Author Topic: Interesting 401k Issue  (Read 1588 times)

dcozad999

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Interesting 401k Issue
« on: December 28, 2016, 09:14:10 AM »
I'll try to keep this short.

So currently, with one check to go, Fidelity has my 2016 401k contribution as $18287.62, over the $18k limit. My check stub shows the contribution as $17,672.88.
Although I don't get paid until tomorrow, I can see the latest check stub which pushes the contribution to $18k, however, they will be sending another $327.12 to Fidelity pushing it even more over the limit.

I looked through the contributions on Fidelity and believe I know what happened. We got paid on 12/31/2015 last year. Fidelity usually makes the purchase the day after (Friday) which would have been Jan 1. Since that is a holiday, they made the purchase on Jan 4. So basically my company is attributing that 401k contribution to 2015, whereas Fidelity is attributing it to 2016.

I've called Fidelity and they referred me to payroll, with whom I'm currently on hold. She doesn't seem to understand any of this so it should be fun. I was wondering if any of you know how this should be handled and how it will work out. Will Fidelity have to change the contribution date and put that first contribution back into 2015? Or will it stand as a 2016 contribution and they will somehow have to refund me the $614.74 that was overpaid? And is this somehow going to come back and penalize me because that overage is already in the market earning a return?

FerrumB5

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Re: Interesting 401k Issue
« Reply #1 on: December 28, 2016, 09:31:07 AM »
I believe, you are all fine. For IRS the payment on 12/31/2015 was exactly on that day and not in 2016. It's just the delay in processing and holidays that resulted in Fidelity making it "look" like 2016.

mskyle

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Re: Interesting 401k Issue
« Reply #2 on: December 28, 2016, 09:32:18 AM »
Yeah, I think what matters is what is on your paystub/W-2, not what Fidelity thinks.

dcozad999

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Re: Interesting 401k Issue
« Reply #3 on: December 28, 2016, 09:37:44 AM »
But what happens when Fidelity does an audit or something and realizes it's over the max contribution limit?

I would think they would have something in their software that monitors this type of thing.

FerrumB5

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Re: Interesting 401k Issue
« Reply #4 on: December 28, 2016, 09:46:20 AM »
But you are submitting tax return to IRS, not Fidelity. W2/payroll will have it proper as 18k for 2016. I would not worry much about it

dcozad999

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Re: Interesting 401k Issue
« Reply #5 on: December 28, 2016, 10:03:42 AM »
OK. Thanks all.

NoStacheOhio

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Re: Interesting 401k Issue
« Reply #6 on: December 28, 2016, 10:44:58 AM »
But what happens when Fidelity does an audit or something and realizes it's over the max contribution limit?

I would think they would have something in their software that monitors this type of thing.

On the outside chance this occurs, I would just send them the 2015 and 2016 W-2s. If you have access to old pay stubs, sending the 12/31/15 stub couldn't hurt.

Davids

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Re: Interesting 401k Issue
« Reply #7 on: December 29, 2016, 10:34:13 AM »
This is not uncommon, it is simply a timing issue. As long as your W2 shows everything correctly you are fine. I assume most people getting paid tomorrow will not have the contribution deposited until January 2017 but it will still count for 2016.