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Tax Law (Questions About Taxes)/Excess contribution to 403b

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Question
My wife has a 403b and had an excess contribution ($2250) this past year due to an administrative error. I have contacted the plan administrator (Vanguard) and they are sending a check for the $2250 as well as interest earnings on that amount (around $200). It is my understanding that I add that $2250 to my earnings for the year 2012, and that the $200 interest earnings amount is taxable for 2013. Is that correct? I am using the HR Block tax software, and the program recognized the excess $2250 and added it to earnings. However, her W2 will show the excess amount in box 12. Do I need to do anything else when filing our return to make sure the IRS is aware of the issue? Thanks!

Answer
Dave,

Thanks for your question.

The excess contributions would be additional income, as the original contribution was a pre-tax contribution.  The earnings on the excess contributions are taxable for 2012.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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