Tax Penalty for putting in too much in a 401K

The plan could make a corrective distribution to you, which is taxable. There should not be a penalty in the baseline case, but both the excess contribution amount, and the earnings on it, will be taxable, possibly in different tax years.

Was there more than one 401(k) plan involved, and were they employer plans or solo plans? There are a lot of possibilities here. If the entire error is in a single solo plan you might be able to re-characterize the contribution as a future year contribution, depending on timing and on future-year earnings. If so then you might avoid the entire impact of having done this.

Steve

At worst double taxation of the excess. See Publication 525.

-------------- Phil Marti, VITA Volunteer Clarksburg, MD

There are 2 401K plans from 2 different jobs. Let me know if this makes a difference.

Thanks,

Gary

It sounds like an excess deferral. See the discussion on page 10 of Publication 525.

-------------- Phil Marti, VITA Volunteer Clarksburg, MD