{"id":345,"date":"2022-02-28T13:15:00","date_gmt":"2022-02-28T13:15:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/"},"modified":"2025-09-05T16:49:15","modified_gmt":"2025-09-05T16:49:15","slug":"over-contribute-to-a-401k-heres-what-i-did","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/","title":{"rendered":"Over-Contribute to a 401(k)? Here\u2019s What I Did"},"content":{"rendered":"
\n

On today\u2019s episode of \u201cKatie\u2019s enthusiasm for early retirement gets taken a bridge too far,\u201d we\u2019re going to discuss what to do (or rather, what I <\/em>did) when I realized I put too much in my 401(k) plans for the year.<\/p>\n

And not just, like, a few hundred dollars too much \u2013 about $10,000 too much.<\/p>\n

If you\u2019re like, Whoah, sis, that hardly seems like an accidental amount<\/em>, keep reading.<\/p>\n

Annual 401(k) limits<\/h2>\n

Most people are aware of the \u201cregular\u201d 401(k) limit, $23,500 in 2025.<\/p>\n

This is the limit that an employee<\/em> can contribute to a 401(k) plan, known as an \u201celective deferral\u201d in the eyes of our boiz at the IRS. But did you know that there\u2019s a backdoor speakeasy version of the 401(k) that you can only access if you know the password and flirt with the bouncer\u2019s weird brother? Yep \u2013 the actual<\/em> plan limit is $70,000 per individual, per year.<\/p>\n

How would one manage to contribute $70,000 to a 401(k) plan? There are two major ways.<\/p>\n

Ways to contribute more than $23,500 to a 401(k) plan<\/h2>\n

The first? You could have an employer with a generous match (though I\u2019ve never heard of one that fills up the bucket all the way to $70,000). Importantly, your employer\u2019s contribution counts toward your $70,000 limit. Makes sense.<\/p>\n

The actual<\/em> way that most employees end up with $70,000 in their 401(k) is through making \u201cafter-tax\u201d contributions \u2013 the precursor to what\u2019s known in the FI community as the elusive Mega Backdoor Roth IRA.<\/em><\/p>\n

Mega Backdoor Roth IRA<\/h3>\n

The Mega Backdoor Roth IRA basically allows a 401(k) plan participant to make contributions in excess of their regular-shmegular $23,500 and their employer\u2019s contribution, up to $70,000 per year (in 2025), that get converted to Roth. Hence the name, \u201cMega\u201d Backdoor Roth IRA.<\/p>\n

Solo 401(k)<\/h3>\n

So there\u2019s that\u2013but there\u2019s another<\/em> major way that someone could end up with $70,000 of contributions in 401(k)s for the year, and that\u2019s the Solo 401(k).<\/em><\/p>\n

If you have self-employment income, you\u2019re able to also<\/em> make employer-only contributions to a Solo 401(k) (also sometimes called an \u201cIndividual 401(k)\u201d). These are \u201cnon-elective\u201d deferrals.<\/p>\n

Your employee<\/em> contributions (\u2018elective\u2019 deferrals) are capped at $23,500 across plans in 2025 (regardless of how many plans you have), so you can\u2019t contribute to both as an employee, but you can contribute up to 20% of your net business income as your own \u201cemployer\u201d if you have self-employment income, too.<\/p>\n

How I over-contributed to my 401(k)s<\/h2>\n

The short answer? Carelessness.<\/p>\n

I had a 401(k) at work, but switched jobs in the middle of the year \u2013 so when I declared my new contribution amount, I hadn\u2019t really given much thought to the fact that it wouldn\u2019t \u201cmatch up,\u201d so to speak, with the contributions I had already made.<\/p>\n

To make matters more complicated, I also had a Solo 401(k) into which I had been desperately shoveling business income, trying to lower my tax bill.<\/p>\n

It hit me like a dump truck one morning a few minutes after making a $15,000 employer contribution to my Solo 401(k).<\/p>\n

\u201cWait a second,\u201d I thought, \u201cI think I may have just way<\/em> over-contributed.\u201d<\/p>\n

I hadn\u2019t been paying attention to how much had been put into 401(k) plans throughout the year, and now I was paying for it.<\/p>\n

How I realized I had over-contributed back in 2021<\/h2>\n

I looked at my statements for the year for each 401(k) plan and tried to find the most efficient way to gauge my contributions. One 401(k) provider summarized the year nicely for me, while another literally made me whip out a calculator and start adding them up. Here\u2019s what I found out:<\/p>\n

TOTAL EMPLOYEE CONTRIBUTIONS TO BOTH WORK PLANS<\/strong><\/p>\n

$19,726.86 (more than the $19,500 limit in 2021)<\/p>\n

\u2026oops. I knew I should\u2019ve paid closer attention when I switched jobs.<\/p>\n

TOTAL EMPLOYER CONTRIBUTIONS TO MY SOLO 401(K)<\/strong><\/p>\n

$68,406.53 (more than the $58,000 limit in 2021)<\/p>\n

\u2026double oops. <\/p>\n

In order to right my wrongs, I decided to start by pulling roughly $10,500<\/strong> out of my Money with Katie 401(k).<\/p>\n

Correcting your contributions<\/h2>\n

My Solo 401(k) provider is Vanguard, so that\u2019s where I started. I literally Googled \u201ccorrective measures form Vanguard Solo 401(k).\u201d You can do the same if you have a different provider; it\u2019s unlikely you\u2019ll go over at work (most 401(k) plans through big employers have stopping mechanisms to make sure you don\u2019t over-contribute) but if you do for the same reason I did (switching jobs mid-year), you can call them and ask for a corrective measures form.<\/p>\n

Vanguard corrective measures<\/h3>\n

I ended up calling Vanguard (the number is 800-376-9162, if you need it) to get help for the corrective measures form, because I wasn\u2019t sure which option to choose.<\/p>\n

And man<\/em>, I\u2019m glad I did, because Ryan from Vanguard hooked it up. He gave me some good advice:<\/p>\n

    \n
  • \n

    Don\u2019t choose \u201cMistake of Fact,\u201d as that\u2019s \u201clike asking the IRS to audit you,\u201d according to my man Ryan<\/p>\n<\/li>\n

  • \n

    The choice he guided me toward was the \u201cexcess annual additions,\u201d Option B<\/p>\n<\/li>\n

  • \n

    You\u2019ll be asked for a \u201cfund number\u201d and \u201caccount number\u201d; the fund number is for the 401(k) plan, while the account number is from your personal investor account<\/p>\n<\/li>\n<\/ul>\n

    After I finished filling it out, I promised Ryan my firstborn son and hung up the phone. After printing it out, I realized I\u2019d need to locate an envelope big enough and a stamp (not easy feats in 2021), and that\u2019s where I decided it was a problem for next week.<\/p>\n

    (I just want to make sure I get it mailed off before the end of the year, as 401(k) contributions run January 1 to December 31 and I\u2019m not interested in the complications of making these changes after the fact.)<\/p>\n

    What happens to the funds?<\/h2>\n

    This part was new to me: Apparently (with Vanguard, at least), the funds get moved into something called a \u201csuspense account,\u201d which is a hilarious and fitting name.<\/p>\n

    The suspense account can stay invested, so he advised me to put whatever index fund I wanted them invested in while they wait to be contributed again.<\/p>\n

    As of January 1, 2022, I could pull them out of the expense account and plop them back in the 401(k) as a 2022 contribution.<\/p>\n

    So the $10,500 basically moved out for two weeks, found itself on an eat\/pray\/love journey to the suspense account, and then moved right back in.<\/p>\n

    (To be clear, I had to go and re-contribute them; it wasn\u2019t automatic. When I went to do this in 2022, I couldn\u2019t find this suspense account anywhere in my Vanguard portal, so I ended up having to call again<\/em>. Turns out you have to literally write them a letter describing which funds you want moved where and include your account numbers for both the suspense account and Solo 401(k), the amount you want moved, and the fund number for what you want it invested in.)<\/p>\n

    The bummer is that the $10,500 didn\u2019t lower my 2021 tax liability, it lowered my 2022 tax liability.<\/p>\n

    So what\u2019s a girl to do? I still have business income I want to defer, man!<\/p>\n

    Why a SEP IRA might be easier for you if you have self-employment income and W2 wages<\/h2>\n

    How much can you put in a SEP IRA?<\/h3>\n

    This\u2019ll sound familiar: 20% of your net business income. <\/p>\n

    The SEP IRA also allows up to $70,000 in employer contributions (but note that you couldn\u2019t fill up both a Solo 401(k) and a SEP IRA for the same business \u2013 that $70,000 limit also applies to income sources).<\/p>\n

    The SEP IRA is (sometimes) an easier self-employment pre-tax account to leverage because it doesn\u2019t require the plan paperwork or EIN that the Solo 401(k) requires.<\/p>\n

    Phew. Got all that?<\/p>\n

    Now to figure out how to go back and retroactively remove my accidental Roth IRA contributions\u2026 it never ends, I tell you! (At least it\u2019s good for content.)<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    On today\u2019s episode of \u201cKatie\u2019s enthusiasm for early retirement gets taken a bridge too far,\u201d we\u2019re going to discuss what to do (or rather, what I did) when I realized I put too much in my 401(k) plans for the year. And not just, like, a few hundred dollars too much \u2013 about $10,000 too […]<\/p>\n","protected":false},"author":178814,"featured_media":2463,"comment_status":"closed","ping_status":"open","sticky":false,"template":"si-template-single-post-401-k-s-and-iras.php","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[47],"class_list":["post-345","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-and-taxes","tag-401ks-and-iras"],"yoast_head":"\nOver-Contribute to a 401(k)? Here\u2019s What I Did - Money with Katie<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Over-Contribute to a 401(k)? Here\u2019s What I Did - Money with Katie\" \/>\n<meta property=\"og:description\" content=\"On today\u2019s episode of \u201cKatie\u2019s enthusiasm for early retirement gets taken a bridge too far,\u201d we\u2019re going to discuss what to do (or rather, what I did) when I realized I put too much in my 401(k) plans for the year. And not just, like, a few hundred dollars too much \u2013 about $10,000 too […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/\" \/>\n<meta property=\"og:site_name\" content=\"Money with Katie\" \/>\n<meta property=\"article:published_time\" content=\"2022-02-28T13:15:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-05T16:49:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1001\" \/>\n\t<meta property=\"og:image:height\" content=\"757\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Katie Gatti\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Katie Gatti\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/\",\"url\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/\",\"name\":\"Over-Contribute to a 401(k)? Here\u2019s What I Did - Money with Katie\",\"isPartOf\":{\"@id\":\"https:\/\/moneywithkatie.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png\",\"datePublished\":\"2022-02-28T13:15:00+00:00\",\"dateModified\":\"2025-09-05T16:49:15+00:00\",\"author\":{\"@id\":\"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000\"},\"breadcrumb\":{\"@id\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#primaryimage\",\"url\":\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png\",\"contentUrl\":\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png\",\"width\":1001,\"height\":757},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/moneywithkatie.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Over-Contribute to a 401(k)? Here\u2019s What I Did\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/moneywithkatie.com\/#website\",\"url\":\"https:\/\/moneywithkatie.com\/\",\"name\":\"Money with Katie\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/moneywithkatie.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000\",\"name\":\"Katie Gatti\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/moneywithkatie.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g\",\"caption\":\"Katie Gatti\"},\"url\":\"https:\/\/moneywithkatie.com\/author\/katiemoneywithkatie-com\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Over-Contribute to a 401(k)? Here\u2019s What I Did - Money with Katie","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/","og_locale":"en_US","og_type":"article","og_title":"Over-Contribute to a 401(k)? Here\u2019s What I Did - Money with Katie","og_description":"On today\u2019s episode of \u201cKatie\u2019s enthusiasm for early retirement gets taken a bridge too far,\u201d we\u2019re going to discuss what to do (or rather, what I did) when I realized I put too much in my 401(k) plans for the year. And not just, like, a few hundred dollars too much \u2013 about $10,000 too […]","og_url":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/","og_site_name":"Money with Katie","article_published_time":"2022-02-28T13:15:00+00:00","article_modified_time":"2025-09-05T16:49:15+00:00","og_image":[{"width":1001,"height":757,"url":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png","type":"image\/png"}],"author":"Katie Gatti","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Katie Gatti","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/","url":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/","name":"Over-Contribute to a 401(k)? Here\u2019s What I Did - Money with Katie","isPartOf":{"@id":"https:\/\/moneywithkatie.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#primaryimage"},"image":{"@id":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#primaryimage"},"thumbnailUrl":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png","datePublished":"2022-02-28T13:15:00+00:00","dateModified":"2025-09-05T16:49:15+00:00","author":{"@id":"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000"},"breadcrumb":{"@id":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#primaryimage","url":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png","contentUrl":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/Wallet_Fire-Pink_100x756.png","width":1001,"height":757},{"@type":"BreadcrumbList","@id":"https:\/\/moneywithkatie.com\/over-contribute-to-a-401k-heres-what-i-did\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/moneywithkatie.com\/"},{"@type":"ListItem","position":2,"name":"Over-Contribute to a 401(k)? Here\u2019s What I Did"}]},{"@type":"WebSite","@id":"https:\/\/moneywithkatie.com\/#website","url":"https:\/\/moneywithkatie.com\/","name":"Money with Katie","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/moneywithkatie.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000","name":"Katie Gatti","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/moneywithkatie.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g","caption":"Katie Gatti"},"url":"https:\/\/moneywithkatie.com\/author\/katiemoneywithkatie-com\/"}]}},"_links":{"self":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts\/345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/users\/178814"}],"replies":[{"embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/comments?post=345"}],"version-history":[{"count":1,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts\/345\/revisions"}],"predecessor-version":[{"id":2144,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts\/345\/revisions\/2144"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/media\/2463"}],"wp:attachment":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/media?parent=345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/categories?post=345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/tags?post=345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}