401k invested beyond $15k limit?

Question

1) What happens if you contribute more than 15k into a 401k limit (I am under the age of 50) ?
2) Does the company-HR automatically stop you from contributing or is the money taxed and then put into your 401k ?

I am rapidly approaching the 15k limit and I forgot to change my elections prior to 6/30 (our company allows changes only once a quarter). I sock away about $2500 a month into my 401k. (I started saving late)...

Further : If the answer to the question is yes to 1)...

3) What happens as it sits in the 401(k) ? How does IRS differentiate between taxfree 401k investment vs taxed 401k investment ? How do I keep track of it ?

Thansk STEVEN F ..

However, those rules you stated are for Profit Sharing Plans and not the Elective Deferrals 401k Plans.

However in the same link you mentioned, there is the following.

Treatment of Excess Deferrals

If the total of an employee's deferrals is more than the limit for 2006 the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distributions. He or she must notify the plan by April 15, 2007 (or an earlier date specified in the plan), of the amount to be paid from each plan. The plan must then pay the employee that amount "by" April 15, 2007.

Keyword --- BY

Answer 1

Actually the 2007 limits are $15,500 (up $500 from last year)...check with your HR department and let them know what is going on...as for the other answer of $4000 that is for an IRA!

Answer 2

1) Excise Tax for Nondeductible (Excess) Contributions

If you contribute more than your deduction limit to a retirement plan, you have made nondeductible contributions and you may be liable for an excise tax. In general, a 10% excise tax applies to nondeductible contributions made to qualified pension and profit-sharing plans and to SEPs

2) If they don't, they should. Ask your benefits department.

3) See IRS publication 560, linked below.

Answer 3

where are you getting 15k from the max is 4k? and the should stop you automatically when you hit it.