Has anyone dealt with the Multiple Support Agreement situation? My brother and I both support our disabled sister (no one provides more than 50% alone), but we rotate who claims her each year. We fill out Form 2120 but I'm never sure if we're doing it right.

This is such a complex area of tax law! I'm dealing with a similar situation with my adult nephew who has autism. One thing I learned the hard way is to keep detailed records of ALL your financial contributions throughout the year - not just big payments but also smaller expenses like medical copays, clothing, transportation costs, etc. The IRS wants to see that you're truly providing more than 50% of their total support, and those smaller expenses can really add up. I created a spreadsheet tracking every contribution monthly, which made it much easier when I had to prove the support test. Also, don't forget that support includes the fair rental value of housing even if no money changes hands. So if your father is providing housing worth $1,000/month, that's $12,000 in annual support you need to factor into your calculations. Make sure your contributions exceed half of that total amount plus all other living expenses.

One thing nobody has mentioned: make absolutely sure your Solo 401k plan DOCUMENT allows for the flexibility you're trying to use. Some plan documents specifically require deferrals to be deposited within a certain timeframe after being withheld. I learned this the hard way last year when I assumed I had until my tax filing deadline, but my specific plan document (from a major provider) required deferrals to be deposited within 30 days of the end of the month in which they were withheld. This was more restrictive than what the IRS/DOL would have allowed! Check your actual plan document before making any assumptions about deadlines.

CPA here specializing in small business retirement plans. This thread has covered most of the key points, but I want to emphasize something critical that could save you headaches down the road. The IRS distinction between "elective deferrals" and "employer contributions" is crucial for S-Corps. Your $22,500 employee deferral must be reflected as reduced wages on your 2024 W-2 (Box 1 should show $81,500 instead of $104,000 if you defer the full amount). This creates the paper trail showing the deferral happened in 2024. However, here's what many miss: if you haven't actually moved the money to your 401k account yet, you need to be very careful about cash flow and business expense timing. The IRS could potentially challenge whether you had "constructive receipt" of that income if the funds sat in your business account for months while you used them for other business expenses. My recommendation: even if your plan document allows flexibility, try to deposit the deferred funds by January 31st at the latest. This shows good faith compliance and avoids any potential constructive receipt issues. The employer profit sharing contribution can definitely wait until your tax filing deadline, but treat the employee deferrals with more urgency. Also double-check that your payroll system is properly coding the deferrals for your W-2 - Box 12 should show the $22,500 with code "D" for elective deferrals.

Is anyone else surprised that tax software still struggles with handling these corrections properly? Like we're in 2025 and TurboTax still doesn't have a simple "replace this W-2 with corrected information" button? Or at least a side by side comparison?

Just went through this exact situation last month! One thing I learned that might help - when you're entering the W-2C in TurboTax, pay close attention to the "difference" column on the form. That's usually what you'll need to enter as adjustments, not the "correct information" column. Also, if your employer changed your state withholding like yours did, make sure to check that TurboTax is calculating the correct state refunds/payments. I almost missed that my New Jersey return needed to be filed because the software initially only showed my original (incorrect) state. You might need to manually add the NJ state return if it doesn't automatically appear after entering the W-2C. The good news is that since you filed an extension, you have until October 15th to get this sorted out properly. Better to take your time and get it right than rush and make mistakes!

I'm dealing with this exact same situation! I'm 64 and received a Code 1 on my 1099-R from my 403(b) withdrawal. Reading through all these responses has been incredibly helpful - I was panicking thinking I'd somehow owe that 10% penalty despite being well over 59.5. It sounds like the consensus is that the IRS systems will automatically catch this based on my age, which is reassuring. I'm using FreeTaxUSA and I'll make sure to double-check that it's not applying any early withdrawal penalty when I enter the form. Thanks everyone for sharing your experiences! This is such a common issue that it really should be better communicated by the plan administrators. At least now I know I'm not alone in dealing with this coding error.

This is such a frustrating but common issue! I went through the exact same thing two years ago when I was 63. Got a Code 1 on my 401(k) distribution and immediately thought "Oh no, they're going to hit me with that 10% penalty!" Here's what I learned after going through it: the IRS computer systems are actually pretty smart about this. They cross-reference your Social Security records (which include your birthdate) with the distribution information. So even though your 1099-R shows Code 1, their system will see that you were over 59.5 and won't apply the early withdrawal penalty. That said, I'd still recommend trying to get a corrected 1099-R if possible, just to avoid any potential confusion down the road. When I called my plan administrator, they initially said they couldn't issue a correction, but when I explained that Code 1 specifically indicates an early distribution subject to penalty (which wasn't accurate in my case), they agreed to send a corrected form with Code 7. TurboTax will definitely handle this correctly - it calculates your age at the time of distribution and applies the appropriate treatment regardless of what code is on the form. You'll see on your tax summary that the early withdrawal penalty shows as $0.

Has anyone tried reporting this to FINRA? IRA custodians are typically regulated and might be more responsive if you file a complaint about the incorrect tax form. Just something to consider before tax day.

This is exactly the kind of frustrating situation that highlights how broken the system can be when custodians make errors and refuse to fix them. You're absolutely right that code 8 should only apply to the $55 excess contribution return, not the entire distribution amount. Since the custodian is refusing to cooperate, I'd recommend a multi-pronged approach: First, document everything - keep records of all your communications with them refusing to correct the form. Then report the 1099-R exactly as issued in your tax software, but make the necessary adjustments with a detailed explanation statement attached to your return. The contradiction between code 8 and the IRA/SEP/SIMPLE box being checked is a clear error on their part. Most tax software will let you override this with an explanation. Make sure to calculate the tax treatment correctly for each portion - the $55 excess contribution versus the regular distribution. If you want to put additional pressure on the custodian, consider filing a complaint with their regulator (FINRA if they're a broker-dealer, or the appropriate banking regulator if they're a bank). Sometimes external pressure makes them more willing to issue corrected forms.