Highly compensated 401k refund
Highly compensated business owner failed means testing for 2014 plan year. Refunded in 2015 the $10,000 from 401k plan contributed in 2014 that was excess. Does he take it as income in 2015 or does he have to amend his 2014 tax returns? THANKS!
Permalink Submitted by Alan - IRA critic on Mon, 2015-09-28 23:38
This is called an excess contribution and allocated earnings and is taxable in the year received (2015). It is reported as addtional wages on line 7 of Form 1040. There is no early withdrawal penalty. The 1099R should be issued next January and this will not affect the 2014 tax return. Note that this refund cannot be rolled over to another plan.