0

I recently went over the 66k limit for employer + employee contributions to 401k with my most recent paycheck (I have one paycheck left for the CY). I'm under the 22,500 pre-tax limit. I called Fidelity, who manages the plan, to ask if I could just have the overage returned. After a long hold, he comes back with "we have to send you a check in Q124, and nothing can be done right now." Since that check is after-tax income (with the exception of earnings if the market is good the next few months - I know those earnings would be taxable), will I be double-taxed or penalized in 2024 tax year?

Also, this is the shorter version of my longer question asked here: Excess deferrals to after-tax, non-Roth 401k (just happened this paycheck) – just ask the plan for a reversal? Tax implications? MBDR implications?

Hopefully someone will know something. Thanks.

1 Answer 1

1

No, you will not.

You need to make sure it's returned to you before the tax due date. It is called "excess contribution", and should be marked as code 8 in box 7 on your 1099-R, with the only the earnings on the excess listed in box 2a as taxable amount (since the contribution itself was after-tax).

You may want to check with your employer why that happened. They should have prevented this. Your benefits department may have a quicker solution if you reach out to them early (before year-end accounting closes).

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .