You must include the excess deferral in your income for the
year of the deferral unless you have an excess deferral of a designated
Roth contribution. File Form 1040 to add the excess deferral amount to
your wages on line 7. Do not use Form 1040A or Form 1040EZ to report
excess deferral amounts
If you take out the excess after the year of the deferral and you
receive the corrective distribution by April 15 of the following year,
do not include it in income again in the year you receive it. If you
receive it later, you must include it in income in both the year of the
deferral and the year you receive it. Any income on the excess deferral
taken out is
taxable in the tax year in which you take it
out. If you take out part of the excess deferral and the income on it,
allocate the distribution proportionately between the excess
deferral and the income.
You should receive a Form 1099-R for the year in which the
excess deferral is distributed to you. Use the following rules to report
a corrective distribution shown on Form 1099-R for 2017.If the
distribution was for a 2017 excess
deferral, your Form 1099-R
should have the code “8” in box 7. Add the excess deferral amount to
your wages on your 2017 tax return.
Report a loss on a corrective
distribution of an excess deferral in the year the
excess amount (reduced by the loss) is distributed
to you. Include the loss as a negative amount
on Form 1040, line 21 and identify it as
“Loss on Excess Deferral Distribution.” Even though a corrective
distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the
plan. It cannot be rolled over into another plan,
and it is not subject to the additional tax on
early distributions.
How to do this in TurboTax:
The
easiest way to get to the interview questions is to type "
excess salary
deferrals" in the search box and click on
Jump to Excess Salary DeferralsYou can also get to the same place by going to the
Miscellaneous Income, 1099-A, 1099-C line at the bottom of the Wages & Income screen .
On the
Other Wages Received screen click
Yes to the question:
Did you receive any other wages?
Click Continue.
On the Wages Earned as a Household Employee screen,
Enter nothing and Click
Continue.
On the Sick or Disability screen,
Enter nothing and Click
Continue.
On the Any Other Earned Income screen click
Yes to the question:
Did you earn any other wages?
Click Continue.
On the Enter Source of Other Earned Income screen click
Other and Click Continue.
On
this Any Other Earned Income screen, enter a Description such as "2017
Excess 401K Deferrals" Enter the amount returned to you and click
Done.
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