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Subject Author Date
401(k) return of excess contributions Paul 03-20-2007
Posted by Paul on March 20, 2007, 1:27 am
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 On March 14, 2007 I was paid a return of excess
contributions from my 401(k) and will receive a 2007 1099-R
with code P in January 2008, meaning it is taxable in 2006.
I have not yet filed my 2006 return and would like to
include this amount in my 2006 return rather than file a
1040x in 2008.

I am using TaxAct for my 2006 return, and it only allows me
to fill out a 2006 1099-R, not a 2007 1099-R. If I use code
P, it puts the amount on line 16a of 2006 form 1040, and if
I use code 8 it includes the amount on line 7 of 2006 form
1040. Either way, I'll be using a 2006 1099-R with my 2006
tax return, but will be receiving a 2007 1099- R in 2008.

What is the best way to handle this?

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Posted by Phil Marti on March 20, 2007, 3:05 pm
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> On March 14, 2007 I was paid a return of excess
> contributions from my 401(k) and will receive a 2007 1099-R
> with code P in January 2008, meaning it is taxable in 2006.
> I have not yet filed my 2006 return and would like to
> include this amount in my 2006 return rather than file a
> 1040x in 2008.

This is what you should do. You don't need a 1099-R.

> I am using TaxAct for my 2006 return, and it only allows me
> to fill out a 2006 1099-R, not a 2007 1099-R.

Forget the 1099-R. See the instructions for line 7 of the
1040, which is where this amount belongs.

Just add the amount to the 1040 line 7 figure and override.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Frederick Lorca on March 20, 2007, 3:05 pm
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> I am using TaxAct for my 2006 return, and it only allows me
> to fill out a 2006 1099-R, not a 2007 1099-R. If I use code
> P, it puts the amount on line 16a of 2006 form 1040, and if
> I use code 8 it includes the amount on line 7 of 2006 form
> 1040. Either way, I'll be using a 2006 1099-R with my 2006
> tax return, but will be receiving a 2007 1099- R in 2008.
>
> What is the best way to handle this?

Page 22 of the 2006 Form 1040 Instructions (bottom of column
III and continuing at the top of page 23) indicates that
corrective distributions from qualified plans are reported
on line 7. While I think code P is the preferable code,
since TaxAct enters the distribution correctly with Code 8,
use Code 8. When you get the 2007 Form 1099-R, just retain
it with your tax records whether it shows distribution code
P, 8, or D, as corrective distributions of excess
contributions variously get reported.

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf (Form 1040 Instr)

http://www.irs.gov/pub/irs-pdf/i1099r.pdf (see Corrective
Distributions, page 4, left column)

Frederick Lorca

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Paul on April 2, 2007, 5:58 pm
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>> On March 14, 2007 I was paid a return of excess
>> contributions from my 401(k) and will receive a 2007 1099-R
>> with code P in January 2008, meaning it is taxable in 2006.
>> I have not yet filed my 2006 return and would like to
>> include this amount in my 2006 return rather than file a
>> 1040x in 2008.

> This is what you should do. You don't need a 1099-R.

>> I am using TaxAct for my 2006 return, and it only allows me
>> to fill out a 2006 1099-R, not a 2007 1099-R.

> Forget the 1099-R. See the instructions for line 7 of the
> 1040, which is where this amount belongs.
>
> Just add the amount to the 1040 line 7 figure and override.

If I override line 7, then I can't file electronically. If I
file electronically with TaxAct using 2006 form 1099-R with
code 8, form 1040 line 7 will contain the excess
contriubution refund, but it won't match my W-2 and I can't
explain the difference with electronic filing. I would think
this might cause the IRS to question my return. Would it be
better to submit my 2006 return without the excess
contribution and wait until I receive the 2007 1099-R in
January 2008 and then file a 1040x for 2006 (and a
Massachusetts form CA-6)? Or would there be a penalty for
waiting a year since the check was received in March 2006?

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Ira Smilovitz on April 3, 2007, 1:48 am
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>>> On March 14, 2007 I was paid a return of excess
>>> contributions from my 401(k) and will receive a 2007 1099-R
>>> with code P in January 2008, meaning it is taxable in 2006.
>>> I have not yet filed my 2006 return and would like to
>>> include this amount in my 2006 return rather than file a
>>> 1040x in 2008.

>> This is what you should do. You don't need a 1099-R.

>>> I am using TaxAct for my 2006 return, and it only allows me
>>> to fill out a 2006 1099-R, not a 2007 1099-R.

>> Forget the 1099-R. See the instructions for line 7 of the
>> 1040, which is where this amount belongs.
>>
>> Just add the amount to the 1040 line 7 figure and override.

> If I override line 7, then I can't file electronically. If I
> file electronically with TaxAct using 2006 form 1099-R with
> code 8, form 1040 line 7 will contain the excess
> contriubution refund, but it won't match my W-2 and I can't
> explain the difference with electronic filing. I would think
> this might cause the IRS to question my return. Would it be
> better to submit my 2006 return without the excess
> contribution and wait until I receive the 2007 1099-R in
> January 2008 and then file a 1040x for 2006 (and a
> Massachusetts form CA-6)? Or would there be a penalty for
> waiting a year since the check was received in March 2006?

File using the code 8 in the 1099-R. There is no
requirement that line 7 match your W-2.

Ira Smilovitz

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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