Appreciate the info here and hoping to clarify a few things.
Our scenario: spouse changed jobs in 2021 and over-contributed to 401K. We didn't realize until it was too late to fix, so we reported the excess as miscellaneous income on 2021 return.
1. Do we have to take any action to have this distributed back to us before normal retirement age?
2. Is there any additional penalty (on top of the tax we will pay for 2021) for not having it distributed to us until then? Are all of the posts referencing annual 6%/10% excise taxes and/or 10% early withdrawal fees mistaken?
3. If the excess amount (+ returns) is distributed back to us at some point going forward before retirement age, how will that be handled in that tax year? And what penalties will we face, if any?
