I have made excess 401K contribution in 2018 as I have changed jobs and contributed to plans from both employers.
I contacted my plan administrator (vanguard). They told me that it was too late to correct it as it passed their deadline (4/6). I had to wait till I changed my job again or till I retired to make the withdraw. I am not sure whether I asked the right question or their answer was correct. Should I call again and speak to another person? If I do what should I tell/ask them? Thanks.
It sounds like you asked the right questions. The deadline has passed for many financial institutions to distribute excess contributions. Since you were unable to have the excess contribution removed by 4/15/19, you will be taxed twice on the amount, once in 2018 and once when you withdraw the money at retirement. For more information, check out Page 10 of IRS Pub 525: https://www.irs.gov/pub/irs-pdf/p525.pdf
If you overcontributed to your 401(k) in 2018, you need to include the excess contribution to your 401(K) on line 1 of your 2018 Form 1040 by following these steps:
- Open your return
- Click on the "Federal Taxes" Tab
- Click on the "Wages & Income" Tab
- Click on "I'll choose what I work on"
- Scroll down to "Less Common Income" and click "Show More"
- Select "Miscellaneous Income" and click "Start or Update"
- Select "Other income not already reported on a Form W-2 or Form 1099" and click on "Start"
- Answer the Question "Did you receive any other wages? Yes"
- Click "Continue" through the questions until you get to "Any Other Earned Income"
- Answer "Yes" to "Did you earn any other wages?"
- Indicate "Other" as "Source" of Other Earned Income and click "Continue"
- For the
description enter "2018 Excess 401K Deferrals" and
click on "Done"
Unfortunately, you will need to paper file your return this year due to the excess 401(K) Contributions.
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