How to fix 401k over contribution after job change?

Thanks for the quick response! That's really helpful and seems way less complicated than getting an amended W2. So I just need to call my current 401k provider and tell them I over-contributed? Will they know exactly what to do with this? Also, since tax day is coming up soon, should I just file for an extension to make sure I have time to get this sorted out properly?

Yes, just call your current 401k provider's customer service line and explain that you've exceeded the annual contribution limit due to changing employers. This is a common situation they handle regularly, so they'll know exactly what to do. Be prepared with the excess amount (in your case $3,500) and they'll walk you through their specific process. Regarding your tax filing, that's a smart approach. Filing an extension gives you until October to submit your final return, though remember any taxes owed are still due April 15th. However, you might not need to delay filing if you can get the distribution processed quickly. Many providers can handle this within a couple weeks, and you'd then receive the 1099-R to include with your tax filing.

Did it help with figuring out which employer to contact? I'm in the same boat but not sure if I should be talking to my old company's 401k provider or my new one. Also, does this service help with calculating the earnings on the excess contributions too?

I'm a little skeptical - couldn't you just call your 401k provider directly? What does this service do that you couldn't do yourself with a quick phone call? Seems like an unnecessary expense for something that should be pretty straightforward.

You should contact your current 401k provider, not your previous one. What made taxr.ai really helpful was that they calculated exactly how much of the excess contribution came from each employer, including the earnings on the excess portion. This made the conversation with my provider super smooth since I had precise numbers. The reason I found it valuable is that my situation got complicated because both employers use different 401k providers, and there was confusion about who should handle what. The documentation they provided helped cut through all that back-and-forth. While you could certainly handle it yourself with phone calls, I personally found having the exact calculations and documentation saved me a ton of time and stress.

Wait, so this service just helps you get through to the IRS faster? How does that actually work? I've tried calling the IRS multiple times about my tax issues and always end up wasting an entire afternoon on hold.

This sounds like BS honestly. There's no way any service can magically get you through the IRS phone tree when millions of other people are waiting. The IRS prioritizes calls based on their own system. I'm calling this out as either an ad or someone who got lucky with timing.

It works by continuously calling the IRS using their automated system, then when they get through, they call you and connect you to the agent. It's basically like having someone wait on hold for you, but using technology to do it. You still talk directly with the IRS - they just handle the hold time for you. I understand the skepticism - I felt the same way initially. The difference is they have systems calling multiple IRS numbers simultaneously and can detect when one line has shorter wait times than others. They're not "skipping" the line, just finding the shortest one automatically. After spending 7+ hours over two days trying to get through myself, I was willing to try anything, and it actually worked.

That's a really good point about checking if I'm calculating correctly! I did check my W-2s from both employers and added up box 12 code D amounts, and I'm definitely over by about $3,500. But you're right that the employer match doesn't count toward that $22,500 limit, which I didn't realize at first.

Glad you were able to confirm the actual over-contribution! Many people see the total contributions (including employer match) and panic unnecessarily. Since you've verified you're truly over the limit, definitely proceed with contacting your current 401k provider to get the excess returned. Just another tip - when you get the excess distribution, it will include earnings on that $3,500. Those earnings are taxable in the year you receive the distribution (2024), NOT for 2023. Only the excess contribution amount itself is reported as part of your 2023 income. This can be confusing when you get the 1099-R, so keep that in mind.

Unfortunately, you're in a tougher situation. The IRS requires excess deferrals to be withdrawn by April 15 of the year following the contribution (so April 15, 2023 for 2022 contributions). If you miss that deadline, you can't avoid the double taxation issue - you'll pay taxes on that money now AND when you eventually withdraw it in retirement. You should still contact your plan administrator to discuss options, but be prepared that you might not be able to avoid the double taxation at this point. You may need to file an amended return, but talk to your plan administrator first to understand your specific situation.

That's exactly what I was afraid of. So basically I'm stuck with double taxation because I didn't catch it in time? That's frustrating, but I appreciate you being straight with me. I'll call my administrator tomorrow but won't get my hopes up.

This is really helpful, thank you! It's reassuring to hear from someone who just went through this recently. Quick question - when you called your current 401k provider, did you need to have any specific information ready besides the excess amount? Like your old employer's plan details or anything like that? Also, did the whole process affect your ability to contribute to your 401k going forward, or were you able to resume normal contributions right away?