What if I contributed more to my 401(k) than is allowed?
The 401(k) contribution limit per person for all of their 401(k)s, 403(b)s, and SIMPLE-IRAs for 2025 is based on age and shown below:
If your total contributions (also called deferrals) are more than the limit, you should ask your plan administrator to pay out the extra contributions (called an excess deferral). The plan must then pay you that amount by April 15, 2026.
Excess Withdrawn by April 15th
If you withdraw the excess deferral for 2025 by April 15, 2026, it is includable in your gross income for 2025, but not for 2026. However, you'll need to report any investment earnings from the excess deferral as gross income for the tax year in which it's withdrawn. The distribution isn't subject to the additional 10% tax on early distributions.
Excess not withdrawn by April 15th
If you don't take out the excess deferral by April 15, 2026, the excess is taxable in the year of deferral. It also isn't included in your cost basis when figuring the taxable amount of any benefits or distributions under the plan in the future. Essentially, an excess deferral left in the plan is taxed twice (once when contributed and again when distributed). Also, if the entire deferral is allowed to stay in the plan, the plan may not be a qualified plan.
Corrective distributions of excess deferrals (including any earnings) are reported to you on Form 1099-R.
How do I correct excess 401(k) contributions?
| Age in 2025 | Limit |
|---|---|
| Under 50 | $23,500 |
| Age 50-59 | $23,500 + $7,500 |
| Age 60-63 | $23,500 + $11,250 |
| Age 64 and Over | $23,500 + $7,500 |
Excess Withdrawn by April 15th
If you withdraw the excess deferral for 2025 by April 15, 2026, it is includable in your gross income for 2025, but not for 2026. However, you'll need to report any investment earnings from the excess deferral as gross income for the tax year in which it's withdrawn. The distribution isn't subject to the additional 10% tax on early distributions.
Excess not withdrawn by April 15th
If you don't take out the excess deferral by April 15, 2026, the excess is taxable in the year of deferral. It also isn't included in your cost basis when figuring the taxable amount of any benefits or distributions under the plan in the future. Essentially, an excess deferral left in the plan is taxed twice (once when contributed and again when distributed). Also, if the entire deferral is allowed to stay in the plan, the plan may not be a qualified plan.
Corrective distributions of excess deferrals (including any earnings) are reported to you on Form 1099-R.
How do I correct excess 401(k) contributions?
