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Subject Author Date
Return of 401k contribution - highly compensated employee Vigo 02-29-2008
Posted by Vigo on February 29, 2008, 4:08 pm
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 My husband received a check for a portion of his contributions to the
company 401k because he has been deemed a highly compensated employee and is
not allowed to contribute the 14% that he had deducted from his pay. I
understand that this money must be reported on our 2007 return and that he
will get a 1099-R in January of 2009 that will report the distribution to
the IRS.

How do we report this distribution on the 2007 return? I'm thinking it goes
on Line 7 as wages, but do we need to attach some kind of explanation for
the source of the income?

Next year when the 1099-R arrives, how does that get reported on the 2008
return? Or does it get reported at all? I'm confused.....

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Posted by removeps-groups@yahoo.com on February 29, 2008, 4:57 pm
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> How do we report this distribution on the 2007 return? I'm thinking it goes
> on Line 7 as wages, but do we need to attach some kind of explanation for
> the source of the income?

Yes, line 7. Attach 1099-R if tax was withheld (probably there was).
There should be no penalty.

--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
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Posted by Phil Marti on March 1, 2008, 11:35 am
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"Vigo" wrote:

> My husband received a check for a portion of his contributions to the
> company 401k because he has been deemed a highly compensated employee and
> is not allowed to contribute the 14% that he had deducted from his pay. I
> understand that this money must be reported on our 2007 return and that he
> will get a 1099-R in January of 2009 that will report the distribution to
> the IRS.
>
> How do we report this distribution on the 2007 return? I'm thinking it
> goes on Line 7 as wages, but do we need to attach some kind of explanation
> for the source of the income?

That's where it goes, and you need no explanation.

> Next year when the 1099-R arrives, how does that get reported on the 2008
> return? Or does it get reported at all? I'm confused.....

It will be coded to indicate that its reporting a disbursement that was 2007
income. You won't have to do anything on your 2008 return.

--
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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Vigo on March 1, 2008, 6:04 pm
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> "Vigo" wrote:
>
>> My husband received a check for a portion of his contributions to the
>> company 401k because he has been deemed a highly compensated employee and
>> is not allowed to contribute the 14% that he had deducted from his pay. I
>> understand that this money must be reported on our 2007 return and that
>> he will get a 1099-R in January of 2009 that will report the distribution
>> to the IRS.
>>
>> How do we report this distribution on the 2007 return? I'm thinking it
>> goes on Line 7 as wages, but do we need to attach some kind of
>> explanation for the source of the income?
>
> That's where it goes, and you need no explanation.
>
>> Next year when the 1099-R arrives, how does that get reported on the 2008
>> return? Or does it get reported at all? I'm confused.....
>
> It will be coded to indicate that its reporting a disbursement that was
> 2007 income. You won't have to do anything on your 2008 return.


Thanks once again for your help!

--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Allan Martin on March 1, 2008, 6:01 pm
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> My husband received a check for a portion of his contributions to the
> company 401k because he has been deemed a highly compensated employee and
> is not allowed to contribute the 14% that he had deducted from his pay. I
> understand that this money must be reported on our 2007 return and that he
> will get a 1099-R in January of 2009 that will report the distribution to
> the IRS.
>
> How do we report this distribution on the 2007 return? I'm thinking it
> goes on Line 7 as wages, but do we need to attach some kind of explanation
> for the source of the income?
>
> Next year when the 1099-R arrives, how does that get reported on the 2008
> return? Or does it get reported at all? I'm confused.....

When the 1099-R arrives it will have a code P in box 7a which denotes the
excess contribution made in 2007. Since you have already accountied for the
adjustment in year 2007 you do not have to file an amended return for 2007.
It would not be reported in 2008.



>
> --
> << ------------------------------------------------------- >>
> << 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 (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>

========================================= MODERATOR'S COMMENT:
When responding, please delete all unnecessary parts of the post to which
you respond.

--
<< ------------------------------------------------------- >>
<< 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 (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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