Hello, my spouse is self employed and has a traditional solo 401k account setup.
I have been trying to enter a contribution for her 401k. However, since our joint MAGI is over $129K, Turbotax says the entire contribution is disallowed (excess) and creates a 6% penalty, on a 5329 form.
I have been making this contribution for years and it has been OK. However, starting in 2022 Turbotax automatically checks off the box that my wife is eligible for a employer retirement plan (due to her being self employed, as she has no other job or W-2). Turbotax explains that due to this check-off, there is a MAGI-based limitation to my spouse's 401k plan.
I cannot find anything from the IRS website that says there is a limit on solo 401k contributions based on too high of a MAGI. I looked mostly here: Self-Employed Individuals – Calculating Your Own Retirement-Plan Contribution and Deduction.
So my question is, is my wife eligible to donate to her solo 401k? If so, how do I enter the contributions correctly?
Thank you!
