What do I do now that the deadline (April 15th) to remove an overcontribution to my Roth 401k's ( job change in 2024) has passed?

Forum|Forum|10 months ago
May 5, 2025
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Opus 17

You must still include the excess deferral as taxable income.

Then, since you can't remove the funds, you leave them in the account until you retire and make withdrawals, and you will pay tax on the funds again. (You don't get to claim a partial tax-free withdrawal because you already paid the tax.)

Deb113Author

So if I leave the excess in the account IRS says I have a 6% penalty until I remove it? There must be a way to do something with the money instead of paying this penalty for the next 20 years? Remove it somehow- or apply it to another year contribution?

Opus 17

@Deb113 wrote:

So if I leave the excess in the account IRS says I have a 6% penalty until I remove it? There must be a way to do something with the money instead of paying this penalty for the next 20 years? Remove it somehow- or apply it to another year contribution?

There is no additional penalty if you over-contributed to a 401k, other than paying tax twice.**

There is a penalty if you over-contributed to an IRA.

A 401K is not an IRA, they are completely different. Which is it in this case?

(**Because a designated Roth 401k is normally not taxable if you withdraw after retirement, the consequences of an excess contribution are a bit odd, and I will need to ask for another expert to remind me. But first, let's clarify if this is an IRA or a 401k.)