Have you saved too much money on your 401K account? Learn how this is done and how to use the best tools to manage your retirement and finance accounts. Most of us don't have to worry about contributing more than the annual limit. Even if you have enough money to contribute 401(k) in excess, your program administrator may prevent you from contributing too much in a year.

However, if you change jobs during the year, or if you have two jobs and both have 401(k), this is a slightly more common problem. In this case, you must work very carefully with the program administrator to ensure that your total 401(k) plan contributions do not exceed the contribution limit this year.

In addition to communicating with your employer, the best thing you can do if you are in this situation is to stay on top of your 401(k) contribution. The sooner you notice the mistake of over-dedication, the sooner you can solve the problem.

How to fix excessive concentration

According to the US Internal Revenue Service, if you are over-investing in your 401(k), you must wait until April 15th next year to resolve the issue. The IRS recommends that employees contact their plan managers to resolve this issue. According to the US Internal Revenue Service, the excess portion of the withdrawal will be included in the total income of your 401K contribution for the year. However, the interest earned on the amount drawn from 401K is taxable in the year of withdrawal.

Employer contributions don’t count

One thing to note here is that the employer's contributions are not included in your 401(k) contribution limit. So if your employer has a matching plan, you can contribute up to 401K plus the employer's matching amount.

IRA is similar

If you have a personal retirement account, you also have to comply with the annual payment limit. If you contribute more, you must resolve this issue by April 15th. But what if you find a problem after filing a tax return? According to Pioneer, you have one of two options:

• Clear the excess within 6 months and submit the revised return by October 15; or
• Subtract the amount of donations for the next year minus the excess. 

For example, if your limit is $5,500 and you exceed $1,500 this year, you can offset the excess by limiting your donation to $4,000 in the next year.

Note: If you choose the "carry over" option, you must pay a 6% penalty until the excess is absorbed or corrected.

In addition, if you contribute to both Ross and the traditional IRA in the same year, and the sum exceeds your contribution limit, according to Pioneer, IRS requires you to first deduct the excess from the Ross IRA. You will pay a 6% tax penalty and the annual money will remain in your account, so you will want to get any excess donations to be fixed immediately.