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401k Excess Contribution Refund - Notification

Personal Finance & Money Asked by Disappointed 401k contributor on December 2, 2020

If my employer is required to return excess 401k pretax contributions due to not meeting the discrimination test, are they required to notify me BEFORE making the refund or selling funds/stock in my account?

An unsuspecting group of us had this happen for the first time this year. Although we might not agree on the IRS regulation, we understand it exist.

Our funds holdings were sold and withdrawn from our accounts prior to any notification by the company or plan administrator that any refund was going to happen.

One Answer

They legally have to provide you with the Form 1099-R as you have money leaving the plan that (normally) has to be taxed. Past that, I'm not aware of any legal responsibility to proactively let you know about the excess and refund.

Answered by kazoni on December 2, 2020

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