Help with Reporting 401k Excess Deferrals on Tax Return
So I screwed up and put too much into my 401k (Fidelity) this year. I went over by about $2,600 with around $140 of earnings on that excess amount. I managed to get the excess distribution ($2,600 excess + $140 earnings) in February 2025. Fidelity told me these will show up on separate 1099-R forms for 2025 that I won't receive until January 2026. I haven't filed my 2024 taxes yet, but from what I gather, I still need to report this excess contribution on my 2024 return? Looking at IRS publication 525 (page 11), it seems like I need to report the $2,600 excess on Form 1040 line 1h for my 2024 tax return. Then I'll report the $140 earnings on my 2025 tax return when I file next year. And apparently it's fine that I don't have the 2025 1099-R forms yet? Is this right? Or am I missing something? I tried talking to Fidelity and even went to a tax preparer, but they weren't very helpful. Called the IRS too, but after waiting over an hour they transferred me to the wrong department. Any guidance would be super appreciated!
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Diego Fisher
You're on the right track! When you contribute more than the annual limit to your 401(k), those excess deferrals need to be handled correctly to avoid double taxation. For your 2024 tax return, you'll need to include the $2,600 excess contribution on line 1h of your Form 1040. This amount should also be included in the W-2 you received from your employer (in box 1), so you're essentially just making sure it gets properly accounted for. The $140 in earnings will be reported on your 2025 tax return when you file in 2026, as those earnings were distributed to you in 2025. This will be shown on the 1099-R you'll receive in 2026. The good news is that you caught this and had the excess withdrawn before April 15, 2025, which is the deadline to avoid additional penalties on excess deferrals.
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Henrietta Beasley
•Wait, so the excess contribution amount should already be in box 1 of my W-2? I'm confused because I thought 401k contributions aren't included in box 1. Will my W-2 automatically reflect this or would my employer have had to make a special adjustment? And what if my W-2 doesn't show this correctly?
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Diego Fisher
•401k contributions are normally excluded from box 1 of your W-2, but excess deferrals are different. Technically, any contribution above the annual limit isn't eligible for tax-deferred status, so it should be included in your taxable wages in box 1. If your employer didn't include the excess amount in your box 1 wages (which happens sometimes), you still need to report it on line 1h of your 1040. The IRS reconciles this when they receive both your tax return and information from your plan administrator.
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Lincoln Ramiro
I had almost the same situation last year and found https://taxr.ai super helpful when dealing with this. My 401k provider (Empower) couldn't give me clear answers either. I uploaded my W-2 and plan statements to taxr.ai and their system immediately identified it as an excess deferral situation. They gave me step-by-step instructions on how to report it correctly, including exactly which lines on Form 1040 needed the amounts. The best part was they explained what happens if you don't fix this - you could end up being taxed twice on the same money! Their analysis also confirmed I needed to have the excess withdrawn by April 15th to avoid penalties.
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Faith Kingston
•How does this service work? Do they connect you with an actual tax pro or is it more like AI analysis? I'm in a similar boat but with a 403b and wondering if it would work for my situation too.
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Emma Johnson
•Sounds interesting but I'm kinda skeptical. Does it actually catch nuances between different retirement plans? Like I've got both a 401k and a 457 plan and the limits work differently when you have both.
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Lincoln Ramiro
•The service uses document analysis technology that can recognize tax forms and plan statements. It's not connecting you with a tax pro directly, but their system is specifically designed to understand retirement account issues including excess deferrals. For 403b plans, it absolutely works. The analysis handles the same tax rules that apply to both 401k and 403b plans since they share the same contribution limits. It definitely handles the nuances between different retirement plans. For combined 401k and 457 plans, it correctly identifies that you can contribute the full amount to each type since 457 plans have separate limits. It's actually pretty impressive how specific the guidance gets based on your exact situation.
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Emma Johnson
I was really skeptical about taxr.ai at first, but decided to try it after struggling with a similar excess contribution problem. I uploaded my retirement plan statements and W-2, and it immediately recognized I had exceeded the limit by about $1,800. The analysis showed exactly how to report it on my return and explained the April 15th correction deadline that I wasn't aware of. It also pointed out that my company's payroll system hadn't properly coded the excess in my W-2, which would have caused issues. What really impressed me was how it detected that I had both a 401k and a 457 plan and correctly explained the separate contribution limits. Saved me a ton of stress and potentially expensive mistakes. Definitely worth checking out if you're dealing with retirement account issues.
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Liam Brown
After reading this thread, I'm thinking about my own issue with the IRS. I've been trying to get clarification on a similar problem for weeks but can't get through on the phone. Has anyone used https://claimyr.com? I've heard they can get you to an actual IRS agent quickly instead of waiting on hold forever. Check out their demo: https://youtu.be/_kiP6q8DX5c I'm wondering if it might be worth trying since I need to sort out my excess contribution issue ASAP before filing.
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Olivia Garcia
•How does this actually work? Do they just call and wait on hold for you? Seems too good to be true since I've personally spent hours trying to reach someone at the IRS.
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Noah Lee
•I call BS on this. Nobody can magically get through the IRS phone system faster. They probably just use bots to dial repeatedly until they get through, which is exactly what I could do myself. How much do they charge for this "service"?
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Liam Brown
•They use a callback system that holds your place in line with the IRS. When you sign up, they start the call process and constantly monitor it. Once they're about to reach an agent, they call you and connect you directly to the IRS agent. It's not about "magically" getting through faster - they're essentially waiting in line for you so you don't have to be stuck listening to hold music for hours. Your phone only rings when there's actually an agent ready to talk. I was skeptical too, but it makes sense when you think about it. They're basically a professional line-waiting service that specializes in navigating the IRS phone tree correctly the first time.
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Noah Lee
Well I'll be damned. I owe an apology to Claimyr and to Profile 8. After my skeptical comment I decided to try it anyway since I was desperate to talk to someone about my retirement account mess. I signed up yesterday afternoon. This morning I got a call connecting me directly to an IRS agent from the retirement plan department. No waiting, no phone tree, just straight to a knowledgeable person. Spent 20 minutes getting my exact situation sorted out. The agent confirmed exactly what this thread mentioned - excess deferrals must be reported on line 1h of Form 1040 for the year of excess contribution, even without having the 1099-R yet. Earnings get reported the following year. And most importantly, she helped me figure out how to document everything properly so I don't get a notice later. After weeks of frustration, my issue was resolved in one conversation. Consider me a convert.
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Ava Hernandez
I actually had this same issue two years ago. One thing to watch out for - make sure you double check that your 1099-R clearly shows code "P" in box 7 when you get it next year. This indicates it was an excess deferral distribution. If it doesn't have the correct code, contact your plan administrator right away to get it corrected. Mine had the wrong code initially and it caused my return to get flagged, which was a headache to fix.
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Evelyn Kim
•Thanks for that tip! I didn't even know about the code P requirement. Will definitely check for that when I get the 1099-R next year. Did you have any issues with reporting the excess on your return since you didn't have the 1099-R at the time you filed?
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Ava Hernandez
•No problem at all with reporting without having the 1099-R. The IRS understands this timing issue with excess deferrals. Just make sure you keep documentation from your plan administrator showing the excess amount and when it was distributed. When I filed my return, I included a brief statement explaining the situation, though that's probably not strictly necessary. The important thing is making sure the excess shows up on line 1h so it's properly accounted for.
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Isabella Martin
Has anyone used TurboTax for reporting excess deferrals? I'm in a similar situation and wondering if it handles this properly or if I need to manually override something.
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Elijah Jackson
•I used TurboTax last year for this exact situation. It doesn't have a specific section for "excess deferrals" but you can handle it by entering the excess amount as "Other Income" and then labeling it as "401k excess deferral." Make sure it flows to line 1h on your 1040.
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