Can I make post-tax contributions to my SIMPLE IRA, in addition to previous payroll deduction contributions? If so, where can I report that contribution in TurboTax?

[wcromar]

My wife made contributions from payroll to her SIMPLE IRA, but not up to the limit. We would like to make an additional contribution now to max out that deduction, if possible.

[RayW7]

Yes, generally you can make post-tax contributions if all the IRA requirements are met.  The total contribution limits are the same. Withdrawals of after-tax contributions to a traditional IRA should not be taxed. However, the only way to make sure this does not happen is to file IRS Form 8606.

Form 8606 for nondeductible contributions

Any money you contribute to a traditional IRA that you do not deduct on your tax return is a “nondeductible contribution.” You still must report these contributions on your return, and you use Form 8606 to do so.

Reporting them saves you money down the road. That’s because no individual’s money is supposed to be subject to federal income tax twice. Form 8606 gets it “on the record” that a portion of the money in your IRA has already been taxed. Later on, when you take distributions, a portion of the money you get back will not be subject to income tax.

Your IRA basis is the total of all your nondeductible IRA contributions (and for all of your traditional IRA accounts, if you have more than one). Contributions do not include rollovers. 

TurboTax will guide you... go to Retirement and Investments and continue through the IRA questions until you reach Any Nondeductible Contributions to Your IRA.  Answer the prompts and you should have no problem.

[dmertz]

RawW7's answer is incorrect.  The only contributions that are permitted to be made to a SIMPLE IRA are your elective deferrals to the SIMPLE plan made through your employer, employer contributions to the SIMPLE plan, and, after the 2-year holding period for the SIMPLE IRA has been completed, rollovers from another IRA or qualified retirement plan.  The tax code explicitly prohibits you from making any other contributions, either deductible or nondeductible, to a SIMPLE IRA.

The limit for elective deferrals to a SIMPLE IRA is independent of the limit for making regular traditional IRA contributions to some other IRA.

[Chefdstandridge1]

Question.  My simple IRA contributions are taken out of my pay check but are not take out pre-tax.  Since they are taxed are they a deduction?  Seems like the same thing as a direct deposit into an IRA account but not seeing a clear answer online. 

[DaveF1006]

It depends. A Simple IRA is usually pre-taxed and is never a Roth according to this IRS document. Look at your W2 and see if there is a difference between Box 1 and Box 3. Also is there an entry in Box 12 and if so, What is the code?

Please, Reply back with your answer.

@Chefdstandridge1 

[dmertz]

@Chefdstandridge1 , a SIMPLE IRA is a special type of traditional IRA that (until 2023) only permits pre-tax contributions.  The employer excludes salary deferrals from the amount in box 1 of your W-2, making tem pre-tax.

Perhaps what you are referring to is not a SIMPLE IRA but is instead a regular traditional IRA and part of your pay is simply directly deposited into your IRA by your employer for you convenience rather than you having to make the deposit yourself.  This is called a Payroll Deduction IRA and the contributions are your own, reportable in the Deductions & Credits section of TurboTax:

https://www.irs.gov/retirement-plans/plan-sponsor/payroll-deduction-ira

[Chefdstandridge1]

Ok so I have confirmed that it is definitly a simple IRA My account on Charles Schawb is listed as "simple IRA".  On my w2 box 1 is $800 more than box 2 however my IRA contributions were serveral times that amount.  Also just some math:  box 1 = gross wages from my last pay check - all pretax decutions (health insurance, fsa, dental) except for my IRA contributions.  The difference between that number and my gross wages is exactly my IRA contributions for the year.  Also my weekly paystub taxable amount also adds up that way gross wages - pretax deductions excluding IRA contributions.  Is my employer just not processing this correctly?  Seems like Simple IRA has to be pretax but it definitly is not. 

[Chefdstandridge1]

also box 12 does have an amount but it is code DD which is health insurance.  the amount matches my health insurance costs taken out pre-tax. 

[Chefdstandridge1]

Ok so I have confirmed that it is definitly a simple IRA My account on Charles Schawb is listed as "simple IRA".  On my w2 box 1 is $800 more than box 2 however my IRA contributions were serveral times that amount.  Also just some math:  box 1 = gross wages from my last pay check - all pretax decutions (health insurance, fsa, dental) except for my IRA contributions.  The difference between that number and my gross wages is exactly my IRA contributions for the year.  Also my weekly paystub taxable amount also adds up that way gross wages - pretax deductions excluding IRA contributions.  Is my employer just not processing this correctly?  Seems like Simple IRA has to be pretax but it definitly is not. 

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[dmertz]

Your SIMPLE IRA contributions are shown with code S in box 12 of your W-2.  A correctly prepared W-2 will have this amount excluded from box 1.

Box 2 is tax withholding and has nothing to do with what is shown in box 1.  Perhaps you meant box 3 or box 5.  I would generally expect the amount in box 5 to equal the amount in box 1 plus the amount with code S in box 12, which , if I interpret what you are saying correctly, agrees with what you see and the W-2 is correct.

[Chefdstandridge1]

got it.  Yes box 3 is $800 less than box one.  box 5 is identical to box 1.  nothing under code S in box 12 just Code DD. 

I feel like my w-2 is incorrect. 

[dmertz]

On a correct 2022 Form W-2, I don't think it's possible that box 3 can be $800 less than box 5 unless box 3 = $147,000 (maximum possible) and box 5 = $147,800.

With no amount in box 12 with code S, the W-2 indicates that you made no salary deferrals to a SIMPLE IRA in 2022.