Over contributed to 401k, but already rolled over to an IRA

[Electricmoose]

Hi there! I’m really struggling to figure out what to do - even my CPA hadn’t seen it before. Last year I had two jobs (one was a non profit, one was for profit). After leaving the first job, I rolled over my 403b to an IRA and started the next job. I left that second job a month ago, and rolled over the 401K to an IRA.

As I was pulling my taxes together this year, I made a mistake and over contributed to my 401K by $6500 dollars (given both jobs - I wasn’t tracking the amount between them)

Since both have rolled over to an IRA, I can’t take a distribution. So far I’ve recorded the $6500 as excess income which seems right - but what do I do with the amount now in the IRA, or the gains? Do I need to move them from a pre-tax to a post-tax account? Do I leave it in there and file an 8606?

This feels like a unique situation and I’m very stressed trying to resolve it - any advice would very appreciated!

[dmertz · Accepted solution]

Since you are unable to obtain a return of excess contribution from either the 403(b) or the 401(k) (because the funds are no longer there), the excess $6,500 elective deferral for 2025 is simply taxable on your 2025 tax return.  There is nothing else to do.  Despite the $6,500 being taxable, it did not become after-tax basis in either employer plan, so no after-tax basis got rolled over to the IRA.  There is nothing to report on Form 8606 regarding this.

The "penalty" for making an uncorrected excess deferral is double taxation.  This $6,500 will be taxed a second time when distributed as an ordinary distribution from the IRA.