What does the term excess contribution mean?

The maximum amount you can contribute to a 401K is (I believe) 15% of your wages or $15,000, which ever is less. If you contribute more, that is an "excess contribution".

It normally happens when you change jobs in the calendar year. If you have ONE job, the 401K custodian knows to NOT allow you to contribute an excess amount to the 401K. However, after a job change, the 401K custodian has no way of knowing what was contributed in the earlier job.

Had this happen to a client. He was NOT happy when the 6% excise tax was levied on the excess contribution.