Over contribution to 401k; employer won't refund
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yekcoh26
Returning Member

Over contribution to 401k; employer won't refund

Due to having two employers in 2020, I over contributed an amount to my 401k.  My current employer is not willing to provide a refund for this over contributed amount, because their policy states that refund requests must be made prior to 3/1.

How do I deal with this over contributed amount in TT, given I will not receive a refund from my employer?

 

2 Replies
macuser_22
Level 15

Over contribution to 401k; employer won't refund

The IRS rules take that into account.

 

You still must report the excess and add it to your taxable income, but it can stay in the account.   When you finally withdraw it as a normal distribution, then it will also be part of that taxable distribution resulting in a double tax - that is the penalty for not removing the money.

 

Employers that themselves did not over-contribute are not obligated to return the money.

 

For information see IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf

 

Enter this way:

 

Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
yekcoh26
Returning Member

Over contribution to 401k; employer won't refund

Thanks so much - that helps!

 

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