Where to Report Excess 401(k) Contributions on Form 1040

Excess 401(k) contributions are reported on Line 1h of Form 1040, the line for other earned income. Any earnings returned to you along with the excess through a corrective distribution go on the same line. Neither belongs on Line 1a, which is limited to W-2 Box 1 wages, or on Lines 5a and 5b, which are for regular pension and annuity payments. For the 2026 tax year, the elective deferral cap is $24,500, and every dollar you deferred above that limit needs to land on Line 1h.¹

Confirming You Have an Excess

Start with Box 12 on every Form W-2 you received for the year. Code D shows pre-tax elective deferrals to a 401(k) plan, Code E covers 403(b) deferrals, and Code AA is used for designated Roth 401(k) contributions.² Add the amounts across all W-2s. The 402(g) cap applies to your combined deferrals across every employer and every plan, not per job.³

For 2026 the base limit is $24,500. Add $8,000 if you are 50 or older, for a total of $32,500. If you are 60, 61, 62, or 63, SECURE 2.0’s enhanced catch-up applies and the total rises to $35,750.⁴ Anything over your applicable cap is the excess.

A quick example. You are under 50, changed jobs mid-year, and your two W-2s show Code D amounts of $18,000 and $9,000. Combined deferrals are $27,000, which is $2,500 over the $24,500 limit. That $2,500 is what needs to be corrected and reported.

Reporting the Excess Deferral on Line 1h

When you made traditional pre-tax 401(k) contributions, your employer excluded those dollars from the taxable wages shown in W-2 Box 1. Neither employer knew about the other, so the excess was never taxed. Adding it to Line 1h pulls it into your adjusted gross income for the year.⁵ In the example above, you enter $2,500 on Line 1h.

Tax software handles this on its own. Once you enter multiple W-2s and the combined Code D amounts exceed the annual limit, the software adds the excess to Line 1h automatically. If you file on paper, Line 1h has its own dedicated entry space starting with the 2025 tax year, replacing the older practice of writing explanations next to Line 1a.⁵

Roth 401(k) Excess Deferrals Work Differently

Designated Roth contributions count toward the same annual limit as pre-tax deferrals, so you combine Code D and Code AA amounts when checking whether you exceeded the cap.⁶ But Roth deferrals were already included in the taxable wages in Box 1, so you do not add the excess Roth amount to Line 1h. It was never excluded from income to begin with.⁵ You still need to request a corrective distribution, and any earnings on the Roth excess are taxable and reported on Line 1h.

Reporting the Corrective Distribution Earnings

When the plan sends the excess back, the money may have grown while it was in the account. The earnings portion appears in Box 2a of the Form 1099-R the plan issues. Those earnings also go on Line 1h, not on Lines 5a and 5b.⁷ If your $2,500 excess earned $120 before being returned, you report $120 on Line 1h. The returned principal itself is not taxed twice; it was already picked up on Line 1h as described above.

The earnings are taxed at your ordinary income rate.⁸ As long as the corrective distribution is completed by April 15, the 10% early withdrawal penalty that normally applies to distributions before age 59½ does not apply.⁹

Which Year the Earnings Belong To

Box 7 of the 1099-R carries a distribution code that tells you which tax year the earnings are taxed in. For corrective distributions of excess deferrals, you will see one of two codes:

Code 8 means the earnings are taxable in the year of the distribution. You get this when both the excess contribution and the corrective distribution happen in the same calendar year.¹⁰
Code P means the earnings are taxable in the prior year, the year the excess was contributed. This is the common case, because most corrective distributions happen between January and April 15 of the following year.¹⁰

Code P has a practical wrinkle. If you receive the corrective distribution in early 2027 for a 2026 excess, the Code P earnings belong on your 2026 return. Filing the 2026 return before that 1099-R arrives means you will need to amend.

Deadlines to Trigger the Correction

You have until March 1 following the end of the tax year to notify each affected plan of the excess and tell the administrator how much to return.³ The plan then has until April 15 to distribute the excess and any earnings back to you. For 2026 contributions, that is March 1, 2027, to notify and April 15, 2027, to receive the money.

April 15 is a hard date. Filing a tax-filing extension does not extend it. Because plan administrators need time to process the request, reach out well before March 1. The corrective distribution includes the excess plus earnings generated during the contribution year, but not earnings from the gap between January 1 and the actual payout date.⁶

Missing the April 15 Deadline

Blowing the deadline triggers double taxation. The excess is taxed once in the year you contributed it, because it exceeds the 402(g) limit, and then taxed again when the money is eventually distributed from the plan, potentially years later at retirement.⁶ You get no tax basis for the excess left in a pre-tax account, so the full amount is treated as taxable income on both occasions.

The money can also become stuck. After April 15, the plan can only distribute the excess when a distribution is otherwise permitted under plan terms, such as separation from service, reaching retirement age, or a qualifying hardship.⁶

If You Already Filed Your Return

If you find the excess after filing, or a 1099-R with Code P arrives after you have filed, use Form 1040-X to amend the original return. Add the excess deferral and any corrective distribution earnings to Line 1h, recalculate your tax, and pay any additional amount owed.¹¹

File a separate 1040-X for each year you are correcting, complete Part II to explain the reason for the change, and attach any relevant schedules. Processing usually takes 8 to 12 weeks.¹¹ Amending the return does not extend the plan-level deadline. The money still has to leave the account by April 15 to avoid double taxation; late paperwork at the IRS cannot fix a late corrective distribution.

1
Internal Revenue Service. Instructions for Form 1040 and 1040-SR
2
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
3
Office of the Law Revision Counsel. 26 USC 402 – Taxability of Beneficiary of Employees Trust
4
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
5
Internal Revenue Service. Instructions for Form 1040 and 1040-SR – Section: Line 1h
6
Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan
7
Internal Revenue Service. Instructions for Form 1040 and 1040-SR
8
Internal Revenue Service. Federal Income Tax Rates and Brackets
9
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
10
Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498 – Section: Table 1 Guide to Distribution Codes
11
Internal Revenue Service. Instructions for Form 1040-X Amended Individual Income Tax Return