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to help structuring the conversation.Pre-tax: $16,400.00
Roth: $4,100.00
(Total: $20,500.0)
Employer Match: $9,000.00 (rounded)
After-Tax (Backdoor): $5,000.00 (rounded)
Pre-Tax: $632.70
Roth: $12,925.02
Q1.a
:( My understanding that the amount in the second 401k that counts towards the $20,500 IRS limit is $632.70 + $12,925.02 = $13,557.72, and the employer and back-door parts are not in the picture,correct?
Q2.b
) Since the first 401k was already maxed out, the $13,557.72 is exactly the overall over-contributed amount in 2022,correct?
Q3
), if the money is withdrawn before the tax deadline, then I can avoid double taxation. In that case the money would need to be taxed as 2022 W2 income, and the early withdrawal penalty would be avoided.Correct?
Q4
) My next step is tounderstand what the applicable tax deadline is
: Several online forums imply that it has already passed on April/18. However, this IRS publication appears to say that the upcoming extended tax deadline is applicable (see section "Excess Contributions Withdrawn by Due Date of Return"). (I have filed for the tax extension.)Q5.a
) If it passed, I will need to understand the consequences of withdrawing the over-contributed amount now vs. later.Q5.b
) If there is still time, I will need to understand how I can compute the exact amount to withdraw to correctly account for capital gains (they are actually small capital losses this year).Yes, all of your traditional elective deferrals and Roth contributions at the second employer are excess contributions.
The statutory deadline for obtaining a corrective distribution is April 15 of the following year, not the due date of the tax return for that year. The April 15, 2023 deadline for obtaining a corrective distribution has passed, so the excess traditional elective deferral to the second employers plan must be included in income on your 2022 tax return because the employer excluded that amount from box 1 of your W-2 and must appear on Form 1040 line 1h. When eventually distributed, both the traditional and Roth excess contributions and their attributable earnings will be taxable, resulting in double taxation of the excess amount. Regular distributions from the traditional 401(k) will naturally be taxable but you'll need to keep track of your Roth excess and attributable earnings so that they can be appropriately taxed when distributed. When making distributions, the excess amount and attributable earnings come out first and are not eligible for rollover.
Yes, all of your traditional elective deferrals and Roth contributions at the second employer are excess contributions.
The statutory deadline for obtaining a corrective distribution is April 15 of the following year, not the due date of the tax return for that year. The April 15, 2023 deadline for obtaining a corrective distribution has passed, so the excess traditional elective deferral to the second employers plan must be included in income on your 2022 tax return because the employer excluded that amount from box 1 of your W-2 and must appear on Form 1040 line 1h. When eventually distributed, both the traditional and Roth excess contributions and their attributable earnings will be taxable, resulting in double taxation of the excess amount. Regular distributions from the traditional 401(k) will naturally be taxable but you'll need to keep track of your Roth excess and attributable earnings so that they can be appropriately taxed when distributed. When making distributions, the excess amount and attributable earnings come out first and are not eligible for rollover.