@Deb113 wrote:
It is a savings plan through my employer that is classified as a Roth 401k- money is taxed prior to funding.
OK. To the best of my recollection: Contributing excess funds to a Roth 401k that you can't remove means that a portion of your 401K withdrawal when you retire is supposed to be taxable, even though a Roth normally is not taxable. However, the plan trustee doesn't keep track and there are no good instructions on how you should keep track, there is no specific tax form for this. So the thing most people do is probably to just leave it alone and hope the IRS doesn't notice, which they probably won't. (When you retire, if we assume the 401K is worth $500,000 and this excess is a few thousand, then less than 1% of your withdrawal would be taxable, very hard to track.)
But I will double check with an expert @dmertz
(Now, I do want to be extra careful. Some employers use a Payroll Deduction IRA. This is not a 401k. A payroll deduction IRA is where an IRA is opened in your name, and the employer makes contributions for you, so you don't forget. But this is an IRA in your name. You can make extra contributions up to the limits for IRAs, you can withdraw funds subject to the normal rules for IRA, and you pay the penalties for excess contribution as with any other IRA. Employers do this because the rules are much simpler for them than establishing a true 401k plan. If you have a payroll deduction IRA, your contribution limit is $7000 and there is a 6% penalty every year if you don't remove the excess contributions. If you have a true 401k, the contribution limit is $23,000 for voluntary deferrals, and $69,000 for total contributions (deferrals plus employer contributions). Because you mentioned 6% before, I want to be doubly-sure that you have a true 401k and not a payroll deduction IRA. If you have a true 401k, then my answers above are correct.)
