Former employer over contributed to retirement plan

[rugorak]

So I got informed by my previous employer that they over contributed to my retirement during the time there. The mention giving me one 1099-R if I pay them back and 2 if I do not. I've done as much research as I can make sense of and found this section of the IRS site - https://www.irs.gov/retirement-plans/correcting-plan-errors

But most of it seems to be more of how they can fix their written plan, pay employees when they find they underpaid, and the like. I cannot find any specifics for me as the ex-employee on what I am supposed to do. I've also tried calling the IRS - no one answers the phone for these issues outside of tax season which is too late. I've tried to contact my ex-employer and cannot get through. Plus the letters just say you should talk to your tax adviser. I've reached out to a CPA to see what the cost might be and am waiting to hear back. But I figured I'd ask here as well. I would hope this would be something fairly simple. But I just want to know what I should do and need to do prior to the end of the year.

Thanks in advance. Hopefully we have some tax wonks here who understand this mess. And I'll be happy to share what I can to try and make sense of this.

[dandarc]

More specifics please.

What limit did they go over?  Did they not cut you off at the $18K deferral limit?  Did they put more than the $54K overall limit in?  Did they accidentally provide you more match than you were entitled to?  Are you being hit by a highly-compensated employee situation? There's many different ways for an employer to "over contribute", and you'll get better advice from the forum the more details you provide.

When was this?  This year?  Last year?  earlier?   Was it 1 tax year or many that were impacted?

[rugorak]

So they did not exceed any IRS limit. Not even close. They just did not follow their plan as written. The plan is/was they contributed to my 403b based on my salary. So at the time they put in an extra 4%. I was no where near being a highly compensated employee.

This was over 4 years. 2008-2011. I last worked for them in 2013 and did a rollover in the beginning of 2014 (it was the soonest I could do the rollover). As far as their letter they say if I had left it in their plan they would have just taken it back and I would have gotten a single 1099-R for this year that I could use as a deduction.  Total amount they say I owe is just under $550. So we are not talking a gigantic sum of money. But enough I want to make sure I do what is right for my taxes.

[johnhenry]

So they were paying in "an extra 4%" over a period of 4 years and the total is under $550?  That doesn't sound right.

Based on the details you've provided it doesn't sound like you or your employer contributed enough to push your annual contribution over any general IRS limits.  Although the "extra" contribution could have violated your employers plan as it was written and they may be obligated to "fix it" for that reason.

It's hard for me to imagine an employer seeking retribution this late in the game for such a small amount.... unless this was a universal problem with their payroll system that affected all/most employees and you just got a form letter because they didn't have access to your account to fix it themselves.

Do you have any former colleagues you could speak to?  Or maybe a phone call to the HR/payroll dept would clear things up.

[rugorak]

It was a global issue and the first letter was just a form letter with my number inserted in. They definitely did not push over any IRS limits. Especially since 1 of those years they suspended contributions for 6 months. And yes it was a universal problem and they said in the form letter they were just removing it from accounts that were still in the plan.

Since all my former colleagues still work there they just had the money pulled out. And I can never get through to the person in the HR department that I am supposed to and they don't call me back.

[Heroes821]

Well if they don't call you back I would try leaving a detailed message that ends with "If I don't hear back from you by COB Friday this week, I will take that to mean the company is allowing me to retain all funds that the company inadvertently contributed to my plan." Or something along those lines that is in no way legally binding, but might motivate the HR person to get back with you.

Alternatively and my preferred method, if you still have contacts at the company get the personal work email address of the HR person in question and email them instead of calling.