Exceeded 403b By Tiny Amount

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ImUrHuckleberry
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Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Wed Dec 25, 2019 12:17 pm

Last year my wife set her payroll contribution to her 403b to hit $19000.02 and set a $19,000 cap. We thought this meant the last contribution would be $0.02 less so as not to exceed the cap. (Otherwise, what is the cap value for?)

Anyway, all $19,000.02 was contributed.

Should we bother doing anything about this since it is only $0.02?

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JamesSFO
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Re: Exceeded 403b By Tiny Amount

Post by JamesSFO » Wed Dec 25, 2019 12:27 pm

Might pay to ask HR/payroll about this? Also did the $0.02 go into an after-tax account (e.g. perhaps her employer supports mega back door ROTHs)

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ImUrHuckleberry
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Re: Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Wed Dec 25, 2019 12:31 pm

I'll check on exactly where it went once I have access to the machine I use for financial transactions. I was just assuming it went into the account we set up for her 403b deposits.

BarbBrooklyn
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Re: Exceeded 403b By Tiny Amount

Post by BarbBrooklyn » Wed Dec 25, 2019 1:26 pm

I would just call HR tomorrow.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

TropikThunder
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Re: Exceeded 403b By Tiny Amount

Post by TropikThunder » Wed Dec 25, 2019 2:32 pm

Even the most rudimentary payroll software will stop elective deferrals at the statutory cap since it’s a huge administrative headache for the company (although this is only 2c). Most likely, the overage went into after-tax which she apparently didn’t know she had.

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ImUrHuckleberry
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Re: Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Wed Dec 25, 2019 7:47 pm

Ok, so I just logged into the brokerage account and the last contribution hasn't posted yet, so I don't yet know what will happen.

But I did notice a potential further problem: the last payroll contribution from 2018 ($280) didn't post until Jan 3rd, 2019. That means if this last contribution posts in full in 2019 she will exceed the limit by $280.02. (In other words, her pay stub says $19,000.02 contributed in 2019, but the brokerage is counting an additional $280 from 2018 payroll as a 2019 contribution since it didn't post at the brokerage until 2019.)

Anyone know how the IRS handles that situation? It must happen frequently, but honestly I've never considered it before.

I guess I need to wait and see how they handle the final contribution and then go from there.

Compound
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Re: Exceeded 403b By Tiny Amount

Post by Compound » Wed Dec 25, 2019 8:03 pm

ImUrHuckleberry wrote:
Wed Dec 25, 2019 7:47 pm
Ok, so I just logged into the brokerage account and the last contribution hasn't posted yet, so I don't yet know what will happen.

But I did notice a potential further problem: the last payroll contribution from 2018 ($280) didn't post until Jan 3rd, 2019. That means if this last contribution posts in full in 2019 she will exceed the limit by $280.02. (In other words, her pay stub says $19,000.02 contributed in 2019, but the brokerage is counting an additional $280 from 2018 payroll as a 2019 contribution since it didn't post at the brokerage until 2019.)

Anyone know how the IRS handles that situation? It must happen frequently, but honestly I've never considered it before.

I guess I need to wait and see how they handle the final contribution and then go from there.
Why wait for the posting? Why not just call HR tomorrow, alert them to the concern, and discuss how the situation will be handled?

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ImUrHuckleberry
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Re: Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Wed Dec 25, 2019 8:07 pm

Well, the HR is my wife and she says she has nothing to do with how this is handled. That it's payroll. But anyway, they are all off until after the New Year. (School system)

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ImUrHuckleberry
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Re: Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Wed Dec 25, 2019 8:09 pm

My guess is the last $280 from 2018 should have been coded at the brokerage as a 2018 contribution even though it posted in 2019. Since this is Security Benefit, we'll probably spend 6 months fixing it. :oops:

Katietsu
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Re: Exceeded 403b By Tiny Amount

Post by Katietsu » Wed Dec 25, 2019 10:18 pm

ImUrHuckleberry wrote:
Wed Dec 25, 2019 7:47 pm


But I did notice a potential further problem: the last payroll contribution from 2018 ($280) didn't post until Jan 3rd, 2019. That means if this last contribution posts in full in 2019 she will exceed the limit by $280.02. (In other words, her pay stub says $19,000.02 contributed in 2019, but the brokerage is counting an additional $280 from 2018 payroll as a 2019 contribution since it didn't post at the brokerage until 2019.)
Do you have some reason to believe that the $280 was not designated as a 2018 contribution? The contribution from the last paycheck does not make it to the brokerage until the following year over half the time for me. This is totally normal and should in no way be a problem.

And stopping the contribution at the maximum allowed should be a payroll function not a brokerage thing. Who handles payroll?

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ImUrHuckleberry
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Re: Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Wed Dec 25, 2019 10:35 pm

Katietsu wrote:
Wed Dec 25, 2019 10:18 pm
ImUrHuckleberry wrote:
Wed Dec 25, 2019 7:47 pm


But I did notice a potential further problem: the last payroll contribution from 2018 ($280) didn't post until Jan 3rd, 2019. That means if this last contribution posts in full in 2019 she will exceed the limit by $280.02. (In other words, her pay stub says $19,000.02 contributed in 2019, but the brokerage is counting an additional $280 from 2018 payroll as a 2019 contribution since it didn't post at the brokerage until 2019.)
Do you have some reason to believe that the $280 was not designated as a 2018 contribution? The contribution from the last paycheck does not make it to the brokerage until the following year over half the time for me. This is totally normal and should in no way be a problem.

And stopping the contribution at the maximum allowed should be a payroll function not a brokerage thing. Who handles payroll?
The $280 is included in the sum given as total 2019 contributions in her brokerage account. Payroll is handled by another dept at the school system. I believe we will have to see what happens during the break and then figure out what needs to be fixed.

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ImUrHuckleberry
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Re: Exceeded 403b By Tiny Amount

Post by ImUrHuckleberry » Thu Jan 02, 2020 12:54 pm

The advice I'm getting is that since the $280 is correctly shown in her 2018 W2 Box 12 as part of the sum of her 2018 403b elective deferrals, we can safely ignore whatever the broker statement says about total 2018/2019 contributions.

They did deposit the extra $0.02 on her last paycheck of 2019, so that does have to be corrected so that the 2019 W2 says $19000.00 and not $19000.02.

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JamesSFO
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Re: Exceeded 403b By Tiny Amount

Post by JamesSFO » Mon Jan 13, 2020 7:56 pm

Did that 0.02 go into 2019 Employee Contributions or 2019 After Tax Contributions or somewhere else? What does the W2 say?

Makefile
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Re: Exceeded 403b By Tiny Amount

Post by Makefile » Mon Jan 13, 2020 8:10 pm

I believe this might get rounded to the nearest dollar when it gets reported to the IRS.
  • H&R Block tax software, at least, forcibly rounds all W-2 entries to the nearest dollar if you try to enter the cents
  • All Wage and Income Transcripts I've requested from the IRS showing what 1099s and W-2s they have on file have all the entries rounded to the nearest dollar.

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