This post is about an excess deferral (contribution) to my 401k retirement accounts in 2019.
It is now January 2022. I am doing my taxes for 2019 now, but have not yet filed (I made big tax payments before so the IRS actually owes me money, so I'm filing to collect the refunds).
In 2019, I switched jobs and contributed too much money to my two 401k accounts. The IRS limits for contribution to 401k for 2019 per individual was $19,000.
- At job 1, I put away $8,750 into the 401k.
- At job 2, I put away $19,000 into the 401k - I was never asked by my new job about previous 401k contributions that year, nor did I tell them that info.
I discovered this mistake when I started doing my taxes in January 2022.
- I contacted Fidelity, but they replied that IRS rules do not allow them to return the excess deferral since it's past April 15, 2020.
- I have not yet filed my 2019 return, I'm doing it now using TurboTax 2019 Home and Business.
- Based on other posts on this forum, I added the excess deferral of $8,750 as Other Earned Income and labeled it as "2019 Excess 401K Deferrals".
My questions:
- What are my options and what is the best course of action to take to minimize headaches and penalties?
- If I'm not allowed to return the excess deferral, what are my options?
- Do I leave it in the retirement fund and apply it to subsequent years (2022 for example)?
- I keep reading about 1099-Rs but haven't received anything
- I also read that IRS charges 6% penalty of the excess amount per year and also if you distribute it 10% penalty.
- Can someone please recommend best course of action using Turbotax?
- I'm trying to find a tax advisor to help with this, but don't know where to even start looking. Any thoughts?
