WhiskeyJ wrote:The company I work for was acquired last year. We used to be able to get to about $13K in 401(k) contributions before we failed the discrimination test. I just got a notice that the mid-year calculation shows that $6500 is likely to be the maximum contribution for HCEs. Unfortunately the combined companies have 20,000+ employees so I doubt there is much chance of changing this.
I had contributed $9K already, so I immediately stopped. I assume they wait until after the end of the year to do the refund, correct?
Yes, they normally issue the return of your excess contributions just prior to next April 15th along with allocated earnings on them. You cannot roll them over and will have to add the distribution to your income in the year you receive the check, which is probably going to be next year. There is no penalty.
But there might be another solution. If you want to have the amount recharacterized as after tax contributions to the plan, many plans will offer that option. You are still taxed on these, but not on the earnings but will have more money in the plan. Check into that option.
As usual, notices you get from the plan are plan specific and trump any comments made here.