Excess 401(k) Contributions

Client over contributed the annual 401(k) limit because she has two employers that offer 401(k) plans.

Client notifies the one 401(k) plan and they take out 2K

1) The 1099-R won't be issued until 2023 but coded to 2022. How can we include this in 2022 if the client wishes to forego the amended return? The instructions of the 2022 1040 says this amount can be reported on line 1h, wanting to make sure this is correct.

2) Because they took the funds out before the deadline of the 2022 tax return, there are no penalties involved, correct?

Can't include it, must amend next year when you see Code P on it...and I don't believe there are penalties.

1. In the past, I have reported it on the original 2022 return. Obviously you have to get the exact #s. I've done this a couple of times and not heard from the IRS or FTB on it.

2. That's my recollection, FWIW.

Can't include it,

Why not?

I've always included it. Specifically so we wouldn't have to amend when the 1099-R comes through next year with the prior year code on it.

Me, too.

+1 ^

Can't include it, must amend next year when you see Code P on it...and I don't believe there are penalties.

I think you may be confusing excess deferrals with excess contributions. They are not treated the same way. The OP has a taxpayer with excess elective deferrals.

Elective deferrals are reportable in gross income for the taxable year. Reg 1.402(g)-1(a)