Excess 401k Contributions

[rfk]

What is the scenario - full impact - when an individual has two employers in one year, and contributes, probably unknowingly, approximately $600 more than the $15,500 limit to his 401k? Does he contact his employer or trustee to correct the particular value or...? I presume that the correction has to be done before 04/15/2008 to avoid any penalty and/or inclusion in income?

Thanks.

RFK

[David1980]

Pub 525 page 9

On right side of page see "Excess deferrals."

Basically he's going to pay the tax on the amount of excess deferrals in the current year whether or not he pulls it out. If he doesn't pull it out, he's going to pay the tax when he takes it out. So he'd get taxed 2x on the same income.

[rfk]

Thanks David1980

So I guess he is out of luck and has to include the difference on line 7 of the 1040.

RFK

[MomBob]

Yes, his employer can't seem to get it right. He will get another for this year 2008. Idea!! What if I included this amount in 2008 income, so we don't have to amend the 2008 return? Do you think the IRS could handle this?