2022 Excess Contribution on 403b

Submitted by Celva Prabu on Sun, 2023-10-08 23:27

Hello,

I have two 403b plans and contributed $700 more to the two employer plans. 2023 tax filing deadline has been extended to Oct 16 being in a flood-affected county. Is the excess correct deadline still April 2023? If I correct my excess by talking to one of the employers by Oct16 would fix the problem or would I need to pay a penalty for late correction?

Thanks in advance!

Regards
Cv

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Permalink Submitted by Alan - IRA critic on Mon, 2023-10-09 01:29

This particular deadline is not among those listed in the following IRS Reg eligible for extension:
26 CFR § 301.7508A-1 – Postponement of certain tax-related deadlines by reasons of a federally declared disaster or terroristic or military action. | Electronic Code of Federal Regulations (e-CFR) | US Law | LII / Legal Information Institute (cornell.edu)
While both of these plans may have declined your request for a return of excess deferrals anyway, and either way the excess deferral will have to be included in your 2022 income, there is no other penalty beyond the $700 being eventually subject to double taxation decades from now when distributions are taken. During this time the excess will generate additional tax deferred gains which will only be taxed once.