It’s hard to google this/find this specific situation for advice.

  1. My last paycheck deferral on to my 401k (on 12/8/2023) resulted in exceeding the yearly maximum employer + employee = $66K limit. (2 weeks ago, I tried to lower my contribution percentage, but it didn’t take effect in time.)
  2. I started the year deferring pre-tax dollars, then switched to after-tax (non-Roth) deferrals.
  3. I’ll be under the pre-tax contribution limit of 22,500.
  4. I have one more paycheck for CY 2023. I am almost certain that my contribution percentage change will be in effect.
  5. My deferral percentage for my final check will be 8% to get full company match (hopefully?).
  6. For easy math assume the following: total contributions (employee + employer) = 67,000 as of today. My salary = $100K. My 2023 employee pre-tax contributions = $21,500 and will not change. The contribution % to after-tax bucket for the past few months was 75% and will be 8% for my final check.
  7. My plan allows in-service withdrawals. I executed a mega-backdoor Roth IRA last year.


  1. Taxes/penalties… Am I overthinking this? It's an after-tax bucket, not a Roth or Pre-tax bucket. Can this just be a simple correction/reversal where I call Fidelity and ask for them to just return the excess? If there are earnings on the 2 or 3 business days until they process the reversal, I understand those earnings would be income and taxable.
  2. Will Fidelity call this an “in-service distribution”, “reversal”, or something else. (When I call I want to be able to speak in their terms for clarity.)
  3. If there are no earnings, will this reversal/correction count as income again? I already paid taxes on the over-contribution, and the money isn’t in a Roth 401k. Will I have to pay taxes again since they’d probably send me a check?
  4. Any other considerations I’m not asking about.
  5. Why doesn’t Fidelity have automated checks to make sure limits aren’t exceeded? (You don't have to waste time on this.)
  6. Using the assumptions above, what’s the math to maximize? For easier math, assume my final 2023 check has no other deductions, e.g. my contribution will be $800 and my company’s contribution will be $800.
  7. I do the MBDR ot an external brokerage (Schwab) Roth IRA, instead of converting "in-plan" to Roth 401K, because I want more investment options that the 401K doesn't offer. Any advice here?
  8. In the past, I’ve executed the MBDR at the end of the year. Is there any reason why I shouldn’t just wait until CY24 to execute this one? I don’t want to muddy the waters asking Fidelity to fix this excess contribution and also conduct an in-service withdrawal of the after-tax bucket. Are there any end-of-year considerations for this? (The only thing that comes to mind is to have the Traditional IRA at $0 if I need to use that as a transition account until the rollover of taxable earnings have made it back into the pre-tax 401K.)

Damn that’s a lot. Anyway, thanks for your answers/advice.

  • There's a lot of questions, not all related to the specific over contribution scenario. Want to split them out maybe?
    – littleadv
    Dec 10, 2023 at 2:01
  • @littleadv Good point. Main question is tax implications for excess contributions to after-tax 401K bucket (not pre-tax or Roth). I can't find anything. IRS tool seems to care only about pre-tax excess. Seems to me that it should be, "okay Fidelity, give me back the excess that I've already paid taxes on" and there shouldn't be any double tax or penalties. (Unless investments made earnings in a couple of days while they process.) Can anybody confirm?
    – dbugg
    Dec 10, 2023 at 21:46

1 Answer 1


Why doesn’t Fidelity have automated checks to make sure limits aren’t exceeded? (You don't have to waste time on this.)

I know you said don't spend much time on this.

This was the interesting part for me. I know that all the employers I have dealt with had the ability to keep the contributions within the limits defined by the law. Though this was the pre-tax/Roth limits not the higher employer + employee maximum number.

No system can catch the error if more than one employer is involved. But the employer/payroll system should have caught this because this is the absolute maximum you and they can contribute.

Since your paycheck was on Friday, it is possible that the money hasn't hit the 401(k) custodian yet. There is still a chance they will reject the overage.

You will have to call the 401(k) administrator in your company, and talk to the custodian at the Fidelity.

I don't think that they they will rollback the entire amount from the check, they should bring it back to the maximum limit. That will also mean that the next check should either have nothing withheld and matched, or the system will go through this dance again.

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