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    sunder244's Avatar
    sunder244 Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Dec 5, 2006, 04:33 AM
    401k excess deferral and penalty
    Hello

    I recently changed job.

    I had already contriobuted the maximum 15000 with my first employer.

    Since my new employer gives match, I wanted to contribute to 401k and get the match. I called the plan admin from first employer and they told me that they can send the excess money back. My question is will there by a 10% penalty on this amount? The plan admin said they will send a form and I need to fill up and sign it.

    Thank you

    Sun
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Dec 5, 2006, 10:25 AM
    Sun:

    If you get the excess contribution back from the first employer, you can then put that amount into your new 401K plan.

    There will be no penalties as long as you do not exceed the $15,000 annual limit.
    sunder244's Avatar
    sunder244 Posts: 2, Reputation: 1
    New Member
    		  
    #3

    Dec 5, 2006, 05:44 PM
    Quote Originally Posted by AtlantaTaxExpert
    Sun:

    If you get the excess contribution back from the first employer, you can then put that amount into your new 401K plan.

    There will be no penalties as long as you do not exceed the $15,000 annual limit.

    Thanks for the reply.

    I did not understand the reply.

    With Company A, I have already contributed 15000.

    With company B, I will be putting 1000 since I can get match.

    Sometime in Jan 2007, I will get from Company A-Administartor the excess contribution back. They have told me that I need to give W2 form and submit the proof.

    I think I have to pay ordinary taxes on the money received back from CompanyA plan Admin.
    Given the above circumstances, will there be any penalty?

    Thank you

    Sun
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Dec 5, 2006, 06:29 PM
    Sun:

    Will you know how much the excess contribution is? If so, you can put exactly that much into your new 401K.

    Again, as long as the TOTAL contribution for 2006 does not exceed $15,000, you should have no problems with the IRS, nor should there be any penalties or taxes due on the refund of the excess contribution.

    The IRS may require that you show proof that you contributed only the excess contribution amount ot the new 401K program, but that should not be a problem,
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