Personal Finance & Money Asked by user3096 on April 2, 2021
I received a check in March 2011 along with a 2011 1099-R for excess 401K contribution made in Tax year 2010. I am a high-compensated employee, the excess was due to company 401(k) matching which was credited into the 401K only in March 2011.
Can I rollover the excess amount ($5000) to a Traditional IRA, within 60 days of the date the check was issued, either to 2011 or 2010 (before April 15 deadline), to avoid taxation ? I would then instruct the plan administrator to change the Distribution Code (box 7) of 1099-R to “rollover”.
Or just put the check into a non-working spouse’s Traditional IRA (qualified, as I make less than $177,000) to reduce taxes for 2010 (before the April 15 deadline).
No. These are two separate issues. The 401(k) excess had to be returned as you say you exceeded the maximum. Money comes back, it's part of your 2010 income.
You can deposit $5000 to the mrs' traditional IRA if she's not working. I'd go with that. (although, I'm compelled to mention that the $177k you mention is the Roth limit, not traditional. Traditional phaseout for Married Filing Joint ends at $109K. The non-working spouse rule kicks in though, scroll down this link to Table 1-3 which supports the deduction in your case.
Answered by JTP - Apologise to Monica on April 2, 2021
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