Contributing the annual maximum amount to your retirement plan is generally a good thing. Exceeding the max? Not so good. If you deferred more than $19,500 (plus $6,500 for individuals 50 and older) of your salary in 2021 to various employer plans, the IRS warns that you must withdraw the excess amount, plus earnings, by April 15, 2022. Withdrawals will be taxed as 2021 income and earnings as 2022 income. No penalties will apply so long as you meet the April 15 deadline. But if you fail to comply, you may face a 10% early distribution tax and 20% withholding. Taxpayers who made salary deferrals to two or more retirement plans may be most at risk for exceeding the contribution limit. Contact the Cg Team for more information. © 2022
22
Feb