How do I report the refund that I received after over funding my 401k?

[CBost]

I over contributed to my 401k in 2017, notified the plan admin, and then in January 2018 was issued a refund for over payment + earnings.  The over contribution was $515 and earnings were $20, so the total refund was $535.

As I understand it, TurboTax calls this an Excess Salary Deferral.  Is this the correct classification?

The TurboTax help has a section called "Examples of Excess Salary Deferrals", where "Example 1" most closely aligns to my situation.  TurboTax also has a section "Steps to Take to Remove an Excess Salary Deferral", which is what I understand that I need to do (low confidence).  Step #4 in this section directs me to report the excess deferral using a Form 1099-R.  Since I did not receive a 1099-R, do I need to mock one up?

If I use Code P in box 7, this indicates "Return of contributions taxable in 2016", but obviously this is taxable in 2017.   Is this the correct code?  

Any guidance would be greatly appreciated!  Thank you,

[Rachel_W · Accepted solution]

Yes, over contributing to your 401(k) is considered an "Excess Salary Deferral".

No, you should not create a mock Form 1099-R. 

You can report the refund of the excess contributions to your 401K on Line 7 of your 2017 Tax Return without a Form 1099-R by following these steps: 

• Click on the "Federal Taxes" Tab
• Click on the "Wages & Income" Tab
• Click on "I'll choose what I work on"
• Scroll down to "Less Common Income"
• Select "Miscellaneous Income" and click Start or Update
• Select "Other income not already reported on a Form W-2 or Form 1099" and click on Start
  
• Answer the Question "Did you receive any other wages?  Yes
  
• Click through the questions until you get to "Any Other Earned Income"
• Answer Yes to "Did you earn any other wages?
• Indicate "Other" as Source of Other Earned Income and click Continue
• For the description enter "2017 Excess 401K Deferrals" and click on Done

You will receive a 2018 Form 1099-R in 2019 with a code P in box 7 which you can ignore if the excess deferral is reported as suggested above.  However, the earnings will be reported on a separate 2018 Form 1099-R with a Code "8" in Box 7 that should be reported on your 2018 tax return.

[CBost]

Thank you Rachel!