Excess Deferrals

Disclaimer for Tax Information

Penn HR cannot provide tax advice. The information below is intended as general information only and should not be relied upon for tax advice. For advice about your individual tax situation, please contact a qualified tax professional.

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What are excess deferrals?

If a retirement plan participant exceeds the IRS 2024 annual limit for elective employee contributions, they had until the due date of their 2024 tax return to have those contributions, or "excess deferrals," distributed to avoid adverse tax consequences.

For 2024, the IRS limits were:

  • $23,000 for participants under age 50
  • $30,500 for participants age 50 and over

These limits apply to the total elective employee contributions across all eligible retirement plans at all employers during the tax year.

For more information, see the IRS webpage, "Consequences to a Participant Who Makes Excess Annual Salary Deferrals."

Quick Links

Contact Us

TIAA Retirement Call Center
(877) 736-6738

Penn Employee Solution Center
solutioncenter@upenn.edu or (215) 898-7372

How do excess deferrals happen?

Penn’s system tracks your annual contributions to its retirement plans and will stop your employee contributions once you reach the IRS limit. Excess deferrals usually occur when you contribute to more than one employer’s retirement plan in the same tax year.

Example: In 2024, the employee contribution limit for participants under age 50 was $23,000. If you contributed $4,000 to another employer’s plan and then $20,000 to Penn’s plan, you would have an excess deferral of $1,000.

How do I request a distribution of my excess deferrals?

If you have excess deferrals from a previous year that need to be distributed from Penn's plans, submit your request to the Employee Solution Center at solutioncenter@upenn.edu. Be sure to attach a copy of the applicable W-2 from the other employer or the last pay statement for that year.

Please note that TIAA cannot accept corrective distribution requests directly from participants. The Penn Benefits Office will submit the corrective distribution request to TIAA on your behalf.

How do I report the distribution on my tax return?

It is a common misconception that the employer will issue an amended W‑2 for a corrective distribution. This is incorrect. As required by the IRS, your corrective distribution will be reported on a specially coded 2024 IRS Form 1099-R, which will be sent to you in 2026. You must report the full amount of your excess deferral on your individual tax return (Form 1040) and report any allocable loss as a bracketed amount on the “Other Income” line of your Form 1040.

Because the IRS Form 1099-R will not arrive until next year, do not delay filing your 2024 Form 1040. If you have already filed your Form 1040 without including the full amount of your excess deferral as taxable income, you will need to file an amended return.

Excess deferrals are not eligible for rollover into another qualified plan or individual retirement account (IRA).