402G Excess Contribution in 2023 - How to Handle Refund on Tax Return?

Thanks for the quick response! That makes sense, but I'm still a bit confused about the tax implications. Will I owe additional taxes on these 1099-Rs? The excess amount was already taxed as income in 2023, so it seems like I'd be double-taxed if I report it again on my 2024 return. Also, how do I indicate in TurboTax that these are for returned excess contributions?

You won't be double-taxed on the principal amount of $276 since that was already included in your taxable income for 2023. When you properly code the 1099-R in your tax software as a returned excess contribution, the system will recognize that the principal shouldn't be taxed again. However, any earnings on that excess amount will be taxable for 2024. That's probably why you received two 1099-Rs - one for the principal and one for the earnings. In TurboTax, when entering the 1099-R, you'll see a question asking about the reason for the distribution. Look for options like "correction of excess contribution" or "returned excess contribution." Select that option and follow the prompts. TurboTax should then properly handle the tax treatment.

Did this actually work? I'm dealing with a similar situation where I over-contributed to both a Roth 401k and traditional 401k because of job changes. The plan administrator sent me like 4 different 1099-Rs and I'm totally lost. Can it handle multiple forms at once?

I'm skeptical about these "upload your tax documents" services. How do you know your sensitive financial info is secure? What if they sell your data or get hacked? Seems risky just to get some tax advice.

It worked perfectly for me! Yes, you can upload multiple forms at once - I had 3 different 1099-Rs (two for the excess principal from different plans and one for combined earnings). The system analyzed them all together and explained how they related to each other. Regarding security concerns, I had the same worries initially. What convinced me was that they use bank-level encryption and don't store your documents after analysis. You can also black out your SSN before uploading if you're extra cautious. They have a detailed security explanation on their site that addressed my concerns.

How does this actually work? Does it just auto-dial the IRS repeatedly until it gets through? And do you still get to talk to a real IRS agent or is it some third-party service giving tax advice?

Right, and I'm sure they're doing this out of the kindness of their hearts. Come on, there's no way this is legit. The IRS phone system is deliberately designed to be frustrating. No way some random service has "hacked" it. Sounds like a scam to get your phone number or payment info.

It works by using an automated system that navigates the IRS phone tree and waits on hold for you. When an actual IRS agent picks up, their system calls you and connects you directly to that IRS agent. You're speaking with a real IRS employee, not a third party. No, it's definitely not free - they provide a valuable service by saving you from sitting on hold for hours. But considering I was able to get official IRS guidance on my retirement account issue without wasting half a day on hold, it was worth every penny to me. They don't ask for any tax info, just your phone number to call you back when an agent is on the line.

Do those limits apply to both Traditional and Roth 401k combined? Or can I do $23,000 in Traditional and another $23,000 in Roth? Also, does the employer match count toward the limit?

The $23,000 limit applies to your combined Traditional and Roth 401k contributions - it's a total limit for all your elective deferrals. So you can split it however you want between Traditional and Roth, but the total can't exceed $23,000 (or $30,500 if you're 50+). Good news though - employer matching contributions don't count toward this limit! They fall under a separate, much higher limit (the "415(c) limit") which is $69,000 for 2024. This higher limit includes all contributions to the plan (your elective deferrals plus employer contributions).

Code "E" actually means distribution under a QDRO (qualified domestic relations order), which is usually for divorce situations. For excess contributions, you should normally see code "P" for principal or code "8" for earnings on excess contributions. You might want to contact your plan administrator because they may have coded your 1099-R incorrectly.