1099-R Question

[commerciallaw]

[Topic is now in Personal Finance (Not Investing) - tax question. mod mkc]

I just received a 1099-R from Vanguard for an excess contribution I made to my solo 401(k) in 2024 and withdrew in 2024 (bad advice from my accountant).

There are two amounts listed in Box 1--the amount of excess distribution and the return on the excess distribution. It is all listed as taxable in Box 2a. The code in Box 7 is P.

I believe I do not have to pay tax on the return of the distribution (because the amount is part of my taxable income) but I do have to pay tax on the return on my 2024 tax return.

Is this correct? How do I do this?

All advice welcome. Greg

[secondcor521]

Not an expert on this.

I think you should confirm whether or not the return of the contribution amount was included in your taxable income. If things were done properly, I believe it should not have been included in your taxable income (so, as you point out, the contribution amount is not double counted).

Reading the codes and your description, something doesn't line up. If it's code P, that means it should be taxable in 2023; if it's code 8 it's taxable in 2024. So from what I see, either you're misremembering the facts and the transactions took place in 2023, or Vanguard used the wrong code (or I don't understand this stuff; quite possible).

I think the entire amount in box 2a should end up on line 5b on Form 1040.