How to properly file taxes with corrected 401k over-contribution? Help needed!

So I just realized I messed up my 401k contributions for 2023 back in March this year. I caught that I had over-contributed and immediately got the excess amount corrected with my plan administrator. Here's where I'm completely stuck - my employer and the 401k company both say they can't provide me with updated documents. My employer won't give me a corrected W-2, and the 401k company said they'll only issue a 1099-R in 2025 because the correction transaction actually happened in 2024. I'm totally confused about how to handle this on my taxes this year. Should I just file as if I never fixed the over-contribution and then file an amended return next year when I get that 1099-R? Or is there somewhere on my tax forms this year where I can report this correction? Has anyone dealt with this before? I really don't want to mess up my taxes but also don't want to pay extra taxes on money that was returned to me. Any advice would be super appreciated!

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18 comments

Liam Brown

•8M

This is actually a common issue with 401k over-contributions that get corrected in the following year. When you correct an over-contribution from a prior year, the distribution of the excess amount is reported in the year the correction occurs (2024 in your case). The 401k administrator is correct that they'll issue a 1099-R for 2024 (which you'll receive in early 2025) because that's when the money was actually distributed back to you. For your 2023 tax return that you're filing now, you should report your 401k contributions as they appear on your W-2, even though you've since corrected the over-contribution. When you file your 2024 taxes next year, you'll report the distribution shown on that 1099-R. Depending on when the correction was made, you might not owe the 10% early withdrawal penalty if the correction was made in a timely manner.

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Liam Brown

•8M

You won't be double-taxed. When you receive the 1099-R next year for the 2024 distribution, it will show a distribution code that indicates it was a return of excess contributions. This code signals to the IRS that this wasn't a regular withdrawal but a correction. When you file your 2024 taxes, you'll report this distribution, but depending on timing and circumstances, you may qualify for an exception to the early withdrawal penalty. The earnings portion of what was returned to you will be taxable in 2024, but the principal amount you over-contributed won't be taxed again since it was already included in your taxable income for 2023.

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Noah Lee

•8M

After dealing with a similar 401k mess last year, I found this awesome tool that helped me figure everything out - https://taxr.ai - it specifically identified how to handle my corrected 401k contribution that happened between tax years. I uploaded my W-2 and other documents, and it pinpointed exactly how to report everything on my tax forms. The system actually explained that my 401k administrator was correct about not needing updated documents for the previous year and walked me through exactly how the correction would be handled between tax years. It was a huge relief since my situation was almost identical to yours!

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Noah Lee

•8M

I didn't need to make any manual adjustments to my current year return. I just filed using the W-2 as provided, exactly as it was, and kept documentation of the correction for the following year. The tool specifically confirmed this approach and explained that the correction would be properly handled when the 1099-R arrived the next year. As for whether it worked with retirement account corrections - absolutely. I was surprised too, but it specifically identified my situation as a "correction of excess contributions" and provided the exact IRS guidance. It saved me a $350 consultation with my CPA and gave me the confidence to file correctly. The system even explained which specific form and line items would be affected the following year.

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Isabella Martin

•8M

I was pretty skeptical about using an online tool for my complicated 401k correction issue last year, but I gave https://taxr.ai a try after seeing it mentioned here. I uploaded my W-2 with the over-contribution and some documentation from my plan administrator about the correction. What surprised me was how it immediately identified my situation as a "correction of excess deferral between tax years" and laid out the exact IRS guidelines. It confirmed I should file my current year taxes normally using the W-2 as provided, then handle the correction in the following year's taxes when the 1099-R arrived. The peace of mind was worth it, and it saved me from making an unnecessary amendment. When I got my 1099-R the next year, everything went exactly as the system had outlined.

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Elijah Jackson

•8M

I went through this exact nightmare last year. After trying to reach the IRS for clarification for WEEKS with no success, I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 45 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed what others are saying - you file with your current W-2 as is, then handle the correction next year when you get the 1099-R. She also told me to keep documentation of the correction date and amount in case of any questions. Having an actual IRS confirmation made me feel 100% better about the whole situation.

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Elijah Jackson

•8M

It uses a callback system that essentially holds your place in line and calls you when an agent is about to be available. I was skeptical at first too, but it actually connected me - I didn't have to sit on hold for hours, which was a game-changer during tax season. I completely understand the skepticism - I felt the same way! But it's a legitimate service that works within the IRS phone system. They don't do anything shady; they just automate the hold process so you don't have to wait with your phone glued to your ear. The IRS hasn't shut it down because it's actually making their phone system more efficient by reducing abandoned calls.

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Mason Davis

•8M

I have to publicly eat my words here. After being completely skeptical about Claimyr, I decided to try it out of desperation with my 401k correction issue. Not only did I get through to the IRS in about 35 minutes, but the agent I spoke with was incredibly helpful. She confirmed exactly what to do with my 401k correction situation - file with my current W-2 now, then handle the distribution with the 1099-R next year. She even gave me specific notes to keep with my tax records about the correction in case there were any questions later. I've been stressing about this for weeks and getting nowhere trying to call myself. Definitely worth it for the peace of mind alone.

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Mia Rodriguez

•8M

Just wanted to add another perspective here. I had a similar 401k correction situation a couple years ago. My advice - make sure you keep really detailed records of: 1. The date you discovered the over-contribution 2. The date you requested the correction 3. The actual date the correction was processed 4. All communications with your 401k administrator 5. The amount of the correction and any earnings that were also distributed This documentation saved me during a random review of my return the following year. The IRS initially questioned the 1099-R, but having this paper trail made it super easy to explain.

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Mia Rodriguez

•8M

In my experience, attaching a statement to your current year return isn't necessary and might actually complicate things. The IRS systems are set up to handle these corrections through their normal process - current year W-2 as is, then 1099-R next year. What's most important is keeping your own detailed records in case questions come up later. When I went through this, the IRS was only interested in my documentation when they had a specific question the following year. Adding extra explanations to your current return could potentially flag it for unnecessary review.

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