401k – Excess contribution
One of our clients received a W-2 from her employer reporting her 401k deferral contribution amount as more than the $22,500 allowed for 2012 for someone age 50 and over. The plan has returned the excess contribution to the employee.
How does everything get reported on the tax return? It’s a 2012 401k contribution, but the return of excess is processed in 2013.
Permalink Submitted by Alan - IRA critic on Mon, 2013-04-01 17:41
The 1099R forms (two of them) will not be issued until Jan, 2014. The actual excess amount must be added to client’s line 7 wages for 2012. But the earnings amount on the excess contribution was also distributed and the earnings will be taxable on the 2013 return. That is why there should be two 1099R forms, one coded to apply the excess income to 2012 and the other coded to report the earnings in 2013. Those earnings will get added to the line 7 wages in 2013. If there was a loss on the excess deferral, the loss (negative amount) can be entered on line 21 as a write in on the 2013 return.
Permalink Submitted by Dennis Prout on Mon, 2013-04-01 17:57
Thank you!!!