Perhaps the IRS is disputing the correctness of the reporting on the W-2. Pub 590-A says, "The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans)."
TurboTax does its calculations based on the numbers in box 1 and box 11 and has no way to determine if those numbers are correct. TurboTax's behavior also depends on the user's response to the follow-up question to a box 11 entry asking if the amount in box 11 is from a nongovernmental 457(b) plan or a nonqualified deferred compensation plan. If you answer No, TurboTax will not reduce the amount in box 1 by the amount in box 11 when determining available compensation for making an IRA contribution. (I'm not sure why TurboTax asks this question unless it's common for amounts that are not from a nongovernmental 457(b) plan or a nonqualified deferred compensation plan to be improperly included in box 11.)
