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New Member

Roth 401k Excess Contribution 2020

I changed jobs in 2019 and in doing so over-contributed to my 401k, here is a summary of the situation:

  • Traditional (pre-tax): $19,000 (allowable contribution, all with the previous employer's plan)
  • Roth (after-tax): $10,000 (over-contribution, all in the new employers plan)
  • I received $2250 in company match for the $10k in contributions (which will be taken back)
  • My Roth investments have lost (YTD) about $2000
  • My top tax bracket for 2019 and 2020 will be 32%
  • I started the process to get the contributions returned today (4/1/2020) but the plan administrator says it will take 2-3 weeks and so I may miss the April 15 deadline. 

 

Questions:

  • Given that this deadline has been extended to July 15, does anyone know if the deadline for removing excess contributions has been extended as well?  The IRS page lists April 15 explicitly and does not allow for extensions so this tells me that the extension will not apply but am hoping to be proven wrong.
  • Is it possible to claim capital losses in this situation? The tax code only talks about gains.
  • Any other advice from folks who have had similar experiences?
3 Replies
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Expert Alumni

Roth 401k Excess Contribution 2020

You have until July 15 to remove your excess contribution.  

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New Member

Roth 401k Excess Contribution 2020

Thanks! is there any IRS reference you can provide that can confirm this or is it just because the filing deadline has been extended therefore I will have more time to receive the 1099 and updated W-2?  

 

Also do you know if I will be able to claim capital losses on the $2000?

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Employee Tax Expert

Roth 401k Excess Contribution 2020

See the IRS rules for withdrawal of excess contributions in the section of IRS Publication 590A at this link.  The language in 590A is a generic "on or before the due date", so yes, because the due date has been extended to July 15th, that is the date for you to remove the excess contribution:

 

"Withdrawal of excess contributions.

 

For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed." 

@alexluc88 

[Edited 04/03/2020|2:08pm PST]

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