Concerned: How Do I report SIMPLE IRA Contributions When My Employer DOES NOT Withhold Them From Wages?

[JTstag]

I'm part of a company of only 3 employees which has a SIMPLE IRA. Similar to how our Traditional IRA worked, these contributions are NOT made through wage withholding (and thus reflected in our W2s) but are taken post-tax (initially) from our respective bank accounts on a twice-monthly basis. The financial advisor who set up our SIMPLE IRA says that many of his clients do it this way as well. 

There seems to be no guidance on how to report these contributions to lessen gross income anywhere, as all answers (here and elsewhere) assume that the SIMPLE IRA contributions are withheld from wages. 

Help?

[ThomasM125]

I think what you mean is instead of taking the contributions from your pay and then reducing your taxable wages reported on your W-2 form to reflect this, the contributions are taken from your bank account with no reporting. As long as the contributions ended up in a traditional IRA and don't, along with other IRA contributions,  exceed your allowable traditional IRA contributions for the year, you can report them as traditional IRA contributions on your tax return.

You do this in the Retirement and Investments section of TurboTax, which is in the Deductions and Credits area. Look for Traditional and Roth IRA contributions and follow the instructions in that section to add your SIMPLE plan contributions as traditional IRA contributions.  

[dmertz]

@AbrahamT correctly replied to your duplicate post on the subject.

Salary deferrals to a SIMPLE IRA are only permitted to be taken from your pay, deposited into the SIMPLE IRA by your employer and reported with code S in box 12 of your W-2.  Similarly, the required employer matching contributions or nonelective contributions are only permitted to be made by the employer.  The tax code explicitly prohibits any other contributions to be made to a SIMPLE IRA other than rollovers form another qualified retirement account at least two years after the establishment of the SIMPLE IRA.

[JTstag]

I do mean that. However, it's not a Traditional IRA. That's how my Traditional IRA used to work over all the previous years I've had it. We switched to a SIMPLE IRA this year and our financial advisor in charge of the plan advised us to have the funds taken from our checking account instead of withheld from pay. A critical mistake, apparently.