Excess 401(k) Deferral Correction Calculator

How an excess 401(k) deferral correction works

Your deferral cap applies to you as one person, not to each job on its own. The IRS excess-deferrals page notes that "A participant must aggregate all elective deferrals contributed to all of the plans in which they participate to determine if the IRC Section 402(g) limit has been exceeded." Under IRS Notice 2025-67, the base cap is $24,500 for 2026 ($23,500 for 2025 under Notice 2024-80). At age 50 or over at year end, section 414(v) adds $8,000 in 2026 ($7,500 in 2025). At ages 60 to 63, the higher catch-up adds $11,250.

In 26 CFR 1.402(g)-1(e)(1)(iii), "The term “excess deferrals” means the excess of an individual's elective deferrals for any taxable year, as defined in § 1.402(g)-1(b), over the applicable limit under section 402(g)(1) for the taxable year." To fix an excess after year end, paragraph (e)(2) lets a plan pay back the excess and its income by April 15. Under paragraph (e)(6), "In no case may an individual receive from a plan as a corrective distribution for a taxable year under paragraph (e)(2) or (e)(3) of this section an amount in excess of the individual's total elective deferrals under the plan for the taxable year."

Under paragraph (e)(5)(iii), a plan finds the year-income share "by multiplying the income for the taxable year allocable to elective deferrals by a fraction." The top of that fraction is the excess coming from the plan. The bottom is the January 1 deferral balance plus the year's deferrals. For the gap period after year end, the safe harbor in (e)(5)(iv) adds 10% of that year-income share per elapsed month. A payout on or before the 15th counts as the end of the prior month. The page leaves gap income out unless you choose to add it.

Excess deferral, allocable earnings, and partial split formulas

excess = total elective deferrals − limit (402(g) limit plus any catch-up); 0 if negative
year income share = income on deferrals for the year × excess ÷ (January 1 balance + that plan's deferrals for the year)
gap income (only if your plan adds it) = 10% × year income share × calendar months elapsed (26 CFR 1.402(g)-1(e)(5)(iv))
corrective distribution = excess + year income share (+ gap income if added)
partial: excess part = amount × excess ÷ (excess + income);  taxed twice = excess − excess part

Worked examples: two-job excess and Treasury Regulation Example 3

Default two-job case ($28,500 put in for 2026 at age 45). You put $16,000 in Plan 1 and $12,500 in Plan 2 ($28,500 in all) against the $24,500 cap, leaving a $4,000 excess. Plan 2 (January 1 balance $40,000, 2026 income $3,000) pays the refund by April 15, 2027. Under the alternative method, the 2026 income share is $3,000 × $4,000 ÷ ($40,000 + $12,500) = $228.57. Plan 2 pays $4,228.57; $4,000 is taxed in 2026, $228.57 is taxed in 2027, and $0.00 is taxed twice. If your plan also adds safe-harbor gap income for a February 10 payout, 1 gap month adds 10% × $228.57 = $22.86, for $4,251.43 in all.

Regulation examples ((e)(3)(ii) and (e)(11) Example 3). In 26 CFR 1.402(g)-1(e)(3)(ii), Employee S puts in $9,000 against an $8,475 cap for a $525 excess. An earlier $5,000 withdrawal does not fix it because "The $5,000 withdrawal did not correct the excess deferral because it occurred before the excess deferral was made." In (e)(11) Example 3, Employee T has a $1,000 excess and $100 of income ($1,100 needed), but the plan pays only $1,000 by April 15: "$909 is treated as a distribution of excess deferrals, and $91 is treated as a distribution of earnings." In exact cents, $1,000 × $1,000 ÷ $1,100 = $909.09 of excess and $90.91 of income, leaving $90.91 taxed twice.

2025 and 2026 IRS caps, section 402(g) scope, and assumptions

• The rules come from 26 U.S.C. 402(g) and 26 CFR 1.402(g)-1(e) (eCFR text as amended by T.D. 9324). The 2026 caps come from IRS Notice 2025-67 and the 2025 caps come from Notice 2024-80 ($23,500 base). Under 26 U.S.C. 402(g)(4), increases in the base cap are rounded down to $500 steps.
• The page uses the alternative method in 26 CFR 1.402(g)-1(e)(5)(iii) for year income. Its sources differ on gap income. The IRS excess-deferrals page says the payout must include earnings for the deferral year "without regard to income earned during the “gap period”". Also, 26 U.S.C. 402(g)(2)(A)(ii) counts income "through the end of such taxable year". The regulation in (e)(5)(i) counts income for the gap period as part of the allocable income. The safe harbor in (e)(5)(iv) sets it at 10% a month. The headline uses year income only. Choose Add gap income to see the other figure. Follow your plan administrator's figure.
• Not modeled: Roth excess splits, the 15-year 403(b) catch-up, daily plan valuation, the (e)(5)(v) combined method, same-year payouts under (e)(3), or state tax. Prior ADP refunds under (e)(6) are covered in the 401(k) ADP test calculator. As the IRS limits page notes, your plan can set a lower limit than the IRS. From 2026, catch-ups above $150,000 of prior-year FICA pay must be made on a Roth basis. For that rule, use the Roth catch-up requirement calculator.
• As the IRS excess-deferrals page notes, "This April 15th deadline is not postponed by extending the filing of the employee's federal income tax return." The bounds of 10 plans and $1,000,000,000 of income are this page's own.

These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.

How to request your corrective distribution before April 15

Add up Box 12 codes D, AA, E, BB, F, and S across all of your Forms W-2 for the year. If the total tops your cap, pick which plan will pay the refund. Check that plan's January 1 deferral balance and year-end earnings.

Send a written notice to that plan administrator right away. Under 26 U.S.C. 402(g)(2)(A)(i), "not later than the 1st March 1 following the close of the taxable year, the individual may allocate the amount of such excess deferrals among the plans under which the deferrals were made and may notify each such plan of the portion allocated to it." Under 26 CFR 1.402(g)-1(e)(2)(i), a plan may set an earlier notification date in the plan document so it can pay out by April 15.

Keep the check stub and watch for Form 1099-R next January (code 8 or P). To stay within the cap this year, set your rate in the 401(k) contribution limit calculator and check your match in the employer match calculator.

Excess 401(k) deferral correction questions