Example of how to report an excess 401(k) deferral on your 2025 return.

Example: You received a corrective distribution from your 401(k) by April 15, 2026.

You've talked to your plan administrator, and you'll be receiving a 1099-R with code "P" in 2027. You decide to do the following to include the excess 401(k) contribution on your 2025 tax return to avoid having to amend your 2025 tax return later:

Your plan administrator told you that you have excess 401(k) contributions of $300 and that the full $300 is taxable. To report this you should:

1. Add a Form 1099-R on the Your Retirement Income (Form 1099-R) screen in the retirement income section.
2. Choose Form 1099-R, 401(k)/pensions/IRA distribution on the Type of 1099-R screen.
3. Choose Enter it Manually on the 1099-R Entry Method screen.
4. Enter information from your plan administrator like the Payer Name, Payer ID Number and address.
5. Enter $300 in Box 1.
6. Enter $300 in Box 2a.
7. Enter code 8 in Box 7.
8. Click Save and Continue
9. Choose No to the question whether this is a rollover.

Ignore any alerts you get about this Form 1099-R like "Uncommon Distribution Code". Manually entering a Form 1099-R like this will report the taxable amount on Form 1040, Line 1h. This will include the income on your tax return to offset your excess 401(k) contribution.

Important: When entering a placeholder 1099-R for the deferral year (code 8), enter only the excess deferral amount that is taxable in the deferral year in Box 2a, don't include the earnings on that distribution.

• If your contributions had earnings, you should receive a 2026 Form 1099-R with code 8 that reports the taxable earnings, which you'll include on your 2026 tax return because the earnings were distributed in 2026.
• You can ignore a 1099-R with code P you receive next year if the taxable amount in Box 2a is the amount you included in step 6, otherwise you may need to amend your 2025 return to include the correct amount.