Q. I just realized that I exceeded the annual limit on 401(k) deferrals. Am I in any trouble? A.H., Watertown, N.Y.
A. Yes, but you can easily correct the error. Arrange to have your 401(k) plan administrator pay you back the excess amount. As long as the excess contribution is repaid to you by April 15, 2011, you can avoid a 10% penalty. In any event, however, you will owe tax on any earnings from the excess contribution while it’s in your account.
Tip: The 401(k) deferral limit for 2010 is $16,500 ($22,000 if you’re age 50 or older).