If you contributed more than the IRS elective deferral limit to your 401(k), Fidelity’s return of excess contribution process is how you get that money back out before it becomes a lasting tax problem. You (or your plan sponsor, depending on which limit you tripped) submit Fidelity’s Return of Excess Contributions form, Fidelity calculates the excess plus any earnings or losses, and a check is mailed to you. Do it by April 15 of the year after the excess and you owe ordinary income tax only on the earnings. Miss that date and the principal gets taxed twice.
The April 15 Deadline
For a Section 402(g) excess deferral — meaning you put more than $24,500 of your own pre-tax and Roth money into 401(k) plans during 2026 — the corrective distribution must be paid out by April 15 of the following year.1Internal Revenue Service. 401(k) Plan Fix-It Guide – Elective Deferrals Weren’t Limited to the Amounts Under IRC Section 402(g) A tax filing extension does not extend this deadline.2Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan
Fidelity’s own cutoff runs earlier. The company needs to receive your Return of Excess Contributions form by April 1 to have time to process the distribution before the IRS date.3Fidelity. Return of Excess Contributions (ROE) Waiting until the last week is the most common way people miss the window.
For 2026 the numbers to check against are $24,500 for elective deferrals, or $32,500 if you’re 50 or older, or $35,750 if you’re between ages 60 and 63 and your plan permits the enhanced catch-up.4Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Employer matching and profit-sharing don’t count toward this limit; the 402(g) ceiling is your own money only.
How to Request the Return From Fidelity
You start the return by completing Fidelity’s Return of Excess Contributions (ROE) form. You can fill it out on screen or by hand and submit it digitally through the NetBenefits mobile app or by mail.3Fidelity. Return of Excess Contributions (ROE) Some plans require the plan sponsor to approve the request before Fidelity processes it, so a call to your HR or benefits contact is worth making the same day you send the form.
If the excess happened because you had more than one 401(k) during the year, the process is the same but the responsibility for spotting the problem is entirely yours. The $24,500 limit applies across every 401(k)-type plan you participate in combined, not per plan, and Fidelity has no visibility into deferrals you made through another employer’s payroll.2Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan Compare Box 12 on your W-2s from each job to identify the total, pick which plan to pull the excess from, and if you choose the Fidelity plan, attach copies of the W-2s from every employer to your ROE form.3Fidelity. Return of Excess Contributions (ROE)
What You Actually Get Back
Fidelity returns the original excess contribution adjusted for the earnings or losses attributable to it from the date of contribution through the calculation period. If your investments gained value, the check will be larger than your excess. If they lost value, it will be smaller — the attributable earnings can be negative.2Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan
Fidelity liquidates the distribution proportionally from your investment holdings inside the plan and mails a check. An ROE distribution cannot be rolled over to an IRA or another retirement plan.3Fidelity. Return of Excess Contributions (ROE)
Any employer matching contribution linked to the returned deferral is typically forfeited from your account, adjusted for earnings.5Internal Revenue Service. 401(k) Plan Fix-It Guide – You Didn’t Use the Plan Definition of Compensation Correctly for All Deferrals and Allocations Fidelity’s ROE form flags this: the plan may require forfeiture of matching contributions associated with the returned amount.3Fidelity. Return of Excess Contributions (ROE) The forfeited match doesn’t come to you; the plan applies it to expenses, future employer contributions, or other participants.
How the Money Is Taxed
The returned amount splits into two pieces for tax purposes: the principal (your original excess) and the earnings on it. Which piece is taxable, and when, depends on whether the contribution was pre-tax or Roth and whether you made the April 15 deadline.
Pre-Tax Excess Returned on Time
The principal is taxable income in the year you originally deferred it. In most cases your employer already included the excess in your W-2 wages for that year, so no additional tax is due on the principal itself. The earnings portion is taxable in the year you receive the distribution.6Internal Revenue Service. Retirement Topics – What Happens When an Employee Has Elective Deferrals in Excess of the Limits
Roth Excess Returned on Time
Roth contributions were already taxed when you earned the money, so the principal isn’t taxable again when it comes back. The earnings on the excess are taxable in the year distributed, the same as with pre-tax.2Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan
Form 1099-R and the Distribution Code
Fidelity issues Form 1099-R for the corrective distribution.7Internal Revenue Service. Instructions for Forms 1099-R and 5498 Box 1 shows the gross distribution, Box 2a shows the taxable portion (often just the earnings), and Box 7 carries the code that tells the IRS what happened. Code 8 means the excess plus earnings is taxable in the current year. Code P means it’s taxable in the prior year — the year the contribution was made — even though you received the check the following year. Code P is the one to watch: the earnings may need to go on the prior year’s return, not the return for the year the check landed.
Fidelity cannot withhold federal or state income taxes on a return of excess that is taxable in a prior year.3Fidelity. Return of Excess Contributions (ROE) Plan for that tax bill when you file.
No 10% Early Withdrawal Penalty
The 10% additional tax on early distributions does not apply to a corrective distribution of an excess contribution, regardless of your age.8Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Ordinary income tax on the earnings still applies; the penalty does not.
If You Miss April 15
Miss the deadline on a 402(g) excess and the tax result gets harsh. The excess deferral is included in your taxable income for the year you contributed it, and it’s taxed again when the money eventually comes out of the plan. You don’t get to treat the excess as cost basis in the account, so there’s no offset later.6Internal Revenue Service. Retirement Topics – What Happens When an Employee Has Elective Deferrals in Excess of the Limits
If your W-2 didn’t already include the excess in taxable wages — a common gap when the excess came from a second employer — you may need to file Form 1040-X to amend the return for the contribution year and add it in.9Internal Revenue Service. Instructions for Form 1040-X
Excesses You Don’t File Paperwork For
Not every excess starts with you sending in a form. Two other situations trigger a return of excess, and in both, the plan administrator drives the correction and Fidelity processes the distribution without you initiating it.
The first is a Section 415 excess: the total annual additions to your account from all sources — your deferrals, employer match, profit-sharing — exceed $72,000 for 2026 (or 100% of your compensation, whichever is less).10Office of the Law Revision Counsel. 26 USC 415 – Limitations on Benefits and Contribution Under Qualified Plans Because the calculation depends on final year-end figures, the correction happens after the plan year closes.
The second is an ADP or ACP nondiscrimination test failure. The plan runs these tests annually to make sure highly compensated employees haven’t contributed at rates too far above everyone else’s, and when the plan fails, the correction distributes excess contributions back to the top deferrers.11Internal Revenue Service. 401(k) Plan Fix-It Guide – The Plan Failed the 401(k) ADP and ACP Nondiscrimination Tests For 2026, a highly compensated employee is someone who owned more than 5% of the business at any point in the current or prior year, or who earned more than $160,000 in the prior year.12Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living
The deadline for ADP/ACP corrections is different from the participant-driven April 15. The plan has 2½ months after the plan year ends — March 15 for a calendar-year plan — to distribute the excess without triggering a 10% excise tax on the employer.13Office of the Law Revision Counsel. 26 USC 4979 – Tax on Certain Excess Contributions If you’re a highly compensated employee, expect Fidelity’s notification to arrive in January or February, and expect the check by mid-March. You won’t file a form; the correction flows through the plan sponsor.
The tax and 1099-R treatment described earlier — earnings taxable on receipt, no 10% penalty, Code 8 or Code P in Box 7 — applies to these corrections too.