Your total contribution to 401k plans is limited to $17,500 for 2013.
Employer matching contributions do not count towards the $17,500 limitation,
as you have already found out.
You have contributed $14,500 for 2013 to your 401k plan with your previous employer.
What if between the two plans, you have already exceeded the 401k
contribution limitation for 2013? Well, the excess
must be withdrawn. You have to inform your employer no later than
April 15, 2014 that an excess contribution has occurred, and the excess contribution
and all earnings attributable to the excess contribution must be withdrawn
no later than that date. Note: it
is April 15, period, of the year following the one in which the excess
contribution occurred, and not the day that the tax return is due which may be
April 16, 17 or even 18 depending on weekends, District of Columbia holidays,
etc. If the money is withdrawn by April 15, and if the contributions
were pretax contributions, then the excess contribution is included in
the gross income for the year in which the excess contribution occurred,
while the earnings on the excess contributions are included in the gross
income for the year in which they were withdrawn. Both these amounts will
be reported to you and the IRS on Form 1099-R. Note that there is no
penalty for early withdrawal etc. on these amounts as long as the
April 15 deadline for withdrawal is met. But here is a an interesting
You can ask any of the 401k plans to which you contributed in 2013
to return the excess deferral, and not necessarily the last one to
which you contributed.
Thus, subject to a caveat, I would suggest contributing
enough to your new employer's 401k to capture all the matching
contributions available (maybe even the full $17,500) and asking your
previous employer's plan to return whatever excess deferral you
end up making as a result. You don't
need to wait till April 15, 2014 to do this; it can be done
in 2013 too if cash flow is a problem.
So what is the caveat? The
on 401k deferrals says
If the total of your elective deferrals is more than the limit, you can have the difference (called an excess deferral) returned to you from any of the plans that permit these distributions. (emphasis added)
which hints at the possibility that some 401k plans might not permit withdrawal
of excess contributions. It might be worthwhile to check if
your ex-employer's plan falls in this restrictive category. If it does
not allow you to withdraw the excess, you will need to
take the excess out of your current employer's 401k, possibly losing
some of your employer's matching contributions.