Hi all,
I’m so glad I found this forum!! I am a stay at home mom who finally decided to start working toward the end of the year. I decided to open a self employed 401k and sep and traditional ira but honestly didn’t really know how any of them work!!! I thought you could put money in them and then move it around for 2020 or 2021 till the tax deadline. Turns out you can’t!

1. First I put $10,000 as my solo 401k election for 2020 in the solo 401k form but fidelity never opened it in time ie before Dec 31st 2020 and I didn’t end up funding it. In fact, until today I didn’t even know I had one cause fidelity named it koeg profit-sharing individual instead of a 401k when they opened my account. Totally weird, confusing and misleading. So can I just ignore and forget about the 10k number on that form? The account has $0 in it. Does that 10k election gets reported anywhere?

2. I made $7000 in 2020 but 2k payment was issued in 2021. I had expected a total of 8k but didn’t. I will count the 2k in 2021 which means my total income for 2020 is 5k

3. I put 3k in SEP IRA and 3k and traditional IRA. Clearly SEP is over-contributed as I didnt end up making that much. Overall my expenses were 2k so I figured I’d have 4-6k to put in retirement if all payments came through and could roll it to 2021 if needed, or withdraw

4. I called fidelity and they are asking me to fill in some excess form and that I will have to pay a penalty and tax and report to the irs. And that I should talk to a talk advisor as I have been a non-compliant employer or something by putting more than 25% into my 2020 SEP. I’m sure the irs will understand that I had no idea what I was doing…right?

I asked them if they could move it into my now open (nonetheless misnamed) solo 401k for 2021 and they said no, we have rules. Apparently fidelity doesn’t let you have a SEP and 401k.

What is the best course of action for me? What do I do about the excess contribution to the SEP? 2020 income is 5k. 2021 expected income is 50k. How do I withdraw or rollover the excess SEP without a penalty or additional tax reporting?

I am feeling very overwhelmed and totally regretting trying to plan for retirement. Thanks for the help