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Hi all,
I started a new job last year and had contributed into my 401(k) at both my old job and my new job. Using my new company’s benefits ticketing system, I had informed my new employer of the cap that I couldn’t pass to stay within the $20,500 limit. I received an email saying it was “resolved”.
Unfortunately, my automated contributions passed that cap by about $400 in my last paycheck in December. I immediately contacted my benefits manager and after marking multiple unproductive tickets as resolved, they were eventually able to send me check in the amount of the excess contribution in January. In fact, the amount they sent is slightly less because there was a loss of the investments during this time.
The statement that came with the check informs me that the amount is taxable in 2022, which makes sense. However, I also received a letter saying that the check I received counts as a distribution and is therefore taxable for 2023.
In reading the IRS’s information about over-contributions, my understanding was that the excess amount would only be taxed if it was not fixed before April 15.
My ultimate question is: Will I or will I not be double-taxed on the excess contribution? If I am double-taxed, do I have any recourse with my benefits manager on the extra taxes I would have to pay, or is this just a lesson to never trust when an automated ticketing system says an issue is resolved?
Thanks in advance!
I started a new job last year and had contributed into my 401(k) at both my old job and my new job. Using my new company’s benefits ticketing system, I had informed my new employer of the cap that I couldn’t pass to stay within the $20,500 limit. I received an email saying it was “resolved”.
Unfortunately, my automated contributions passed that cap by about $400 in my last paycheck in December. I immediately contacted my benefits manager and after marking multiple unproductive tickets as resolved, they were eventually able to send me check in the amount of the excess contribution in January. In fact, the amount they sent is slightly less because there was a loss of the investments during this time.
The statement that came with the check informs me that the amount is taxable in 2022, which makes sense. However, I also received a letter saying that the check I received counts as a distribution and is therefore taxable for 2023.
In reading the IRS’s information about over-contributions, my understanding was that the excess amount would only be taxed if it was not fixed before April 15.
My ultimate question is: Will I or will I not be double-taxed on the excess contribution? If I am double-taxed, do I have any recourse with my benefits manager on the extra taxes I would have to pay, or is this just a lesson to never trust when an automated ticketing system says an issue is resolved?
Thanks in advance!
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