? on form 5330 for excessive employer contribution

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Topic Author
foolio97
Posts: 28
Joined: Sun Mar 10, 2013 4:31 pm

? on form 5330 for excessive employer contribution

Post by foolio97 »

Apologies in advance for the lengthy question, I included some related bogleheads links that I found useful at the bottom of this post.

BACKGROUND (going to use round numbers below to simplify)
A. made excess employer contribution of $5k to solo 401k (at Vanguard) for tax year 2019
....a. created the solo 401k and funded the employee ($19k) and employer portion ($15k) on 12/24/2019; should have waited to fund employer portion until after we did our taxes in March 2020)
....b. employer contribution for tax year 2019 was $15k, but after we did our taxes realized through TurboTax that we should have only contributed up to $10k

B. we are going to carry over the $5k of excess employer contributions from 2019 into 2020 but need to submit form 5330 with 10% excess tax

C. Here is the IRS form 5330:
https://www.irs.gov/retirement-plans/form-5330-corner

1. NEED TO SUBMIT FORM 5330 FOR TY2019 (reasonably confident this form is correct)
5330 Schedule A (for tax year 2019)
....1. Total contributions for your tax year to your qualified employer plan (under section 401(a), 403(a), 408(k), or 408(p)): $15,000
....2. Amount allowable as a deduction under section 404: $10,000
....3. Subtract line 2 from line 1 $5,000
....4-8 are all 0's
....9. Tentative taxable excess contributions. Add lines 3 and 8 $5,000
...10. Nondeductible section 4972(c)(6) or (7) contributions exempt from excise tax: $0
...11. Taxable excess contributions. Subtract line 10 from line 9 $5,000
...12. Multiply line 11 by 10%. Enter here and on Part I, line 1 $500

2. NEED TO SUBMIT FORM 5330 FOR TY2020 (I am stuck on this form and believe that I have error(s) somewhere in #1 - 8)
Notes:
....a. wife allowed to contribute up to $15k maximum employer contributions for TY2020.
....b. but we are carrying over the $5k excess employer contribution from TY2019
....c. so we'll only contribute $10k (employer) for TY2020 + $5k (excess employer contribution) carryover from TY2019 = $15k maximum employer contribution
5330 Schedule A (for tax year 2020)
....1. Total contributions for your tax year to your qualified employer plan (under section 401(a), 403(a), 408(k), or 408(p)): $10,000
....2. Amount allowable as a deduction under section 404: $15,000
....3. Subtract line 2 from line 1 -5,000
....4. Enter amount of any prior year nondeductible contributions made for years beginning after 12/31/86: $5,000
....5. Amount of any prior year nondeductible contributions for years beginning after 12/31/86 returned to you in this tax year for any prior tax year: $0
....6. Subtract line 5 from line 4: $5,000
....7. Amount of line 6 carried forward and deductible in this tax year: $5,000
....8. Subtract line 7 from line 6: $0 [Following the instruction, I end up with 0 here which I suspect is wrong. I think it should be $5,000]
....9. Tentative taxable excess contributions. Add lines 3 and 8 [I believe this should add up to $0, but it doesn't the way I'm entering lines 1 - 8; looking for help here.]
...10. Nondeductible section 4972(c)(6) or (7) contributions exempt from excise tax:
...11. Taxable excess contributions. Subtract line 10 from line 9
...12. Multiply line 11 by 10%. Enter here and on Part I, line 1

For section D above 5330 Schedule A (for tax year 2020), I have an error somewhere in lines 1 - 8 as it should result in owing $0 taxes since I am carrying over the $5k of excess contributions from TY2019.

RELEVANT THREADS
I have reviewed previous forum posts related to correcting excess employer contributions to a solo 401k (i401k), including the following which have been incredibly valuable. Thank you to all of the posters, especially Spirit Rider. Also, if there is a tip jar for Spirit Rider, please let me know. Thank you in advance for any help.

viewtopic.php?t=216798
viewtopic.php?t=247562
viewtopic.php?f=2&t=276441
viewtopic.php?t=183100
viewtopic.php?t=210568
Topic Author
foolio97
Posts: 28
Joined: Sun Mar 10, 2013 4:31 pm

Re: ? on form 5330 for excessive employer contribution

Post by foolio97 »

bump...
Topic Author
foolio97
Posts: 28
Joined: Sun Mar 10, 2013 4:31 pm

Re: ? on form 5330 for excessive employer contribution

Post by foolio97 »

bump...
Eira54
Posts: 1
Joined: Mon Jun 22, 2020 1:55 pm

Re: ? on form 5330 for excessive employer contribution

Post by Eira54 »

I have the exact question right now about Form 5330. foolio97, did you ever figure out how to fill out Form 5330 so it zeros out?
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