you were asking about two different excess contributions.  If you had an excess contributions only to a 457(b), yes, this was reported incorrectly on your 2023 tax return.