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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.

3 Responses to “Correction to 401k and Taxes Filed”

  1. creditcardfree Says:

    I know you said you wouldn't adjust contributions for 2017, but I sure would to avoid the extra hassle and have access to my money now. But it is your choice of course! At least you got it corrected. Smile

  2. snafu Says:

    ' I tried to get them to not deposit the last transfer when I realized the tax issue, but they released it anyway.' I'm guessing these are automatic transfers, done as previously programmed. The only way to stop these is to have your bank cancel your program with resultant paperwork. The days of asking that an individual intercede on your behalf stopped with the convenience of automatic deductions or payouts.

  3. terri77 Says:

    Yes, I did decide to still contribute the $18k to my TSP. Either way, I would have to either request a deduction of my excess contributions or have a split amount of deferrals to these two accounts & request a rollover to my TSP. I am opting for the request to return excess contributions. Considering that I will probably owe taxes again next year, I'm not in a rush to file. I'll probably have to end up sending most, if not all, of that $2500 to the IRS anyway.

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