@sathish23 wrote:
Thanks for the response. After I posted, I also saw a couple of other posts and I wanted to confirm something before I proceed.
1. I can call the 401 Account Manager and ask for the $600 excess deferral to be returned to be, show that as income as suggested and add additional 10% of $600 as income due to early withdrawal or
2. I can ask the excess $600 to be used for this years (2021) 401K, show $600 as income as suggested in 2020 taxes.
Are either of these correct? I also keep seeing about some 6% penalty so not sure where and on which option it would apply.
Thanks
#1) As I said in my answer - the excess had to be returned *before* April 15, 2021 or it cannot be returned at all.
#2) . No. it must be reported as 2020 income as I said above.
#3) The 6% penalty applies to IRA's, not 401(k) plans.
**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.**
