42

The limit of $19,500 (plus an additional $6,500 for those 50 and over, for a total of $26,000) only applies to employee pre-tax contributions to Traditional 401(k) and employee contributions to Roth 401(k). It does not apply to employer contributions nor to after-tax contributions to Traditional 401(k) (the latter is the basis for the "mega-backdoor ...


17

No one at fidelity told you to save more. Some poorly coded notification system suggested you save a higher percentage of your income with no consideration that your current election is taking you within spitting distance of the maximum. It's probably important to remember that the custodian is just a vendor of the company you work for. You're entering a ...


12

Some institutions enforce the limits, some don’t. However, one aspect that you may not realize is that they really don’t know what your contribution limits are. Lots of things affect your contribution limits. For the HSA specifically, your limits can be reduced if you are only eligible for part of the year, or if you have another HSA account that you are ...


11

What you should do is called "re-characterization". See the instructions for form 8606 for details (that is also the form to use to report the incident). See example 3: You made a contribution to a Roth IRA and later recharacterized part or all of it to a traditional IRA. Report the nondeductible traditional IRA portion, if any, on Form 8606, Part I. ...


8

This is a common occurrence when somebody has multiple jobs in one year. The employer can't know if you have reached the annual limit. They know to stop when you have hit the maximum for their company, but don't have information on the other jobs. In fact the IRS doesn't let them factor in the other jobs. They have to keep making their payment until you hit ...


8

TL-DR: Remove one of the contributions (and all earnings therefrom) for 2017 by December 31, 2017. Don't wait till after the New Year to tell the IRA custodian to count it as a 2018 contribution. You have double-contributed to IRAs for 2017, and so, by December 31, 2017, you should withdraw one of the contributions as well as the gains (if any) that the ...


7

The first employer matching contribution gets taken back. You don't want to mess around with over contributions like this. In addition to withdrawing over contributions, they withdraw some portion of investment gains. The accounting gets complicated so best to avoid the issue.


7

You didn't mention how old you are, which may be a factor, but as you observe you are already contributing the maximum you can to a 401(k) (or at least close to it). Most retirement systems have some sort of "retirement calculator" that look at your current savings rate, time to retirement, other retirement assets, and cost of living to determine if you are ...


7

Anyone can sue for any reason, so technically yes they can sue. The only thing that they might run up against is a statute of limitations, but that would be state dependent and you did not specify the state. Additionally, I would think that 2 years is within most statute of limitations. I am no lawyer, and as such this is not legal advice. This is what I ...


6

It is enforced long before distribution time. By May 31st of each year the trustee sends a copy of IRS form 5498 to you, they also send a copy to the IRS. This form tells the IRS that you made an IRA or Roth IRA contribution. The IRS will then match it to your tax form that you filed in April. If you shouldn't have made the contribution, or you over ...


6

Congratulations on getting married! As far as the IRS is concerned, you are a married couple for all of this year for tax purposes. The 2014 HSA contribution limit for you and your husband together is $6550. This limit applies to both of you together, whether you file jointly or separately. So it looks like you and your husband have excess contributions ...


4

Yes, you'll be able to get the money by submitting legitimate receipts for care for your child, and at tax time you'll pay the tax on the extra $3600.


4

This is a question that you want to make sure with a tax expert. It appears based on the IRS documents that you can do so. The question is will the confusing set of documents slow the IRS computers and delay your refund. If you recontribute to a new account, I would even select a new custodian, within the 60 day window this should not be a big deal. If ...


4

Your best bet is to remove the excess contribution. Your broker should have forms to do that. There is a 6% tax on the excess contributions for each year that it remains uncorrected. It would be better to just eat the $25 fee and get rid of any future headaches.


4

I found a forum post on the Intuit website that confirmed what I learned here and in some other places. Thanks all for the feedback and input. The gist of it is: Yes, the earnings on the withdrawn amount count towards MAGI, further reducing your contribution limit You could repeatedly withdraw (given enough time before you file taxes) until it settles, or ...


4

I did this myself a few years ago. Best path forward is to call your financial institution managing your Roth and let them know (Vanguard helped me sort out my over-contribution). You'll need to tell them the amount you are allowed to contribute (or conversely the amount of your contribution overage). Generally they will need to run a calculation and ...


4

You do not need to withdraw, you can recharacterize your contribution as a Traditional IRA then roll it over to a Roth. Contact the brokerage. Source: https://investor.vanguard.com/ira/ira-recharacterization


4

I understand that I'm supposed to remove all earnings attributable to this ineligible contribution--is there a formula for computing this? That's if you withdraw (aka remove or correct) the excess contributions (by Oct. 15). See pub 590a 'Excess Contributions Withdrawn' for Roth and the more detailed version for trad which links to the same worksheet ...


4

Why are excess HSA/IRA/401k/etc contributions allowed? Sometimes they aren't allowed, e.g. Vanguard makes sure that the customers don't over-contribute to IRAs: So it depends on how good/bad your financial institution is. Also note that they can't check whether you over-contributed if you have other accounts at other financial institutions.


3

Calling this "strange" is an understatement. I'd call it illegal. You can't pay healthcare premiums with HSA funds while you are employed (unless you are on COBRA), and if you over contribute you pay a 6% tax on the overage unless you correct it. Furthermore, overage contributed by an employer must be treated as taxable wages, so they'd be better off just ...


3

Yes, you can withdraw the excess contribution (or actually any amount you contributed for 2015, not necessarily an excess), plus earnings from that withdrawn contribution, by April 15, and not incur a penalty for the excess contribution. It would count as if you did not contribute that amount at all. The earnings would be taxed as regular income, and the ...


3

You can't change the W2, the employer issues it and sends it to the IRS. You cannot affect it in any way. The employer reported correctly. You did contribute $4137 in 2015. You then withdrew the excess in 2016, and did it timely, so it is not taxable in 2016. However, the excess contribution should be added back to your wages on your tax return. The way to ...


3

You should speak to HMRC about the correct way to unpick this. The ISA helpline number is 0300 200 3312.


3

You didn't have a situation of "excess contribution". If you have proof that someone in Fidelity actually told you what you said, you might try to recover some of your losses through a lawsuit. However, their first (and main) defense would be that they're not in the business of providing tax advice, and it is your problem that you asked random person a tax ...


3

One of the ways to fix it is to do nothing, and pay 6% penalty on the excess. That would cost you $90, and you'll report the excess of 2013 as a contribution in 2014 and will learn not to make such mistakes again. Another way is to talk to your IRA custodian and see what they can do about it. The most trivial thing is to physically withdraw and then re-...


3

What you should do is re-characterize contributions from being a Traditional IRA contributions to Roth IRA contributions. Call your broker that holds the account and ask how to do that. Note: re-characterize means you don't move the money to Roth account, you retroactively say that it was a Roth account to begin with. By re-characterization you're saying ...


3

Neardupe Where to enter earnings income when correcting excess Roth IRA contributions? (which I just updated). How much to withdraw? .... Is this right? It looks right to me, but when you request this Vanguard should (re)compute it for you, using the figures for the date the correction is executed. (AFAIK all IRA custodians do this, but you asked ...


3

First off, the 6% excise tax only applies to IRAs, and also applies every year the over contribution is in the account, until you correct it. Since you're talking about a 401k, this does not apply. [Some sites mention 6% taxes for over contributing to a 401k but I can't find that in the IRS documents. The only mention I see is regarding IRAs. If someone ...


3

1% of your overcontribution will be paid in penalties per month. It's not just a one-time penalty. That continues until you correct the problem by withdrawing to reduce the overcontribution or until your RRSP contribution room catches up. So, if you never earn money again, you'll keep paying 1% per month in penalties indefinitely. On the other hand, if you ...


2

Yes, provided you're not over the IRA deductibility limit as well. – JoeTaxpayer♦ Aug 4 at 18:02 Note that if you get refunded for excess contributions, it usually happens in the following year, in which case it doesn't affect the year where these contributions occured -- rather, the refund counts as taxable income in the year you received the refund. – ...


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