401k contribution
What happens if an employer withholds more than the maximum 401k contribution? This year an individual over 50 can contribute $20,000 to a 401k plan. What happens if the employee’s employer withholds more than that amount? Must the employee contact the employer about this mistake? Is there a penalty if he fails to do so?
Permalink Submitted by Al Fry on Sun, 2007-11-11 19:42
For 2007, its $20,500. If they witheld more than that, he should get a refund.
Permalink Submitted by Denise Appleby on Wed, 2007-11-14 23:29
Right. If the amount exceeds the $20,500 limit for this year, the employee must submit a claim to the plan administrator by March 1 of 2008. The amount should be returned to him by April 15, 2008 and would be treated as a income for 2007 .
If the amount is not corrected timely, then it would be double taxed.