<< Back to all Blogs
Login or Create your own free blog
Layout:
Home > Archive: February, 2017
 

Archive for February, 2017

Correction to 401k and Taxes Filed

February 25th, 2017 at 01:49 pm

Vanguard sent me a check for over $7k for the excess contributions from last year & a little income for this year. Of course, I'll have to pay both the state & federal about $1700 combined for the payment. Next year I will have to go through the process again as they won't send me back the payments for this year. Yes, I could adjust my contributions, but I'd rather get the money dedcuted from the Vanguard account as I explained in my last post. This year's contributions are only a little over $2500. I tried to get them to not deposit the last transfer when I realized the tax issue, but they released it anyway.

I'll use the amount left over after paying my taxes for debt repayment. I don't plan on sending in my taxes until April for the federal & May for the state. Might as well hold on to that money for as long as I can. It would have been nice to have the $2500 returned to me as well so I could also pay down some debt, but at least I'll see more in my paycheck now that I've stopped the 75% contributions to the 401k.

My Big Tax Mistake

February 12th, 2017 at 09:42 am

So remember how excited I was that I was going to be able to contribute to both a 457b & and a 401k? Well, I was wrong. My TSP is actually a 401a. Who knew? Obviously, not me. So now I have a tax penalty due to exceeding my contribution limit. I had to write a letter of instruction to Vanguard to start the process of withdrawing my excess contributions for 2016.

Another problem is that I've already contributed over $2k for 2017 & I'm not sure if they'll allow me to withdraw that as well. I'm not interested in having that small amount of money at Vanguard if the rest of my money is with the TSP. I do have a Roth IRA with Vanguard, but I don't want more accounts than I need.

Also, I'm not interested in going through this process again next year if I happen to go over the limit again. Yes, I can adjust my contributions throughout the year, but the easiest thing to do is just to withdraw this year's contributions & contribute entirely to the one account which will not allow me to exceed $18,000 in contributions.

What a bother! I thought I did my due diligence researching the tax laws, but I didn't realize that I had erroneously categorized one of the accounts. Lesson learned!