Anybody who works for albertsons get their 401k returned?

[vardenafil]

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Sorry about the crappy spelling etc. My phone auto correct is going crazy Hey guys quick question. Anybody have their 401k from albertsons returned to them? Last year I put in about 12k into my albertsons sponsored 401k plan. This week I got a check in the mail for 5k from albertsons for a supposed overpayment on my 401k. I called fidelity and was told that the irs fined albertsons for the plan favoring highly compensated employees. In order to make things fair they returned a portion of my contributions. I put money in pretaxed and the check they sent to me was taxed by federal and state. And now I'm going to have a early withdrawal penalty attached to this because it's considered an early withdraw. Any one in the same situation? How can I reinvest without the penalty.?

 

[Dred Pirate]

the taxes make sense, but the penalty? that seems like crap

 

[ldiot]

Put it in a traditional IRA and get the income taxes back in your tax return? As for the early withdrawal penalty that makes no sense

 

[genesis09]

Make sure to not cash the check. Contact an investment company of your choice, IE Fidelity or Vanguard. Contact them about your situation and discuss how to open a rollover 401k. You will sign the checks over to them and include a separate check for the amount of tax withheld. You will then not have to worry about any penalties. This advice is only OK as long as it is considered to be a 401k distribution.

 

[BenJammin]

Put it in a traditional IRA and get the income taxes back in your tax return? As for the early withdrawal penalty that makes no sense

Probably makes too much to write it off.

 

[ChalupaBatman86]

Make sure to not cash the check. Contact an investment company of your choice, IE Fidelity or Vanguard. Contact them about your situation and discuss how to open a rollover 401k. You will sign the checks over to them and include a separate check for the amount of tax withheld. You will then not have to worry about any penalties. This advice is only OK as long as it is considered to be a 401k distribution.

It would be an IRA, not a 401k.

Sent from my SAMSUNG-SM-G890A using SDN mobile

 

[pezdispenser]

I know a fair bit about taxes, but I haven't read that much about this specific issue. Still, I would think that you can't just put it into a deductible traditional IRA because if you are a Highly Compensated Employee, you are probably also over the income limits to get a deduction for an IRA of $61k single, $98k married filing jointly.

 

[BenJammin]

Why not put it in a backdoor roth?

 

[pezdispenser]

Ok I looked into this and found the information you need in IRS Publication 525:
https://www.irs.gov/publications/p525/ar02.html#en_US_2015_publink1000229171

Or page 11 of the PDF: https://www.irs.gov/pub/irs-pdf/p525.pdf

Skip the entire section entitled "Elective Deferrals" because it actually does not apply to this situation and could cause you to do the wrong thing.

Excess Contributions

If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees.

If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. You must include the excess contributions in your income as wages on Form 1040, line 7. You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts.

If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. You should receive a Form 1099-R for the year the excess contributions are distributed to you. Add the distribution to your wages for that year.

Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions.

So basically part of your contributions were 'kicked out' of the plan and you will have to include it as income and pay taxes on your *2016* tax return. Like the tip says, you cannot roll it over into an IRA to prevent the payment of taxes. But you will not be charged a penalty as if it were an early distribution.

 

[JustTryintosavesomemoney]

Sorry about the crappy spelling etc. My phone auto correct is going crazy Hey guys quick question. Anybody have their 401k from albertsons returned to them? Last year I put in about 12k into my albertsons sponsored 401k plan. This week I got a check in the mail for 5k from albertsons for a supposed overpayment on my 401k. I called fidelity and was told that the irs fined albertsons for the plan favoring highly compensated employees. In order to make things fair they returned a portion of my contributions. I put money in pretaxed and the check they sent to me was taxed by federal and state. And now I'm going to have a early withdrawal penalty attached to this because it's considered an early withdraw. Any one in the same situation? How can I reinvest without the penalty.?

Hey Vardenafil, I am just looking for a follow-up on what happened to your situation 2 years ago. I currently am in your exact position and just realized I'll be over the highly compensated employees limit (7%) for Albertsons by about 5k. Were you able to waive your early withdrawal penalty? Any recommendations? I recently just dropped my contribution to the 401k plan to 0% and will likely call Vangaurd next to see what I can do..

 

[CetiAlphaFive]

Hey Vardenafil, I am just looking for a follow-up on what happened to your situation 2 years ago. I currently am in your exact position and just realized I'll be over the highly compensated employees limit (7%) for Albertsons by about 5k. Were you able to waive your early withdrawal penalty? Any recommendations? I recently just dropped my contribution to the 401k plan to 0% and will likely call Vangaurd next to see what I can do..

They only hit you with a penalty if the check goes directly to you and not into an IRA or something.

 

[Dred Pirate]

They only hit you with a penalty if the check goes directly to you and not into an IRA or something.

the problem is that often you cannot put that money into an IRA because you make to much - I hate the rule - I think it is ridiculous if you get hit with the penalty because the other people in the plan don't contribute enough

 

[CetiAlphaFive]

the problem is that often you cannot put that money into an IRA because you make to much - I hate the rule - I think it is ridiculous if you get hit with the penalty because the other people in the plan don't contribute enough

Seriously??? Damb

 

[walkyle]

I don't work for Albertsons but I have heard many times about their 401k returned. If I might be an employee at Albertsons I would know all about the latest news and what is going on at Albertsons by just log in to direct2hr.net login portal where you can almost find all information on employees and about Albertsons.