Tax Penalty for putting in too much in a 401K

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Subject Author Date Tax Penalty for putting in too much in a 401K Gary 04-20-2009   Re: Tax Penalty for putting in too much in a 401K Steve Pope 04-20-2009  Re: Tax Penalty for putting in too much in a 401K Gary 04-20-2009  Re: Tax Penalty for putting in too much in a 401K Phillip Marti 04-20-2009  Re: Tax Penalty for putting in too much in a 401K Phillip Marti 04-20-2009
Posted by Gary on April 20, 2009, 12:21 pm Please log in for more thread options What is the Tax Penalty for putting in too much into a 401K ? Does it work the same for a Roth IRA ? Thanks, Gary -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Steve Pope on April 20, 2009, 1:38 pm Please log in for more thread options >What is the Tax Penalty for putting in too much into a 401K ? The plan could make a corrective distribution to you, which is taxable. There should not be a penalty in the baseline case, but both the excess contribution amount, and the earnings on it, will be taxable, possibly in different tax years. Was there more than one 401(k) plan involved, and were they employer plans or solo plans? There are a lot of possibilities here. If the entire error is in a single solo plan you might be able to re-characterize the contribution as a future year contribution, depending on timing and on future-year earnings. If so then you might avoid the entire impact of having done this. Steve -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Gary on April 20, 2009, 3:57 pm Please log in for more thread options On Mon, 20 Apr 2009 13:38:47 EDT, spope33@speedymail.org (Steve Pope) wrote: > >>What is the Tax Penalty for putting in too much into a 401K ? > >The plan could make a corrective distribution to you, which >is taxable. There should not be a penalty in the baseline case, >but both the excess contribution amount, and the earnings on it, >will be taxable, possibly in different tax years. > >Was there more than one 401(k) plan involved, and were >they employer plans or solo plans? There are a lot of >possibilities here. If the entire error is in a single solo plan >you might be able to re-characterize the contribution as a future >year contribution, depending on timing and on future-year >earnings. If so then you might avoid the entire impact of having >done this. > >Steve There are 2 401K plans from 2 different jobs. Let me know if this makes a difference. Thanks, Gary -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Phillip Marti on April 20, 2009, 6:31 pm Please log in for more thread options "Gary" wrote: > There are 2 401K plans from 2 different jobs. Let me know if this > makes a difference. It sounds like an excess deferral. See the discussion on page 10 of Publication 525. -------------- Phil Marti, VITA Volunteer Clarksburg, MD -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Phillip Marti on April 20, 2009, 1:50 pm Please log in for more thread options "Gary" wrote: > What is the Tax Penalty for putting in too much into a 401K ? At worst double taxation of the excess. See Publication 525. -------------- Phil Marti, VITA Volunteer Clarksburg, MD -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Solo 401K (aka Individual 401K) same as Super-Simplified 401K? December 3, 2007, 12:49 am 401K for W-2 job, plus "individual" 401K for 1099 income ? March 17, 2008, 8:28 pm Roth 401K vs. "Regular" 401K? January 1, 2008, 9:13 pm 401K vs. Roth 401K November 4, 2008, 4:26 pm Tax Penalty June 5, 2007, 3:20 pm Re: Tax Penalty June 8, 2007, 1:22 pm Penalty on underpayment? 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