Hi,
I do have similar situation with slight different. Could you please assist ASAP.
a) Turbo Tax online product shows, 401K excess contribution can be withdrawn till May17th 2021. I got same information from Turbo Tax Live help. However, my plan administrator/employer says, IRS didn't extend 401K excess contribution date (found same information in IRS as Apr 15th) and deadline is crossed. I do have below questions. Which one (IRS or Turbo Tax) is correct?
b) My employer/plan administrator says, the withdrawal amount will be considered as early withdrawal of 2021 contribution and not 2020 contribution. In addition, Federal tax of 20% and state tax has to be paid along with early with drawl penalty. I'm already added steps mentioned in my 2020 return. Is it true? Will this be early withdraw and penalty will be applied?
2) What happens if existing 401K excess contributions to convert to Traditional/Rota IRA? Do I need to still pay the penalty?
3) What happens if I keep excess 401K contributions in 401k account as I have already in misc. additional income and paying taxes for same amount in this year return.
Please advise and Thanks for advance
