Personal Finance & Money Asked on July 23, 2021
In 2020 I left a corporate job and started my own business. I established a solo-401k and accidentally made an excess contribution to the solo 401k due to a previous contribution in my last job’s 401k. I understand there are separate employee and employer contribution limits, and I figured this in and made a corrective distribution from the solo 401k in March 2021.
As the "employer," I understand I need to file a 1099-R for the principal distribution and a second 1099-R for the interest earned.
As the employee, I believe I need to include the excess contribution amount in my 2020 income, and also include the amount in my qualified plan contribution deduction (showing an excess). Is this right? I also understand I’ll need to report the 1099-Rs, but does this need to happen in 2020 or 2021? In other words, does my 2020 return need to wait until I can file the 1099-Rs?
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