I knew that I was going to leave my former company for one of the Bay Area startups. Expecting that I would not have a 401(k) account there, I frontloaded my contributions and maxed out my 401(k) account with my former employer. I'm currently at $18,500 for 2018, plus all matched contributions that I received from my former company.
An unexpected turn of events led me to accept an offer from a large tech company that has a 401(k) plan and generously matches employee contributions.
I can't contribute any more this year without going beyond the legal maximum but I'm wondering if I should nonetheless do it to take advantage of my new employer's matching. I see two ways to pull this off and I'm debating which one makes more sense.
My initial thought was to begin contributing just enough at my new job to maximize my new employer's matching and then in January 2019, notify the new 401(k) administrator that I've over contributed (these contributions would be returned to me). My concern is that if my "new" contributions for 2018 are returned then does that mean there was technically no ground for employer matching and so those matched contributions should also be returned to the new employer?
The second approach is for me to contribute just enough to maximize my new employer's matching but then tell my old 401(k) administrator that I've contributed too much. The old administrator would then return the over contributed sum and I'd have to pay more taxes on the gains realized by these over contributions. However, it wouldn't invalidate my old employer's matching and wouldn't have to do anything with my new employer's matching.
I'm leaning towards #1, but that's under the assumption that the return of over contributed money won't require the reversal of all the matched contributions received from the new employer. Thoughts?