@augburto wrote:
However, I was also reading about another 6% tax penalty where every year if your plan has exceeded the contribution limit, you will get taxed 6%. I've been reading a lot of mixed things about whether this applies to 401(k)s but from what I understand, this penalty only applies to IRAs. Is that right? Or do I still need to file to remove the contribution to avoid this 6% penalty? It's unclear to me if someone was to file the 1040 and mark it as miscellaneous income, if they still need to try and pull out the excess from my 401(k) to avoid other penalties.
The repeating 6% penalty is for excess contributions that are not removed from an *IRA* - not a 401(k) plan. There is no such penalty for a 401(k).
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
