Max income for 401k Contribution

[digger72]

The Gross income is $338708.00

I contributed $16600 in 401k

Now I am using turbotax. 

It shows a refund of $28420.  This does not change whether I enter in box 12 of W2 nothing or D and $16600 

My question is 

1. Is there is a maximum income limit after which 401k contributions do not apply. 

2. Does turbotax calculate the 401k contribution based upon box 12 entry. 

[MargaretL]

You are correct, Box 12, code D on your W2 form changes nothing on your tax return. 

And, please do not report any contributions (reported on your W-2, box 12, D) as a separate entry in Turbo Tax. All you have to do is report W2 data in Turbo Tax exactly as it appears on the form.

The 401(k) plan contributions you elect to make come directly out of your salary. Since the contributions are made with pre-tax dollars, your employer does not include these amounts in your taxable income for the year. At the end of the year, when you receive your W-2 form that shows your earnings, you will notice that your wages subject to federal income (box 1) tax are lower because of your 401(k) plan contributions (box 12). Since the contributions are not counted in your taxable income to begin with, you do not take a deduction when you file your return.

So to answer your questions... there is no income limit and your contribution is already reflected. There is nothing for TurboTax to calculate since there is no separate deduction for the 401(k) contribution on the tax return.  

[flyjetguy]

Why is there no discussion of a 401k versus a Roth? I have contributed the maximum allowed at my age to my "roth" shell in my company's 401k. There is no income limitation for this. Turbo tax, and my company's retirement contractor, Schwab, do not elaborate on this key difference. When I called Schwab, the rep mentioned a 402.g limit but emphasized there is NO income limit for contributions up to the maximum within my 401k. WHAAAAAAT?

However, if I had contributed the same amount to a Roth IRA not associated with my 401k, I would NOT be eligible for ANY contribution amount and subject to annual penalties if I did contribute with my current income. Ouch. 

[Maldita]

Hello sir, did someone from Turbo tax address your issue?  I also heard that if you contribute to your employer's 401K Roth plan, that there is no income limitation unlike if you contribute to a Roth IRA which has income limitation.  I have not seen any information about this situation from the IRS website as well. Hope someone can clarify it for us.  Tax expert out there, we need your help!

[DMarkM1]

You are correct there is no income limitation for the designated Roth account elective deferral contributions or 401K elective deferral contributions.  However there is an elective deferral contribution limitation for those accounts.  For 2022 it was 20,500 plus a 6,500 catch up contribution for those over 50.  These limits are per person not per account.  So the total elective deferral contribution to all accounts owned by a taxpayer cannot exceed these limitations. 

 Here is a comparison chart for a designated Roth account, a Roth IRA and a 401K account.  

For more information on Roth accounts click here

Go here for specific differences between a Roth IRA and designated Roth account 

@Maldita

[Maldita]

Thank you so much for the information.  I'm sure it will help a lot of people. You are undoubtedly a Tax Expert!! Again, a million thanks to you!