How to Fix Excess 401k Contributions When You Have Both Roth and Pre-tax in 2025?

But wait, I'm confused. If my 401k administrator didn't calculate the earnings portion separately and just returned the flat excess amount, how do I determine what's taxable? My 1099-R doesn't have a code P - it has code J. Does that change things?

But wait, im confused. If my 401k admin didnt calculate the earnings part separately and just returned the flat excess amount, how do I figure out whats taxable?? My 1099-R doesnt have a code P - it has code J. Does that change things??? Im freaking out a little tbh

If your 1099-R shows code J, that typically indicates an early distribution from a retirement plan that doesn't qualify for any exceptions to the 10% penalty. This might mean your plan administrator processed this as a regular distribution rather than a correction of excess deferrals, which is concerning. For proper excess deferral corrections, the administrator should calculate the earnings on the excess amount, and only those earnings would be taxable. If they didn't do this calculation and just processed a regular distribution, you might want to contact them immediately to clarify and potentially have them reissue a corrected 1099-R with the proper code. The timing is also important here - excess deferrals should be returned by April 15 of the year following the excess contribution to avoid double taxation. If you're working with a tax professional, bring this to their attention as they may need to file additional forms to ensure proper treatment of the distribution.

Does this actually work for complicated retirement issues? I've been struggling with a similar situation (contributed to 401k and 403b in same year and went over limit) and my tax software isn't handling it right. Can it help figure out how the earnings portion gets taxed?

I'm skeptical about these online tools. My situation has Roth conversions, excess contributions, AND a rollover all in the same year. Would it really be able to handle something that complex? My CPA charges me $400 just to deal with this part of my return.

It absolutely works for complicated retirement account issues. The system is specifically designed to handle situations like excess contributions across multiple accounts. It will help you identify exactly how the earnings portion should be taxed and reported correctly on your return. For your Roth conversions, excess contributions, and rollovers situation, I'd be confident it could handle that. The system was built by tax professionals who specialize in retirement account transactions, and it can process even the most complex scenarios. I had multiple retirement accounts, a backdoor Roth, and excess contributions all happening in the same tax year, and it sorted everything out perfectly.

Does this actually work for complicated retirement issues?? I've been struggling with a similar situation (contributed to 401k and 403b in same year and went over

Wait, how does this actually work? I thought it was impossible to get through to the IRS these days. Last time I tried I gave up after 3 hours on hold. Does it really get you to the front of the line somehow?

This sounds like a scam. There's no way to "skip the line" with a government agency like the IRS. Why would they let some random service put people at the front of the queue when everyone else has to wait? I'll stick with waiting on hold like everyone else.

It's not about skipping the line - Claimyr uses an automated system that handles the hold time for you. They continuously call the IRS using their system, and once they reach an agent, they call you and connect you. You don't have to stay on hold yourself - you get a call back when an agent is reached. The reason it works better than calling yourself is that their system can keep redialing and navigating the phone tree 24/7 until it gets through, something most of us don't have the time or patience to do. It's completely legitimate - you're still waiting your turn in the queue, they're just handling the painful part of the process for you.

Don't file with the incorrect code! I made that mistake and ended up with a CP2000 notice from the IRS questioning why I didn't pay the 10% early withdrawal penalty. Call your plan administrator and request a corrected 1099-R with code P. If they refuse, file Form 8919 with your return explaining the situation. You might need to attach a statement explaining that this was an excess deferral correction.

Thanks for the warning about filing with the wrong code. I just called my plan administrator and they initially resisted issuing a corrected 1099-R, claiming code 1 was correct. After escalating to a supervisor and referencing IRS Publication 525 which specifically discusses excess deferral distributions, they agreed to issue a corrected form with code P. They said it would take about 2-3 weeks to receive it.

This is an important timing distinction. For excess 401(k) deferrals, the deadline to have the excess returned is April 15th of the year following the excess contribution (not the tax filing deadline with extensions). If your excess was returned after April 15, 2026 for a 2025 excess contribution, you unfortunately may face some tax consequences. The excess amount would be effectively "double taxed" - once in the year it was contributed, and again when it's distributed. Additionally, any earnings on the excess amount would be taxable in the year they're distributed. This is different from the 6% excise tax that applies to excess IRA contributions. For 401(k) plans, the penalty is the double taxation rather than a specific excise tax.

This is really helpful, thank you! I'm dealing with a similar situation right now and I'm so confused about the whole process. Can you clarify something for me - when you say the employer should calculate the earnings on the excess amount, how exactly do they figure that out? Is it based on the investment performance during the time the excess money was in the account? Also, I'm worried my employer might push back when I ask for the earnings breakdown. Did you have any trouble getting them to provide that information, or do they pretty much have to give it to you since it's required for proper tax reporting?

Great question about the earnings calculation! Yes, it's based on the investment performance during the time the excess contribution was in your account. The plan administrator should calculate this using the actual gains or losses on your account from the date the excess contribution was made until the date it was distributed. In my experience, most plan administrators are required to provide this breakdown since it's necessary for proper tax reporting. However, some might initially resist or claim they don't track it that way. If you run into pushback, mention that IRS regulations require them to calculate earnings on excess deferrals for proper tax treatment. You can reference IRS Notice 2008-30 which outlines the requirements. If they still won't cooperate, you might need to escalate to their compliance department or contact the Department of Labor since this affects your ability to file your taxes correctly. Most employers don't want regulatory scrutiny, so mentioning the compliance aspect usually gets results. The key is being persistent but professional about it.