If you were covered by an employer's plan, box 13 of your Form W-2 should be checked. You are considered a participant in the plan even if you are not vested, or even if you were not a participant in the plan at the end of the year. If you do not participate in a plan that your employer offers (you do not make any contributions), you will only be considered to be participating in the plan if it is a "defined benefit" plan.
my suggestion is to check w/ your employer to see if they can unmark Box 13. or consult CPAs or 401k experts for tax professional help.
good luck!
P.S. you said "it is really bad". I wonder how bad it is?
