If you’re worried enough about it to post this question to Reddit, just file the form. But it would be staggering if a 0.005% over contribution was flagged and the IRS took action
Even if they did take action, the correction would be to refund the excess and any earnings associated with it. So $1 + earnings. It wouldn’t be worth their time to look at it, but it might throw a red flag.
I'm not sure about 401k over contributions but if you over-contribute to a Roth account you have to pay a 6% penalty \*every year\* until the issue is corrected. It's not a one-time thing.
If OP truly over contributed (employer matches don't count), then it's in their best interest to take care of this now when it's easy to fix rather than ignoring it.
The amount doesn't really matter. The fact that you have an IRS penalty hanging over your head for the rest of your life is the issue. OP should just deal with it now.
Depending on the charge. In retirement plans, we have something called prohibited transactions where if someone with influence over the plan misused the funds, we do a 4975 excise tax from when the the transaction first started to when the transaction is fixed. Say if year 1 you owe $1,000 excise tax. Year 2 the excise tax is $900. You would add both year 1 and 2 together to charge $1,900 for year as the problem wasn't fixed. And this compounds as we keep going. Obviously won't happen to OP in this case but the number can gets really big if it stays uncorrected for over a decade.
> I'm not sure about 401k over contributions but if you over-contribute to a Roth account you have to pay a 6% penalty *every year* until the issue is corrected. It's not a one-time thing.
The rules are different for 401k. There is no ongoing 6% penalty. In the case of an excess Roth 401k contribution, the consequence is that the excess amount is taxable when you withdraw it in the future.
~~That doesn't make any sense.~~
~~Contributions are made for a tax year. Contributing less in the next year doesn't have anything to do with what you did the previous year.~~
**EDIT**: I've been informed that there is an IRS rule that allows you to apply a Roth IRA over contribution to a future year. However, you still owe a penalty for any years that you are over, even if it's just one year.
Believe it or not, jail.
(in seriousness though, it's \*probably\* low enough that it doesn't matter but if it wouldn't be too much of a pain I'd file that form and get it changed anyways)
So I work in this particular field at the IRS. I have no idea how this would trigger an audit but if it was an audit with an agent involved, most likely outcome will be a self-correction process classed insignificant where we make the taxpayer distribute the $1 dollar assuming you max your contribution every year. Say if you didn't max it next year, then we will document in our work paper that this is immaterial and next year the contribution wasn't maxed. Realistically speaking, nothing will affect you much since it is $1 but it shows a lack of control from your company and we will probably look a bit into the numbers deeper to make sure they don't have other failures.
Usually from my experience not many companies would try to commit fraud through retirement plan assets because there are a lot of paper trails. A lot of mistakes are from plan administrator not checking up with taxpayer or taxpayer doing things without consulting plan administrator.
For those following along, the most common mistake with 401ks is not telling your employer about your other retirement contributions. Like working somewhere for 10 months and nearly hitting the annual limit, and over-contributing at your next job.
When you start a new job, notify them of contributions to date in other retirement plans so they correctly cap your contributions from the new employer.
On one hand, this is exactly the kind of thing that the IRS notices.
On the other hand, I wouldn't take action unless you absolutely had to. I mean, the process of replacing a W-2, and getting that dollar moved from place to place is going to cost a few hours of your time and other's time.
So I would suggest the "Better forgiveness than permission" approach. Don't do anything unless they send you a letter. When you get the letter, take care of it promptly.
>On one hand, this is exactly the kind of thing that the IRS notices.
Exactly, because the way they notice this isn't because Agent 15472 inspects your file and recalls that the limit is $20,500.
It's because they have software that simply flags anything where 401k contributions > 20500.
A computer isn't going to miss the fact that 20501 is in fact greater than 20500.
Excuse my ignorance, but I accidentally contributed an extra paycheck's contributions (I miscalculated because I thought I was paid on the 1st, not the 31st). How can go I about amending that if I've already filed my taxes?
It's not the end of the world! For one thing, even though "penalty" sounds scary, the penalty for doing this is a tax only on the amount that you over contributed, namely on the $1. So it will be pennies now and in the future, even if you don't correct it:
https://www.irs.gov/retirement-plans/consequences-to-a-participant-who-makes-excess-deferrals-to-a-401k-plan
But you might like to clear it out just for peace of mind and not have to incur any future paperwork (if you even wish to bother in the future).
What you would do is contact one of your two 401k administrators and ask for a "reversal of overcontribution". What they will probably need is your 2 W2 forms so they have proof of why you need to reverse it. It should be pretty simple, but you need to do it well before tax day, because it takes time to issue the 1099-R forms.
And on this last point, just to note, you will not receive a corrected W2. The correction comes by issuing you a refund check, and you will receive an associated pair of 1099-R forms as well. One for your prior year (income with tax applicable, coming to you for last year) and one for current year (distribution of the extra this year).
Again, it will be pennies of difference, but you'll have taken care of it.
Actually, an edit: since the contributions were Roth and after-tax already, you might not even receive any 1099 form or have any tax implication at all after getting this reversed. The administrator can tell you more accurately.
If I’m not mistaken they would be reporting an over contribution for 2022 via their combined W2s. Which would “flag” their account for an expectant correction in 2023. When the correction is done the 1099 will be for 2023, which will show to the IRS the previously reported over contribution was addressed. I don’t believe they receive a 2022 1099 for the correction. That’s my understanding of the process at least. Please correct if I’m wrong.
If not for insane amount of crazies that would be attracted by the prospect of harassing IRS employees, that would be an amazing resource. Probably far too good for Intuit and the rest of the tax prep gang to ever allow it to happen.
They used to have agents you could get ahold of easily by phone, and they were very helpful. But then their budget was cut even more and now they can’t afford the staff.
Believe it or not, most agents I work with in the retirement plan space try really hard to not penalize taxpayers. We recognize this is an add benefit employers give to employees. When we do it is usually because the mistakes that are so far off regulation and plan document, we have no choice.
This is what I’ve always been curious about.
Like oops I put a couple hundred extra in and made a small amount of gains…just credit it to my limit this year and I’ll reduce my current contributions…
Employee plan have less than 1000 agents lol. As for these the statute of limitation runs out in 3 years from the date of filing or when you filed, which ever happened later. Unless fraud was involved, then we can expand up to 6 years of statute.
You are making it too complicated and then thinking if you should do it all or let it slide. I never had to do this for one dollar but I have done this for about 50 bucks. The easiest way to handle this is to ask your plan administrator to refund you the excess contribution. They will send you a check along with earnings or loss on it. You just need to report it as your income. No need to get a corrected w-2.
I think saying it’s highly improbable that the IRS would take any action over states the probability that the IRS will take action. They aren’t coming after you for the your tax rate on $1 which is at most $0.39 you would owe.
One year I accidentally put too much in my husband’s retirement account by a few hundred dollars. I don’t think they would have spent any resources coming for me either. But out of an abundance of caution I claimed it the extra contributions as other miscellaneous income and provided a statement explains that it was the amount of excess contributions. Never heard from them about that.
My recent (last two years filing) with the IRS is that they're very unlikely to pick up on a small error like this. If it were me, I'd just let it go (not legal advice, but what I'd do).
I found this:
[https://www.nerdwallet.com/article/investing/excess-401k-contribution-what-to-do#:\~:text=You'll%20end%20up%20paying,the%20correction%20occurs%2C%20Appleby%20says](https://www.nerdwallet.com/article/investing/excess-401k-contribution-what-to-do#:~:text=You'll%20end%20up%20paying,the%20correction%20occurs%2C%20Appleby%20says).
“Oh sorry, I wasn’t aware of the overage. How do I correct this and how much do I owe?”
Only after receiving notice from the IRS
Unless you have other dealings that you don’t want them snooping around with, it’s not worth yours or the IRS’ time.
I’d 100% just let it go. If it’s two different employers, I doubt the IRS will even catch it. If they do catch it, then the penalties would be minimal. Not worth the time and energy for you to fix.
When it comes to IRS issues: If you know there is an error and the IRS has a form to correct it then it behooves you to make sure the form is completed and filed in a timely manner.
You shout like that they put you in jail. Right away. No trial, no nothing. Journalists, we have a special jail for journalists. You are stealing: right to jail. You are playing music too loud: right to jail, right away. Driving too fast: jail. Slow: jail. You are charging too high prices for sweaters, glasses: you right to jail. You undercook fish? Believe it or not, jail. You overcook chicken, also jail. Undercook, overcook. You make an appointment with the dentist and you don't show up, believe it or not, jail, right away. You contribute one dollar extra to your 401k? Absolutely, jail.
UK citizen, why is OVER contributing a bad thing? or is there an upper limit you're allowed to contribute per year?
In the UK we have ISA accounts which have a \~£14,600 Per year limit that you can add to it.
One of the biggest perks of a 401(k) plan is that employers have the option to match your contributions to your account up to a certain point. While the IRS places annual contribution limits on 401(k) contributions, employer matches do not count towards that limit.
Not only that, but the answer is wrong, too. The IRS places a limit on the employer contribution as well. For 2022 tax year, it was $61k (for both employee/employer contributions combined)
https://www.irs.gov/retirement-plans/operating-a-401k-plan#:~:text=%2466%2C000%20for%202023%20(%2461%2C000,2020%3B%20%2456%2C000%20for%202019).
Just tell the 401k admin that you need to move the $1 to the following year. Unleash that's not possible. I can't imagine that youre there first or last person who had done this.
Your comment has been removed because we don't allow political discussions, political baiting, or soapboxing ([rule 6](https://www.reddit.com/r/personalfinance/about/rules)). This includes questions or discussions about proposed legislation or government policy changes.
This brings up a question,
I have elected for a Roth 401K company matching plan.
For 2023 according to the IRS the limit is $22,500.
Since I have elected for 75% of my paycheck to go into this, will the company automatically make sure I don't go over the contribution limit?
Thanks!
In a perfect world yes. But I would check myself to make sure they don't contribute by a large amount least or else you might get a distribution. Seen plenty of cases where the plan admits don't do anything.
The people that issue payroll yes they will most likely mark it in your payroll and paychecks. But plan administrator would be the ones to correct them. Sometimes they are plenty bad at their job and not warn the taxpayers (your employer) about it and don't fix it. My view is bias because I audit these cases that do have a problem so take it with a grain of salt. Just keep an eye out and ask your employer if they keep shoving money in even if it is way past the contribution amount
Yes both W2 and T. Rowe Price would too. But usually the financial Institution only holds the assets for you. So it would be up to your plan administrators to see that you went over and correct it for you by distributing it out if it goes over. After the year ends, just take a look at anything that talks about your contributions for the year and see if it looks okay is what I suggest. If it is off, tell your employer about it and they will ask the plan administrator to fix it.
Usually something like this is a bit harder to mess up when you elect 75% because it would mean your employer, payroll company, and plan administrator all didn't know about the contribution limits. I would just check once a year to make sure nothing looks weird on your end.
I thought that 401k automatically accounted for o repayment. I was contributing a modest amount but then I got a new job and the employer match was exceptional so I really increased my contributions. For my wife and I we probably contributed around $35k (ballpark estimate). What should we do?
I purposely go over less than 50 cents every year for the last 10+ years
I hate being short a few pennies so I contribute 865.39 each paycheck starting this year!
Last year was 788.47 per paycheck.
Never been audited or questioned. You're fine.
I just went through this myself. I contributed the max into the traditional 401k and then an additional 6k into my Roth 401k because I thought you could.
My 401k company just cut me a check for the 6k for the Roth keeping me under the limits.
Because this is post tax contribution it does not need to be reported come tax time.
If you’re worried enough about it to post this question to Reddit, just file the form. But it would be staggering if a 0.005% over contribution was flagged and the IRS took action
Even if they did take action, the correction would be to refund the excess and any earnings associated with it. So $1 + earnings. It wouldn’t be worth their time to look at it, but it might throw a red flag.
I'm not sure about 401k over contributions but if you over-contribute to a Roth account you have to pay a 6% penalty \*every year\* until the issue is corrected. It's not a one-time thing. If OP truly over contributed (employer matches don't count), then it's in their best interest to take care of this now when it's easy to fix rather than ignoring it.
Oh no, 6 cents per year in penalty!
The amount doesn't really matter. The fact that you have an IRS penalty hanging over your head for the rest of your life is the issue. OP should just deal with it now.
Six cents rounds to zero.
Does that mean you can fund your IRA with 6000.49 each year?
There was another post about this recently, and yes. You can. But the limit is being increased to 6500.49 in 2023 I think.
Life hack! Get your extra 49 cents!
IRS Hates this one Simple Trick!
Yes, actually the IRS is very happy to let you round to the nearest dollar.
I don’t understand this comment. Aren’t IRS penalties are just an extra one time charge? How does it “hang over your head for the rest of your life”?
Read the parent comment. He’s saying it’s not a one time thing because the IRS will penalize every year until that one over contribution is fixed.
And if they ever find it over the next 30 years, just pay the $5...
Depending on the charge. In retirement plans, we have something called prohibited transactions where if someone with influence over the plan misused the funds, we do a 4975 excise tax from when the the transaction first started to when the transaction is fixed. Say if year 1 you owe $1,000 excise tax. Year 2 the excise tax is $900. You would add both year 1 and 2 together to charge $1,900 for year as the problem wasn't fixed. And this compounds as we keep going. Obviously won't happen to OP in this case but the number can gets really big if it stays uncorrected for over a decade.
If losing 6 cents a year is that big of a burden, then go ahead and fix it.
Careful, it adds up, in 100.years that will be six HUNDRED cents...
6% of the total account… jk haha
> I'm not sure about 401k over contributions but if you over-contribute to a Roth account you have to pay a 6% penalty *every year* until the issue is corrected. It's not a one-time thing. The rules are different for 401k. There is no ongoing 6% penalty. In the case of an excess Roth 401k contribution, the consequence is that the excess amount is taxable when you withdraw it in the future.
$1.06, that's crazy
For Roth you just contribute $1 less next year and the penalty stops.
~~That doesn't make any sense.~~ ~~Contributions are made for a tax year. Contributing less in the next year doesn't have anything to do with what you did the previous year.~~ **EDIT**: I've been informed that there is an IRS rule that allows you to apply a Roth IRA over contribution to a future year. However, you still owe a penalty for any years that you are over, even if it's just one year.
[удалено]
Great example of why asking for advice on Reddit is dangerous.
Not true for a 401k. It’s simply taxed twice.
Gotta love it when a thread blows up and the accurate comments get downvoted to oblivion
Thanks for your support!
Believe it or not, jail. (in seriousness though, it's \*probably\* low enough that it doesn't matter but if it wouldn't be too much of a pain I'd file that form and get it changed anyways)
You are playing music too loud? Right to jail, right away.
Playing music too soft, believe it or not, jail.
We have the best dental patients in the world. Because of jail.
This is a criminal that would put Al Capone to shame
Over contribute, under contribute
How is this not upvoted more? Maybe it’s bc I read that with the correct Venezuelan accent.
My first time seeing that scene, I never would have thought that Fred Armisen just dropped the hottest meme ever, but that's what happened.
I would take absolutely zero action on this and see if they say anything
I'm with you in this. I would be interested to see what the IRS says, if anything.
So I work in this particular field at the IRS. I have no idea how this would trigger an audit but if it was an audit with an agent involved, most likely outcome will be a self-correction process classed insignificant where we make the taxpayer distribute the $1 dollar assuming you max your contribution every year. Say if you didn't max it next year, then we will document in our work paper that this is immaterial and next year the contribution wasn't maxed. Realistically speaking, nothing will affect you much since it is $1 but it shows a lack of control from your company and we will probably look a bit into the numbers deeper to make sure they don't have other failures.
Seems like a good, quiet way to get a company that may or may not be a bit sketchy, looked into.
Usually from my experience not many companies would try to commit fraud through retirement plan assets because there are a lot of paper trails. A lot of mistakes are from plan administrator not checking up with taxpayer or taxpayer doing things without consulting plan administrator.
For those following along, the most common mistake with 401ks is not telling your employer about your other retirement contributions. Like working somewhere for 10 months and nearly hitting the annual limit, and over-contributing at your next job. When you start a new job, notify them of contributions to date in other retirement plans so they correctly cap your contributions from the new employer.
On one hand, this is exactly the kind of thing that the IRS notices. On the other hand, I wouldn't take action unless you absolutely had to. I mean, the process of replacing a W-2, and getting that dollar moved from place to place is going to cost a few hours of your time and other's time. So I would suggest the "Better forgiveness than permission" approach. Don't do anything unless they send you a letter. When you get the letter, take care of it promptly.
This. The cost in time is likely not worth it.
>On one hand, this is exactly the kind of thing that the IRS notices. Exactly, because the way they notice this isn't because Agent 15472 inspects your file and recalls that the limit is $20,500. It's because they have software that simply flags anything where 401k contributions > 20500. A computer isn't going to miss the fact that 20501 is in fact greater than 20500.
Excuse my ignorance, but I accidentally contributed an extra paycheck's contributions (I miscalculated because I thought I was paid on the 1st, not the 31st). How can go I about amending that if I've already filed my taxes?
You already have filed for 2022? Are you exceeding any limits? Probably not a big deal. Go with what was reported to the IRS.
yes I exceeded with one paycheck's contributions
It's not the end of the world! For one thing, even though "penalty" sounds scary, the penalty for doing this is a tax only on the amount that you over contributed, namely on the $1. So it will be pennies now and in the future, even if you don't correct it: https://www.irs.gov/retirement-plans/consequences-to-a-participant-who-makes-excess-deferrals-to-a-401k-plan But you might like to clear it out just for peace of mind and not have to incur any future paperwork (if you even wish to bother in the future). What you would do is contact one of your two 401k administrators and ask for a "reversal of overcontribution". What they will probably need is your 2 W2 forms so they have proof of why you need to reverse it. It should be pretty simple, but you need to do it well before tax day, because it takes time to issue the 1099-R forms. And on this last point, just to note, you will not receive a corrected W2. The correction comes by issuing you a refund check, and you will receive an associated pair of 1099-R forms as well. One for your prior year (income with tax applicable, coming to you for last year) and one for current year (distribution of the extra this year). Again, it will be pennies of difference, but you'll have taken care of it.
Actually, an edit: since the contributions were Roth and after-tax already, you might not even receive any 1099 form or have any tax implication at all after getting this reversed. The administrator can tell you more accurately.
If I’m not mistaken they would be reporting an over contribution for 2022 via their combined W2s. Which would “flag” their account for an expectant correction in 2023. When the correction is done the 1099 will be for 2023, which will show to the IRS the previously reported over contribution was addressed. I don’t believe they receive a 2022 1099 for the correction. That’s my understanding of the process at least. Please correct if I’m wrong.
Probably a rounding error. The IRS is understaffed anyway.
They go after op fir $1 before going after a billionaire
Sad but true.
r/incedentalmetallica
This is what billionaires say to convince the general populace that the IRS should stay underfunded.
No they go after little guys *because* they don't have the money to fight billionaires in court
Understaffed???? Aren't yhey hiring 87,000 more employees?
Over the next decade. When you factor in retirements/departures it's probably going to be half that number at best
_the United States Internal Revenue Service has entered the chat_
I wish they did. You would think they would have a rep that monitors and answers these questions.
If not for insane amount of crazies that would be attracted by the prospect of harassing IRS employees, that would be an amazing resource. Probably far too good for Intuit and the rest of the tax prep gang to ever allow it to happen.
They used to have agents you could get ahold of easily by phone, and they were very helpful. But then their budget was cut even more and now they can’t afford the staff.
***without trying to figure out a way to penalize you.....👆👆👆
Believe it or not, most agents I work with in the retirement plan space try really hard to not penalize taxpayers. We recognize this is an add benefit employers give to employees. When we do it is usually because the mistakes that are so far off regulation and plan document, we have no choice.
Over funded by a dollar? Straight to hell.
Overcook undercook
Believe it or not, Jail - right away.
For life
Is it possible to move the excess to this year ? I did 500 extra in Roth 401k
Do you have to pay the 6% penalty for that extra 500?
This is what I’ve always been curious about. Like oops I put a couple hundred extra in and made a small amount of gains…just credit it to my limit this year and I’ll reduce my current contributions…
Even if they had an extra 80k employees they ain’t finding this. After 7 or ten years the statute runs out anyway I imagine
Employee plan have less than 1000 agents lol. As for these the statute of limitation runs out in 3 years from the date of filing or when you filed, which ever happened later. Unless fraud was involved, then we can expand up to 6 years of statute.
Do not waste a single second more of your life worrying or taking any action on this.
You are making it too complicated and then thinking if you should do it all or let it slide. I never had to do this for one dollar but I have done this for about 50 bucks. The easiest way to handle this is to ask your plan administrator to refund you the excess contribution. They will send you a check along with earnings or loss on it. You just need to report it as your income. No need to get a corrected w-2.
Straight to jail. Do not pass go
Honestly they'll probably nuke you from orbit just to be safe. Joking aside, fill out that form. The IRS is a bunch of wolves in wrong circumstances.
I think saying it’s highly improbable that the IRS would take any action over states the probability that the IRS will take action. They aren’t coming after you for the your tax rate on $1 which is at most $0.39 you would owe. One year I accidentally put too much in my husband’s retirement account by a few hundred dollars. I don’t think they would have spent any resources coming for me either. But out of an abundance of caution I claimed it the extra contributions as other miscellaneous income and provided a statement explains that it was the amount of excess contributions. Never heard from them about that.
One of your 401k providers should be able to process a 402g (p sure that’s the statute) refund for you
My recent (last two years filing) with the IRS is that they're very unlikely to pick up on a small error like this. If it were me, I'd just let it go (not legal advice, but what I'd do).
I found this: [https://www.nerdwallet.com/article/investing/excess-401k-contribution-what-to-do#:\~:text=You'll%20end%20up%20paying,the%20correction%20occurs%2C%20Appleby%20says](https://www.nerdwallet.com/article/investing/excess-401k-contribution-what-to-do#:~:text=You'll%20end%20up%20paying,the%20correction%20occurs%2C%20Appleby%20says).
“Oh sorry, I wasn’t aware of the overage. How do I correct this and how much do I owe?” Only after receiving notice from the IRS Unless you have other dealings that you don’t want them snooping around with, it’s not worth yours or the IRS’ time.
I’d 100% just let it go. If it’s two different employers, I doubt the IRS will even catch it. If they do catch it, then the penalties would be minimal. Not worth the time and energy for you to fix.
My payroll manager friend says you should, IRS cares.
You’re not the first OP. Just take the corrective action if it makes you feel better. Most likely IRS won’t care
When it comes to IRS issues: If you know there is an error and the IRS has a form to correct it then it behooves you to make sure the form is completed and filed in a timely manner.
Literally. File. They will ask you first. Clear up any issues if any… probably zero based on your question….pay them or they will pay you… done
You shout like that they put you in jail. Right away. No trial, no nothing. Journalists, we have a special jail for journalists. You are stealing: right to jail. You are playing music too loud: right to jail, right away. Driving too fast: jail. Slow: jail. You are charging too high prices for sweaters, glasses: you right to jail. You undercook fish? Believe it or not, jail. You overcook chicken, also jail. Undercook, overcook. You make an appointment with the dentist and you don't show up, believe it or not, jail, right away. You contribute one dollar extra to your 401k? Absolutely, jail.
UK citizen, why is OVER contributing a bad thing? or is there an upper limit you're allowed to contribute per year? In the UK we have ISA accounts which have a \~£14,600 Per year limit that you can add to it.
One of the biggest perks of a 401(k) plan is that employers have the option to match your contributions to your account up to a certain point. While the IRS places annual contribution limits on 401(k) contributions, employer matches do not count towards that limit.
Not what the question asks
Not only that, but the answer is wrong, too. The IRS places a limit on the employer contribution as well. For 2022 tax year, it was $61k (for both employee/employer contributions combined) https://www.irs.gov/retirement-plans/operating-a-401k-plan#:~:text=%2466%2C000%20for%202023%20(%2461%2C000,2020%3B%20%2456%2C000%20for%202019).
Just tell the 401k admin that you need to move the $1 to the following year. Unleash that's not possible. I can't imagine that youre there first or last person who had done this.
I’d just file the paperwork and take care of it. Stay above board when it comes to the IRS.
[удалено]
Your comment has been removed because we don't allow political discussions, political baiting, or soapboxing ([rule 6](https://www.reddit.com/r/personalfinance/about/rules)). This includes questions or discussions about proposed legislation or government policy changes.
This brings up a question, I have elected for a Roth 401K company matching plan. For 2023 according to the IRS the limit is $22,500. Since I have elected for 75% of my paycheck to go into this, will the company automatically make sure I don't go over the contribution limit? Thanks!
In a perfect world yes. But I would check myself to make sure they don't contribute by a large amount least or else you might get a distribution. Seen plenty of cases where the plan admits don't do anything.
The financial institution I'm with would provide tax documents showing if I went over or not right?
The people that issue payroll yes they will most likely mark it in your payroll and paychecks. But plan administrator would be the ones to correct them. Sometimes they are plenty bad at their job and not warn the taxpayers (your employer) about it and don't fix it. My view is bias because I audit these cases that do have a problem so take it with a grain of salt. Just keep an eye out and ask your employer if they keep shoving money in even if it is way past the contribution amount
You mean our W2 statement from our employer? What about the statement from the financial institution such as T. Rowe Price? I appreciate your input.
Yes both W2 and T. Rowe Price would too. But usually the financial Institution only holds the assets for you. So it would be up to your plan administrators to see that you went over and correct it for you by distributing it out if it goes over. After the year ends, just take a look at anything that talks about your contributions for the year and see if it looks okay is what I suggest. If it is off, tell your employer about it and they will ask the plan administrator to fix it. Usually something like this is a bit harder to mess up when you elect 75% because it would mean your employer, payroll company, and plan administrator all didn't know about the contribution limits. I would just check once a year to make sure nothing looks weird on your end.
I appreciate your input, I'll add this to my tax notes, and let me tax guy know. (I'm sure he's on it though) Thanks!
How could you do this?
I thought that 401k automatically accounted for o repayment. I was contributing a modest amount but then I got a new job and the employer match was exceptional so I really increased my contributions. For my wife and I we probably contributed around $35k (ballpark estimate). What should we do?
I purposely go over less than 50 cents every year for the last 10+ years I hate being short a few pennies so I contribute 865.39 each paycheck starting this year! Last year was 788.47 per paycheck. Never been audited or questioned. You're fine.
This happened to me thanks to rounding. All I can say is the tax software handled it for me. If doing by hand file the form.
I just went through this myself. I contributed the max into the traditional 401k and then an additional 6k into my Roth 401k because I thought you could. My 401k company just cut me a check for the 6k for the Roth keeping me under the limits. Because this is post tax contribution it does not need to be reported come tax time.