From @Mike9241 I thought he meant contribution is tax free and I only need to pay tax on earnings.
From @dmertz Since excess is coming from employer contribution, I need to pay tax on both contribution and earning.
Sorry I am getting confused.
I was also reading Publication 525 on "Excess Annual Addition" session. (this shows code E)
A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. A corrective payment consisting of your after-tax contributions isn't taxable.
My understanding from IRS rule : This is saying the contribution is not taxable. only earning is. Could you please help me understand this ?
Thank you
