No IRA 10% penalty for excess contrib in 401k plan
I received a letter from my previous 401k provider regarding an excess contribution I supposedly received at some point before I left that company and closed my 401K and rolled it into an IRA. I was told that I can have that excess contribution amount of ($82.76) deducted from my IRA because it’s not supposed to be used towards my retirement.
My concern is that I will get penalized, under age 59 1/2 for any withdrawals from my IRA? Or because this is not money coming to me but paying an excess contribution to my former 401K provider, there is no penalty from IRA?
Permalink Submitted by Alan - IRA critic on Sun, 2015-05-03 01:46
The IRA withdrawal should not be taxable or subject to penalty except for earnings on the 83. You will have to provide the IRA custodian with evidence that indicates the 83 should be treated as an excess regular IRA contribution. Reporting on your tax return depends on whether this was an excess contribution or excess deferral, which year you did the rollover etc. Has your 1099R been revised for 2014?
Permalink Submitted by CHARLIE STAMOS on Mon, 2015-05-04 18:26
2014, Not revised yet, Thanks
Permalink Submitted by Alan - IRA critic on Mon, 2015-05-04 18:42
Are they revising it? If you received a letter what did it say? If not addressed, you will need to call them because they should issue two 1099R forms for this and separate the 83 from the G coded 1099R reporting the rollover. Without a clear letter, you may have problems getting the IRA custodian to code an IRA distribution as a corrective distribution.