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IceNineJon

December 16, 2007

Posted by IceNineJon

What do I do if I went over my 401k contribution limit for the year?

I may have gone over the $15,500 contribution limit for the year (if my employer receives my request to stop contributing I'm safe but it's going to be down to the wire). Normally, my employer would prevent me from contributing too much but I changed jobs this year so they don't know how much I contributed before I started with them.

Anyway, what are my options? I've read that I'll have to pay tax on the amount that went over (as earned income). Are there any alternatives like transferring the overage to an IRA?

Tagged:

  1. 401k,
  2. ira,
  3. irs

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chriscahn

December 17, 2007

Posted by chriscahn

4 stars ( 2 ratings )

Are you sure you have gone over your contribution limit. Most people don't realize that matching contributions from your employer do not count in the yearly contribution total.

Regardless, you may be able to have the difference returned to you from any of the plans that permit these distributions through an excess deferral. You need to notify the plan by April 15 of the next year of the amount to be paid from the plan. The plan must then pay you that amount plus allocable earnings by April 15 of the year following the year in which the excess occurred. Reference Form 1099-R.

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