Guideline will monitor your total contributions throughout the year and do our best to notify you when you are close to reaching the annual deferral limit. If you participated in another qualified plan, be sure to report outside contributions within your participant dashboard as limits often apply to all plans you participate during the year as a whole.
If your contributions exceed the annual deferral limit, Guideline will notify you. Any excess contributions will then be refunded via check, taking into account any gains or losses incurred.
If you are refunded prior to the IRS tax deadline of April 15th, the excess funds will be taxable in the calendar year deferred and earnings on the excess contribution will be taxed the year the refund is distributed. When timely distributed, the refund will not be subject to early withdrawal tax penalties or mandatory withholdings.
Our custodian will issue you a 1099-R for the tax year in which the excess contributions were made. You will use the 1099-R to report your excess contributions, gains or losses for income tax purposes.
If you are contributing to more than one plan, such as other cash or deferred arrangements, tax‑sheltered 403(b) annuity contracts, simplified employee pensions, or other 401(k) plans, and your total 401(k) holdings exceed the annual deferral limit, you will need to decide which plan you’d like to return the excess amount from.