I did my tax late after April 15th 2023. I had two employers and 2 separate traditional 401k plan, which causes a slight over contribution of $800 , which I did not discoverred until May 2023, I have already reported the excess in Turbotax for my 2022 return.
However, I asked my current employer plan about withdrawing the excess $800, they don’t allow me to do that because it is after the tax date, and they don’t allow me to do any early withdraw because I am still employed by my current company.
They suggest me to talk with my previous 401k plan about early withdrawal, but I already rolled it over to my IRA.
Two questions:
1. Can I just remove the $800 from one of my own IRA accounts to address the over contribution?
2. If step 1 is not okay, what is my best course of action to get this resolved?
1. No.
2. There is no point in doing anything. You've already included the $800 in your 2022 taxable income and the $800 will be simply be taxed again when eventually distributed as a normal distribution.
1. Can I just remove the $800 from one of my own IRA accounts to address the over contribution? No ... you are stuck with this situation.
2. If step 1 is not okay, what is my best course of action to get this resolved? There is nothing you can do ... you will add the excess to your 2022 return and pay taxes on it and you will ALSO pay taxes on it when you make a distribution later ... that is the penalty for making this error and not fixing it timely.
Hi @Critter-3 thank you so much for your reply. I am not too concern about the double tax since I am only $800 over, the tax is not significant.
Do you suggest I withdraw the excess amount as soon as possible or should I wait until the retirement? It seems like peoople suggest to just wait until retirement to avoid early withdraw penalty. I still have about 30 years till retirement.
Thank you!