I am not a tax specialist, but it seems logic to me that your federal taxes increase: Say you over-contributed $2000 to your 401k. These $2000 were not included in your W2 wages and salaries because they were pre-tax contribution to the 401k, and consequently, you haven't payed taxes on them (ie, in your tax declaration these $2000 weren't taxed yet). Now, it turns out you were over-limit and the $2000 were an excess deferral -- so you should have payed taxes on them (ie, undoing the 401k contribution). Once you add the $2000 into the "other income", it will be treated as if you never contributed them to your 401k, and thus you need to pay income taxes on them (which you haven't yet) - thus increase in federal taxes.
