Overcontribution to 401K
Thanks in advance- i worked for a company for the first half of 2022 where i maxed out my 401k. Then i moved to a second company and was told that i could contribute to their 401k and i am now doing that. Am i right in that? Or should i have not contributed to the new 401k. WOndering if im looking at a tax problem of overcontributing? Thanks very much.
Permalink Submitted by Alan - IRA critic on Mon, 2022-09-19 18:07
401k elective deferrals are limited to a total of 20,500 (27,000 for age 50+) per participant, regardless of how many plans are involved. If you have exceeded these figures, you need to stop contributing to the new plan. You can ask your current plan to return excess deferral amounts with allocated earnings, but they are not required to do so. Either way, unless your contributions are Roth contributions you will be taxed on any amount that exceeds the above figures, and if the plan is not willing to refund the excess by next 4/15, and the excess remains in the plan, you will eventually be taxed again when you take RMDs or other distributions down the road.