Overcontributed to 2023 401k

nycobie

Hello - I over contributed to my 401(k) for 2023. I wanted to try and fix this before the end of the year but I need my W-2s to fix the issue so I won't be able to correct it until January. My understanding is that I have until April 15 to fix this without penalty.

I believe this means that I will owe taxes on the excess contribution and any gains next year, is there anything I need to do with respect to my 2023 taxes? In particular, what do I need to do to document I have received the refund of excess contributions before the April 15 deadline?

rachels

Hi nycobie,

You may not necessarily need your W-2 to get the issue corrected. Have you contacted your employer about this? Your employer may be able to withdraw the excess before January. Doing that should allow your W-2 to be issued with the 401(k) handled correctly. If you can do this before the end of 2023, all of the necessary corrections and forms (W-2 and 1099-R) should be issued for your 2023 tax return.

You are correct that you have until the April 15th deadline to withdraw the excess. See: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-what-happens-when-an-employee-has-elective-deferrals-in-excess-of-the-limits

If you do not get the excess withdrawn before the end of 2023, you will typically receive a Form 1099-R for the year of the withdrawal (2024). Depending on the 1099-R, you may then need to amend your 2023 tax return to report the excess deferral as income for 2023.

If you don't get this corrected before the end of 2023, you generally won't need to do anything to report it on your 2023 return for now. Instead, the amount would be reported when you amend your 2023 return after getting the 1099-R in 2024.

You can also use the IRS's interactive tool to help you determine how to correct the excess 401(k) contribution in your specific situation.