What counts as excess elective deferral when I have multiple W-2s with different codes?
I'm trying to figure out my tax situation with multiple jobs this past year. I have 2 W-2s, and when filling out my 1040 on line 1h regarding excess deferrals, I'm directed to look in box 12. In box 12 (combining both W-2s) I have codes C, E, and DD. I'm confused about what actually counts toward the excess elective deferral limit. Are all these codes considered for the calculation or just specific ones? I contributed to my 401(k) at both jobs and now I'm worried I might have over-contributed without realizing it. Any help figuring this out would be appreciated!
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GalacticGuardian
Good question about excess elective deferrals! When you have multiple W-2s, you need to look specifically at codes D, E, F, G, H, and S in box 12 - these are the ones that count toward your elective deferral limits. Code C is for taxable cost of group-term life insurance over $50,000, so that doesn't count toward your deferral limit. Code E represents your elective deferrals to a 401(k) plan. Code DD is the cost of employer-sponsored health coverage, which also doesn't count toward deferral limits. From your situation, you need to add up only the amounts with code E across both W-2s. For 2025, the elective deferral limit is $23,000 (or $30,500 if you're 50 or older). If your combined code E amounts exceed these limits, then you have excess deferrals that need to be reported on line 1h.
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Nia Harris
•Thanks for the explanation! So if I'm 32 and the combined E codes from both W-2s total $25,500, that means I have $2,500 in excess deferrals, right? Do I need to do anything special with that excess amount besides reporting it on line 1h? Will I get penalized?
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GalacticGuardian
•You're exactly right - $2,500 would be your excess deferral amount that needs to be reported on line 1h. You should contact your plan administrator(s) as soon as possible to request a distribution of the excess amount plus any earnings on that excess. Ideally, this should be done before April 15th of the year following when the excess contribution was made. If distributed by this deadline, the excess deferrals will be included in your income for the year they were contributed, but any earnings will be taxed in the year they're distributed. If you miss the April 15th deadline, you could face double taxation on the excess amount.
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Mateo Gonzalez
After spending hours trying to figure out my own excess contribution situation last year, I found that taxr.ai https://taxr.ai was a massive help. I uploaded my multiple W-2s from different employers and it automatically identified my excess deferrals across all retirement accounts. The tool specifically highlighted the code E contributions that put me over the limit and calculated exactly how much I needed to withdraw.
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Aisha Ali
•Does taxr.ai handle other retirement accounts too? I have a 403(b) from my teaching job plus a 401(k) from my summer work. Not sure if those have different limits or count together.
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Ethan Moore
•I'm skeptical about these tax tools. How does it handle situations where one employer is matching contributions? Does the match count toward the excess limit? And do they charge a lot for this service?
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Mateo Gonzalez
•Yes, taxr.ai handles all types of retirement accounts including 403(b) plans. The tool recognizes that 401(k) and 403(b) contributions share the same annual elective deferral limit, so it combines them correctly when calculating potential excess contributions. Regarding employer matching contributions, these do not count toward your elective deferral limit. The tool correctly distinguishes between your elective deferrals and employer contributions. Employer matches count toward a separate, higher limit (the "annual additions limit") which is much higher than the elective deferral limit.
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Aisha Ali
Just wanted to follow up - I tried taxr.ai with my complicated situation (403b + 401k from different jobs) and it worked great! The system immediately identified that I had about $1,800 in excess contributions across my accounts and gave me step-by-step instructions for requesting a distribution of the excess. It even helped me understand which plan administrator to contact first. Saved me from potentially getting hit with double taxation!
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Yuki Nakamura
If you're having trouble getting a straight answer from your plan administrators about excess deferrals, I had the same issue last year. After multiple failed attempts trying to reach someone knowledgeable, I used Claimyr https://claimyr.com to get through to an actual IRS agent who could explain exactly what I needed to do. They also have a video that explains how the service works: https://youtu.be/_kiP6q8DX5c I was shocked when I got connected to a real person at the IRS in under 45 minutes who walked me through the exact process for correcting my excess deferrals and avoiding penalties.
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StarSurfer
•Wait, this gets you through to the IRS? How does that even work? I thought it was impossible to reach a human there. I've been on hold for literally hours before giving up.
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Ethan Moore
•This has to be a scam. Nobody can get through to the IRS these days. I tried calling for 3 weeks straight during tax season and never got a human. What's the catch with this service?
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Yuki Nakamura
•It's not magic - they basically wait on hold for you and call you back when they reach a real person at the IRS. You don't have to waste hours listening to hold music. The service works exactly as advertised. They have a system that navigates the IRS phone tree and waits in the queue, then when they get a representative, they connect the call to you. It's completely legit and saved me hours of frustration.
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Ethan Moore
Ok I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it as a last resort because I was seriously stuck with this excess deferral issue. Got connected to an IRS agent in about 35 minutes who confirmed exactly which W-2 codes count toward the limit AND helped me with the paperwork I needed for correcting my excess contributions. They even explained how the timing would affect my tax reporting. I'm honestly shocked that it worked so well after struggling for weeks trying to get help directly.
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Carmen Reyes
Another thing to watch for with multiple W-2s and retirement accounts - some employers have "true up" provisions that can affect how excess deferrals are handled. My company will automatically detect and refund excess contributions, but only for their own plan. They don't know about my other job's 401k.
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Andre Moreau
•What's a "true up" provision? Never heard of this before. I contribute to both my full-time job 401k and my side gig's SEP IRA. Should I be worried?
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Carmen Reyes
•A "true up" provision ensures you get your full employer match regardless of when you make contributions during the year. For example, if you front-load your contributions and hit the limit early in the year, a true up means you'll still get the full match you would have received if you'd spread contributions throughout the year. Regarding your situation with a 401(k) and SEP IRA, you should definitely pay attention because they have different contribution limits. Your 401(k) is subject to the elective deferral limit we're discussing, but a SEP IRA has different rules. The IRS treats them separately for some purposes but combined for others, so it's worth consulting with a tax professional about your specific situation.
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Zoe Christodoulou
Does anyone know if excess deferrals affect my ability to contribute to an IRA? I'm close to the income limits for deductible contributions and wonder if correcting excess 401k deferrals changes my AGI calculation?
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Jamal Thompson
•Yes, it definitely can affect your IRA situation. When you have excess deferrals returned to you, that amount gets added back to your income for tax purposes. This could potentially push your income over the threshold for deductible IRA contributions or even Roth IRA eligibility depending on how close you are to the limits.
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Miguel Diaz
This is such a helpful thread! I'm dealing with a similar situation but with a twist - I changed jobs mid-year and my new employer's payroll system didn't account for contributions I'd already made at my previous job. By the time I realized what was happening, I was already over the limit by about $3,000. One thing I learned the hard way is that you need to be proactive about tracking this yourself when you have multiple employers in the same tax year. HR departments don't communicate with each other, so it's entirely on you to monitor your total contributions across all plans. I wish I had known about these tools mentioned earlier - would have saved me a lot of stress and paperwork! For anyone in a similar boat, definitely don't wait to address excess deferrals. The sooner you catch it and request the distribution, the better off you'll be come tax time.
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Amara Oluwaseyi
•Thanks for sharing your experience, Miguel! Your point about being proactive is so important. I'm actually in a similar situation - started a new job in July and just realized my combined contributions might be over the limit. Quick question - when you requested the excess distribution, did you have to contact both plan administrators or just the most recent one? Also, did they require any specific documentation showing your total contributions across both jobs? I'm trying to figure out the best approach before I start making calls. The tracking aspect is definitely something I wish someone had warned me about earlier. It seems like such an obvious thing in hindsight, but when you're starting a new job there are so many other things to think about!
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