I am 77. I contribute to a SEP IRA traditional. This year it penalized me because I'm over 70.5 and its not a ROTH IRA. My financial consultant says nothing has changed

[virginia_marsh3]

I have contributed every year in the past based on a formula from my self employed earnings less expenses and though my earnings are much lower this year I should be able to contribute about $3500.  Turbo Tax is calculating a penalty vs a benefit.  What changed?  My investment banker says the tax laws around this didn't change.  I've always contributed to my Traditional SEP and have done it every year even though I'm 77.

[TomD8]

Contributions can be made to a SEP-IRA after age 70 1/2 if you're still working, but you still have to take RMD's.

[virginia_marsh3]

Then why is turbo tax assessing a penalty vs reducing tax burden?  I do take RMDs

[TomD8]

Make sure you enter your SEP-IRA contributions in the correct section of TurboTax.  Enter 'sep ira contributions' in the search box in the upper right of the TT window to be taken to the correct area.

[macuser_22]

SEP's are employer plans, not Traditional IRA's.    SEP contributions are entered in the schedule C section.  Nothing should be entered in the Traditional IRA contribution interview at all.

If you entered in the IRA contribution section then un-check the Traditional IRA box and [continue] to delete the improper contribution.

[virginia_marsh3]

Thank you!  That did it!

[IreneS]

Tom D8 is correct - You should still be able to take the deduction.

Please make sure your program is updated.  [In TurboTax, click Online (in black bar) > Check for Updates.]

Even if you get that error screen, Turbo Tax should still reflect the contribution on your return.  To check this:

1. Go into Forms Mode by clicking on the Forms icon at the top right of your screen. 
2. In the Forms in My Return list, click 1040 Wks.
3. Scroll down to Schedule 1, line 28.  You should see the amount of your contribution.