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Level 2

Question

Excess and Non-Deductible 401(k) Contributions

7 replies
60 views

Why are company contributions to a qualified retirement 401(k) plan termed "excess" by TurboTax for a 70 1/2+ employee?

401K

DaveF1006

Alumni - Intuit

How much were your contributions and what type of retirement plan is it?

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DaveF1006

Alumni - Intuit

Turbo Tax Premier would be your correct choice.

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Rick44Author

Level 2

DaveF1006,

Does that mean the problem is handled correctly in TurboTax Premier, but not in my Home and Business?

Thanks,

Rick44

SteamTrain

Level 15

"Company Contributions"? (those don't show up anywhere on yoru W-2)

Or your contributions to a company 401k? Those are different issues.

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1) I tried it for a 74 y.old person. who contributed 10,000 to a 401k (As noted on his W-2).

No errors indicated, nor is an over contribution indicated anywhere using desktop software ...BUT Make sure you only enter your W-2 as-is, don't double-enter your 401k as a contribution in the IRA/ROTH IRA contribution section...a 401k is NOT an IRA.

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2) OR...are you talking about a Solo 410k for self-employed people ?

..... how each is handled can be entirely different and is important for you to say-so when you ask a question about such things.

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3) Of course, it is possible to do so (Excess contributions to a 401k) but usually only with multiple employers at any age.

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4) OR are you actually referring to an IRA contribution...and incorrectly calling it a 401k contribution.....then NO, you cannot contribute to an IRA after a certain age...you can do a rollover to one, you just can't make any more "contributions"

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

Rick44Author

Level 2

Steam Train,

You sound like this issue is in your wheel house. This was a new plan (for 2019) instituted by my company after I went to part-time employment. I had rolled over my old plans, but the new plan withholds 3% from employee pay in a 401(k) and matches it with 9% from the company. The 3% shows up in Box 12 against the notation D. It's a relatively small amount. I don't know why TurboTax is calling it an excess contribution even if it were subject to an RMD - I'm confused about the RMD as well.

Cheers,

Rick44

SteamTrain

Level 15

The 9% company match is immaterial to you.

IF all you entered was your W-2 data and the box 12 code D $$, there should be no complaint (well, at least that is the case with my desktop software). For 401k contributions thru your employer, as long as the particular 401k plan allows it, you are allowed to contribute to the 401k beyond age 70.5 and no RMD distributions are required until you leave employment there.

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So, unless it's an online software bug, I can't see that the software would target that.

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BUT...you also said you rolled over your old plan (into an IRA???). Those $$ would be subject to RMDs if you turned 70.5 in 2019. You do have to make those RMDs are taken if they went into an IRA

(....and depending on when you rolled them, you might have been required to keep the RMD at the time you rolled.....but I'm hazy on the procedures and timing of that....may depend on what year you rolled them.)

I don't see how those would show up in any way as an excess contribution to your 401k though....shoudl not be related at all (I think)

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I just tried an Online W-2 with 10,000 in box 12, code D for a 75 year old....and the software says nothing about an over contribution when I go thru the the full interview and Federal review/error check. So I think the Online software is operating OK too. At least from what I can gather about yoru description

But again...are you sure you did NOT enter anything on the Deductions & Credits page for "Traditional and Roth IRA Contributions". That would have triggered an over contribution warning.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*