Personal Finance (Not Investing) • Delayed discovery of excess 401K contributions

It looks like we're back at the beginning again where you wrote:

So now does this mean we will need to file an amended tax return for 2022? Not sure if this is handled by TurboTax and just wanted to confirm: When we receive the 1099-R we should file an amended return for 2022 and pay the additional taxes owed (plus interest?) as well as including that same amount in our 2024 income and paying tax a second time on the same amount?

I hope this post is not too old for a clarification. In digging through the transactions on the Vanguard site, what I now realize is that the excess contributions were associated with his after tax 401K contributions which were then converted to Roth 401Ks. So the HCE employees were limited to contributing 4% of their pay into the after tax 401K. But there was apparently an additional limitation of gross salary and due to the way the company treats bonuses, the 4% was taken from income that exceeded that salary limit. The check returned included those excess after tax contributions as well as the earnings since 2022. So I presume that the earnings are what will be taxable. Does this have any effect on my question as to whether this taxable amount needs to be included in the income from any previous years (via amended returns) or are we still good to just report it as income in the year received? It's not a lot, about $600 total in earnings.

Did you ever seek clarification from the administrator when the original letter arrived with the check? I would follow their advice. The money returned could be either Roth or tax-deferred and you should get confirmation on that too.

Statistics: Posted by brockmari — Tue Jul 09, 2024 2:43 am — Replies 15 — Views 1585