Excess Deferral to Solo 401k Promptly Corrected. Tax Implications?

I've read about this but seem to be having a brain freeze so seeking some help here.

My March 2020 my wife made an employee deferral for the year 2019 (which is clearly permitted) in her solo 401k and miscalculated the allowed amount (that was my mistake), then two weeks later we discovered the error, and contacted Fidelity and had the excess ($3k) removed from the solo 401k, still in March 2020.  We reported the correct deferral amount on the 2019 tax return by ignoring the excess.

What are the tax consequences? Are we taxed on the $3k excess deferral just as if it was a withdrawal in 2020 from a retirement account (we are age 61) -- that seems odd to me but perhaps it's the law?

We did get a 1099-R from Fidelity for the $3k stating the amount was taxable in box 2a and stating distribution code as "E" in box 7 which is EPCRS.

Other?

Thank you.

Leaving out the timing of deposits was it an "Excess Deferral" or an "Excess Annual Addition"? You'll find they have different meanings and 1099-R implications.

An excess deferral means you exceed the elective deferral limit under 402(g) limit of $19,000 plus catch-up of $6,000 if applicable for 2019.

An excess annual addition means you exceed the 100% of pay limit or the $56,000 415(c) limit catch-up of $6,000 if applicable for 2019.

In the former case you would include the excess when you file your 2019 tax return and your 2020, 1099-R should have code P indicating taxable income in 2019.

In the later case you are correcting under EPCRS and you would have deducted the contribution in 2019 and then picked it back up as income in 2020 with distribution code 7.

Your pension adimin should be able to tell you want happened. If you're doing it on your own, good luck.

What Lou S. said.  It sounds to me like the code is wrong but it's hard to tell for sure...based on the fact that they reported it as taxable in 2020 you should have deducted it in 2019 (otherwise you get taxed but never got a deduction), but again, we don't know the full story.

Next time, save yourself a big ol' headache and leave it in and count it for the year deposited.  

For clarification regarding issuing 1099-R for excess deferrals - is this correct for an excess deferral that is paid by 4-15: There is only one 1099-R issued for the actual excess deferral amount - it is for the year of payment, and code P indicates it is taxable for the prior year.  So at the time of preparing that prior year's taxes, there is no 1099-R yet.

(note this post does not inquire about related earnings and its own 1099-R).

One more question - in this instance is the W-2 corrected?