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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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how do you deduct the loss on an excess 401k contribution in

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how do you deduct the loss on an excess 401k contribution in my federal income tax return in turbotax?

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.


Hello there,

Can you tell me a little more about your "excess contribution" loss? Generally, all funds contributed to a 401K are contributed on a pre-tax basis, and losses are not allowed.


There are penalties for over contribution, and you are required to take the excess amount out of the 401k by the due date of the return.


Did you have after tax contributions to the 401K?

Customer: replied 5 years ago.
Yes, I made after-tax contributions which I believe are an excess contribution. consequently, I have filed the paperwork to withdraw them from my account. this amount, after the contribution was invested in options that consequently lost 90% of thier value.


The instructions for deducting your loss on a corrective distribution of elective deferrals can be found on page 10 of the Following publication, in the third column, under "report a loss"...basically you will be entering a negative amount on line 21 of your 1040:




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