Excess Roth 401k contributions

Forum|Forum|1 year ago
March 25, 2025
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I had excess contributions to my 2024 Roth 401(k) since I was employed in 2 different companies.

I contacted the 401k providers but they said it was too late for them to make changes to reverse this (since they have an internal deadline of Mar 15, 2024).

However, since it is still before April 15th, what options do I have to reduce my impact? I can request a distribution before April 15th (as discussed on other threads). Are there better options?

Best answer by DanaB27

@DanaB27 Thank you for the response. So, to confirm - I will not need to do anything in my 2024 return.

Based on this discussion, https://ttlc.intuit.com/community/taxes/discussion/withdrawing-excess-roth-ira-contribution/00/3434643 - I thought I needed to enter a 1099-R as indicated here since after all this is excess contribution I did in 2024 (though I did receive my distribution + earning last week ie. in 2025)? This was the message I was following (though it differs from my case where I was using the Roth 401(k) - post tax money).

Please let me know when you get a chance. Thank you.

Correct. An excess made to a Roth 401(k) is different. You do not need to add the excess to your wages since this is a Roth 401(k). Only the earnings will be taxable in the year of distribution. Therefore, you do not need to report anything on your 2024 return.

Mike9241

(since they have an internal deadline of Mar 15, 2024). 2024?

see this link for how to correct excess.

https://accountinginsights.org/roth-401k-over-contribution-how-to-fix-excess-contributions/

ap_103Author

Thank you for the quick response. (It was a typo. I meant March 15, 2025)

If I just request a distribution for the excess amount before April 15, 2025, is that sufficient?

I know I'll have to pay taxes on the withdrawn amount - any other ramifications?

Mike9241

best before 4/15. you should only have to pay taxes on the income withdrawn. You got no tax deduction for the Roth contribution so unless your withdrawal includes some or all of an employer match none is taxable.

if you withdraw the excess after 4/15 the excess is also taxable.