Complete Story
04/01/2026
401(k) Refund Checks: Why They’re Not Always a Good Thing
Source: Printers 401k / Diversified Financial Advisors, March 31, 2026
Business owners often assume that getting a refund check from their company’s 401(k) plan is a positive sign—extra money back, right?
Not necessarily.
In many cases, these checks are the result of your plan failing IRS non-discrimination testing, which is designed to ensure the plan benefits all employees fairly—not just owners or highly compensated individuals.
When that test isn’t passed, excess contributions made by top earners are required to be returned.
What that can mean:
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The refund may be taxable income
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You could be saving less toward retirement than you expected
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It may indicate a need to review your plan’s design or participation rates
The good news? It's fixable.
If this sounds familiar, it may be worth a conversation. With certain plan design strategies and a fiduciary-focused approach, I can work with you to help ensure you plan passes testing- and works for everyone on your team.
Here’s a link to schedule a time with Joe Trybula, CFP, AIF, to discuss strategies : https://calendly.com/
