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kristybui821
New Member

Filed taxes already and corrected a 401K over-contrib. Employer now says they cant process payout by 4/15. Do i need to file an extension now? What is proper action?

I filed already correcting for the 401K over-contribution just like turbo tax instructed.

Now employer is saying they cannot guarantee that the funds will be withdrawn from the 401K account before the end of the day today.

Do I need to file an extension?  Am I doomed to be double taxed?  What is the proper course of action at this point?

3 Replies
Rachel_W
Level 4

Filed taxes already and corrected a 401K over-contrib. Employer now says they cant process payout by 4/15. Do i need to file an extension now? What is proper action?

No, if you already filed you do not need to file an extension.  Unfortunately, you will be double taxed on the over-contribution to your 401(K), once on your 2018 Tax Return and again when you withdraw the money in the future.

If you already included the over contribution as wages on your 2018 Tax Return, there is no other action you need to take.

For more information, you can check out IRS Pub 525:  https://www.irs.gov/pub/irs-pdf/p525.pdf.

kristybui821
New Member

Filed taxes already and corrected a 401K over-contrib. Employer now says they cant process payout by 4/15. Do i need to file an extension now? What is proper action?

Yes, I already included the over contribution as “other income” on my 2018 tax return.  To confirm, it’s okay to file the over contributor as “other income” even though 401k funds can’t be withdrawn in time? Also if they don’t withdraw it in time, how do I report this on the 2019 tax return since I already reported it as other income on this years tax return? Thanks
Rachel_W
Level 4

Filed taxes already and corrected a 401K over-contrib. Employer now says they cant process payout by 4/15. Do i need to file an extension now? What is proper action?

Yes, the over contribution needs to be reported on your 2018 Tax Return regardless of whether you are able to withdraw it.  If it is not withdrawn by 4/15, you don't need to report anything on your 2019 Tax Return.
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