how to handle excess 401k contribution with multiple jobs

[softaxes6]

I work multiple jobs and didn't keep track closely enough and ended up contributing like ~2k more than the limit in 2025 for 401k contributions. Since taxes are due in 1 day, I'm assuming it's too late to ask for a distribution so I'm not sure what to do now.

I read through

https://www.irs.gov/retirement-plans/consequences-to-a-participant-who-makes-excess-deferrals-to-a-4...

and it looks like I just need to report the excess as income and that's it? Do I still need to request a distribution or can I ignore it now? also, what if I didn't report this? The IRS has all my W2s so I'm assuming they would catch the overcontribution and say I underpaid my taxes right?
Is there any risk of the irs notifying 1 or all my jobs?

[DavidD66]

The IRS will not notify any of your employers.  The IRS might catch the excess contribution, and they might not.  I don't recommend waiting to whether they do or not.  

The first thing you need to do is have the excess contribution (deferral) withdrawn from your 401(k).

Reporting excess salary deferrals (excess 401k contributions) returned to you after the end of the tax year but by April 15th of the following tax year on your 1040.  Do not create your own 1099R for this situation.  If the excess is returned to you after April 15th you will be subject to an excise tax (penalty) on the amount that remained in your account.  The excise tax is charged each year the excess remains in the 401(k).   

Any excess 401k contributions returned before the end of the current tax year should be covered in a 1099R from the 401k for the current tax year and entered as a 1099R in Turbo Tax.    

Page 10 of IRS Pub 525 under Excess deferrals (the IRS term for 401K contribution is deferral) tells us to include the excess deferrals as income on line 7 of Form 1040 if the money was returned after the end of the tax year but by April 15th of the following tax year.  You need to report only the excess contribution, not any money generated by the investment of the excess contribution.  What you earned will be covered by a 1099R for the following tax year and will be entered then as a normal 1099R. 

Below is how to do this in TurboTax Online:

• The easiest way to get to the interview questions is to type "excess salary deferrals" in the search box. 
• You can also get to the same place by going to the Miscellaneous Income line at the bottom of the Wages & Income screen.
• Answer Yes to "Did you earn any other wages?"
• Indicate "Other" as Source of Other Earned Income and click Continue 
• For the description enter "20XX Excess 401K Deferrals" and click on Done

Any income on the excess deferral taken out is taxable in the tax year in which you take it out. If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income

[softaxes6]

thanks for the reply. so to confirm, I should still contact my 401k plan administrator and ask for a distribution even though it's past the april 15 deadline?

does it matter which plan administrator I ask, or can I choose any among my jobs?

also, is there any way I can just pay a 1 time extra tax and not have to contact anyone? 

Like could I just report the excess as income and not take a distribution? or is taking a distribution absolutely required?

[softaxes6]

would love a reply if anyone knows

[AnnetteB6]

As stated in the answer provided by DavidD66, the excess deferral is subject to excise tax each year that it remains in the 401k.  

So, you do need to contact one of the plan administrators to have the excess deferral amount (and associated earnings) distributed from the account.  As long as the total excess is removed, it does not matter which plan distributes it.

@softaxes6 

[softaxes6]

are you sure there's an excise tax annually? I thought that's only for ira overcontributions

[DianeW777]

Yes, the excise tax is paid each year until the excess is removed, which includes earnings. it never stops until the required amount is removed. Concur with AnnetteB6 and DavidD66 information posted earlier.

@softaxes6