Tax Withholding on a 402(g) Refund

[Nate X]

Participant wants taxes withheld on a 2025 excess deferral.  The excess will be Code P. Is tax withholding applied to 2025 or 2026 tax return?  Any citation would be helpful.

[Artie M]

Don't know of a cite but generally federal income tax withheld in one year can't be applied to a prior year's tax liability.  For example, if an employer incorrectly withholding taxes in a prior year, they can't simply correct it in the current year.  This IRS Chief Counsel Advice states that generally you can only fix if find the mistake in the same calendar year.  http://irs.gov/pub/irs-wd/201727008.pdf