403 overcontribution- 1099 form?

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Topic Author
mozzy
Posts: 17
Joined: Sat May 21, 2011 9:29 pm

403 overcontribution- 1099 form?

Post by mozzy »

Hello.
I changed my job last year (2020) and overcontributed to my 403b by $911
I realized this in early March 2021 and requested my current employer to correct this by removing $1000
Fidelity sent me a check for $1350
However, I do not have a 1099-R form. I called Fidelity and they said the form would be sent next year since the distribution was in March 2020.

I did a google search and looked through this forum but could not find the answer to this.
I use turbotax/taxact to file my taxes and cannot complete it.

Can someone advise me how I should proceed.
Thanks in advance.
Topic Author
mozzy
Posts: 17
Joined: Sat May 21, 2011 9:29 pm

Re: 403 overcontribution- 1099 form?

Post by mozzy »

From this link- https://www.irs.gov/retirement-plans/40 ... endar-year

Reporting requirements for excess deferrals
The plan must report corrective distributions of excess deferrals (including earnings) on Form 1099-R.

Excess deferrals and earnings distributed between January 1 and April 15 of the following year may have to be reported using two Form 1099-Rs.
One Form 1099-R (Code P) for the excess deferral, and
One Form 1099-R (Code 8) for the earnings.


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However, Fidelity wont send me the form.
MrJedi
Posts: 3540
Joined: Wed May 06, 2020 11:42 am

Re: 403 overcontribution- 1099 form?

Post by MrJedi »

I think what you're probably looking for is an amended W2 to show the correct amount of deferrals.

Your overcontribution 1099-R will come next year with a code P to show that it is for a prior tax year (2020). If you use the amended W2, that will already reflect this as income in 2020.

Your earnings portion will come on a 1099-R with code 8 to show that it is for current year (earnings distribution for 2021). These earnings are added to your current year income (2021).
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: 403 overcontribution- 1099 form?

Post by livesoft »

mozzy wrote: Fri Apr 16, 2021 5:44 am Hello.
I changed my job last year (2020) and overcontributed to my 403b by $911
I realized this in early March 2021 and requested my current employer to correct this by removing $1000
Fidelity sent me a check for $1350
However, I do not have a 1099-R form. I called Fidelity and they said the form would be sent next year since the distribution was in March 2020.

I did a google search and looked through this forum but could not find the answer to this.
I use turbotax/taxact to file my taxes and cannot complete it.

Can someone advise me how I should proceed.
Thanks in advance.
Do you have the years correct in the above? You had the current employer correct this in March 2021, then you state the distribution was in March 2020.

Then you wrote about Fidelity and didn't state which plan Fidelity was the custodian for. The old plan? Then new plan? Some other plan?

https://www.investopedia.com/ask/answers/158.asp

See also: https://www.irs.gov/retirement-plans/co ... -401k-plan

Note: a 403(b) is like a 401(k) plan.

I think MrJedi's response is consistent with the linked articles.
Wiki This signature message sponsored by sscritic: Learn to fish.
Alan S.
Posts: 12669
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: 403 overcontribution- 1099 form?

Post by Alan S. »

Employers do not amend W-2 forms to reflect any excess deferrals returned. Your tax program should automatically add up the Box 12 figures from all W-2 forms and add the excess deferral amount to your wages line on your 2020 1040. This will happen whether you have the excess returned or not. This is easy to check - just see if your wage line exceeds the total of W-2 Box 1 amounts by the excess deferral.

The earnings returned with the excess are reported on a separate 1099R form issued in 2022, and will be taxable in 2021. Because this excess was returned by 4/15 with earnings, it will not be double taxed.

Note that the 439 of earnings distributed is most likely incorrect. First, the excess did not occur until your last couple of pay periods late in 2020, and second, the computation no longer includes the gap period earnings (1/1/2021 to date of distribution). How could the excess earn 54% (439) in a month or so? Even if the plan incorrectly used the gap period for earnings calculation, 54% seems way too high.

Sec 402g:
) Distribution of excess deferrals
2(A) In general
If any amount (hereinafter in this paragraph referred to as "excess deferrals") is included in the gross income of an individual under paragraph (1) (or would be included but for the last sentence thereof) for any taxable year-

(i) not later than the 1st March 1 following the close of the taxable year, the individual may allocate the amount of such excess deferrals among the plans under which the deferrals were made and may notify each such plan of the portion allocated to it, and

(ii) not later than the 1st April 15 following the close of the taxable year, each such plan may distribute to the individual the amount allocated to it under clause (i) (and any income allocable to such amount through the end of such taxable year).
Topic Author
mozzy
Posts: 17
Joined: Sat May 21, 2011 9:29 pm

Re: 403 overcontribution- 1099 form?- SOLVED

Post by mozzy »

Sorry for replying late-
I just completed my taxes and all the above information was helpful.

To reply to all:
Livesoft- March 2020 is a typo- I meant March 2021

Mr Jedi/ Alan S- your suggestions were accurate.

I also found this information from turbotax:
Steps to Take to Remove an Excess Salary Deferral

1. Figure out which retirement account you want to remove the excess salary deferral from. You can use IRS Publication 560, Retirement Plans for Small Business, to help you decide.

2. Notify the plan administrator (the company or broker that handles your retirement account) that you have an excess salary deferral as soon as possible.

3. Withdraw the funds no later than May 17, 2021 to avoid paying additional taxes on the excess deferral.

4. Report the excess deferral on your 2020 return in the Income section for Retirement Plans and Social Security whether or not you received a Form 1099-R before you file your return. Enter as much information as you can. Report the excess deferral amount in boxes 1 and 2a, and use code P in box 7. Indicate that this is a 2021 Form 1099-R.

5. In 2021, you will probably receive two Forms 1099-R. One reports the excess deferral amount. The other reports the earnings on the excess deferral. Enter both of these forms in your 2021 return, and we'll only add the earnings to your 2021 income.



Alan S: You were also correct about the excess withdrawal.
I was able to find the exact amounts withdrawn and date withdrawn on the payments tab of Fidelity. It clearly mentioned that I will recieve a 1099R for this next year:

My overpayment was $911
For simplicity I asked my employer to instruct Fidelity to refund $1000
However- Fidelity refunded 1350 - with 2 charges of 1089 and 146
I am assuming 1089 is the principal and 146 is the earnings
Topic Author
mozzy
Posts: 17
Joined: Sat May 21, 2011 9:29 pm

Re: 403 overcontribution- 1099 form?

Post by mozzy »

I was able to find the tax id number and address of Fidelity Net Benefits (which is actually Fidelity Brokerage LLC as per the statement) online

https://eintaxid.com/company/043523439- ... %20Number.
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