Solo401k Excess Deferral & 2020 Taxes

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dbogleheadmd
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Joined: Sun Nov 29, 2015 8:38 pm

Solo401k Excess Deferral & 2020 Taxes

Post by dbogleheadmd »

Hoping the boglehead group mind can help confirm my thinking on this:

I over contributed (excess deferrals [employee]) to my solo 401k for 2020 by about $800 as I didn't pay enough in estimated taxes (I contributed the entire profit from the year). I caught this in March of 2021. I called Vanguard and had the $800, which is a combination of principle and earnings, distributed to my business account. I have not submitted my 2020 taxes yet. Now the question.

For tax purposes, Vanguard confirmed that the excess deferral portion is counted as income for 2020, despite it being redistributed to me in March of 2021. In contrast, the excess earnings (interest) are taxable in the year in which they were distributed - 2021 in this case. They will not be sending out any updated tax forms.

Given this, should I simply add the excess deferral portion to my income for 2020? Or is this something I should wait for updated forms to be sent?

Thanks in advance for your help with this,
dmbogle
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