How should I address an accidental over-contribution to my retirement account (457 non-governmental) when my income fluctuates, and what steps should I take to avoid penalties?


The additional taxes are pretty steep for an over contribution to a retirement account, so contact the financial institution and explain what happened. It's better to withdraw the excess contribution as soon as you can. If you don't, you actually owe excise taxes on that excess contribution every year you leave it in the retirement account.

You'll probably get a 1099-R just for the earnings portion, but the additional tax and penalties shouldn't be that much.


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