You have an excess deferral. If the excess is not timely distributed, it is:
- included in your taxable income for the year contributed, and
- taxed a second time when the deferrals are ultimately distributed from the plan.
The excess deferrals may not be distributed until a distribution is otherwise permissible under the terms of your plan. Additionally, you do not receive basis in the excess deferrals.
See Consequences to a Participant Who Makes Excess Annual Salary Deferrals
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