Withdraw Excess Roth 401k contribution

[glacialjaosn]

I just found out that I over contributed to my ROTH 401k plan in 2022 and have withdrawn enough to go below the 20.5k limit.

The question for help is - should I leave it alone and not report for the year of 2022 given the money is post tax or should i enter a dummy 1099-R and revise in 2023 when i receive the form?

[DanaB27]

Yes, you don't have to add the excess contribution to your Roth 401(k) to your 2022 wages when you receive the excess amount by April 15th because they were after-tax funds. 

You can ignore the 2023 Form 1099-R with codes B and P for the return of the excess deferral to the Roth 401(k). But the 2023 Form 1099-R with code 8 for the earnings will have to be reported on your 2023 tax return.

Please be aware, if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan.  This happens once when you contribute it and again when you receive it as a distribution. You can't include the excess amount in the cost of the contract even though you included it in your income.

Please see Pub 525 for additional information.

[glacialjaosn]

Thank you. I've had the excess fund withdrawn. Since i don't have to report it in an additional 1099-R format.

1. Do I have to amend my W-2 in this case to reflect the new actual contribution? or i'll leave it as is and report in 2023 if any 1099-R with code 8 showing up next year. 

2. If yes to question 1 and if my employer cannot amend the W-2, anything else i should do?

[DanaB27]

No, you don't need to change your W-2. You don't get a penalty calculated like with excess contribution to IRAs therefore you can ignore the warning of the excess deferral since you took corrective actions.

Yes, all you need to do next year is report the earnings (if you had any) shown on the 2023 Form 1099-R with code 8.