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Bill, Enrolled Agent
Category: Tax
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My company put too much money into my 401k. This will mess

Resolved Question:

My company put too much money into my 401k. This will mess up my W2 tax form, and will force me to withdraw the amount from my 401, possibly costing penalty and additional taxes from the state and IRS. What legal precautions should I take while the company and I straighten this out.
Submitted: 2 years ago.
Category: Tax
Expert:  Bill replied 2 years ago.
Was the excess contribution a result of the company taking too much from your paycheck or miscalculation of a match or discretionary employer contribution?
Customer: replied 2 years ago.
It was their company match....nothing to do with my contribution....mine looked ok.
Expert:  Bill replied 2 years ago.
How much was the excess and what date was the contribution made? Are you considered a highly compensated employee (earn over $110,000 annually) or owner of the business?
Customer: replied 2 years ago.
The excess was over $2million. I'm salaried....but not highly compensated.
Expert:  Bill replied 2 years ago.

The excess match contribution was over $2 million? Was the excess contributed on 1 date or over a number of years? What date or dates were the contributions made? How did the company make that error?

Customer: replied 2 years ago.
I get paid twice a month. I get direct deposit. They sent the check stub in the mail on Friday, 12/30/11. It was a one time error. (I do get a company match on each of my bi-monthly contributions.
Expert:  Bill replied 2 years ago.

The company should correct the error by removing the excess (plus any earnings that may have accrued) from your account. However, none of it will be taxable to you and it will not be reported to the IRS as a distribution.

Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3078
Experience: EA, CEBS - 34 years experience providing financial advice
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Bill
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EA, CEBS - 34 years experience providing financial advice