Very Small Excess Deferral

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Very Small Excess Deferral

Post by ShadowRegent »

My wife changed employers mid year this year. The new employer's 403(b) requires deferral amounts in full percentages, and based on some math, the closest I can get to the limit puts her $2 over. Considering the small amount, we're considering just leaving the excess in rather than having it returned. Is there any issue with that approach other than paying taxes on $2 twice?
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Joined: Fri Mar 18, 2011 9:59 am

Re: Very Small Excess Deferral

Post by lakpr »

No. Speaking from self-experience, I changed jobs in 2016 and in similar situation. In my case it was more like $250 over the then limit of $18,500, if I wanted to capture the full match from the new employer. Happily accepted the double taxation of $250 some years into the future when I retire.

When you do file the taxes for 2021, make sure that this $2 excess is added back to the income (tax software automatically does that, but if you file taxes through pencil and paper this may be a bit tricky)
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