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Anonymous
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Individual self-employment 401k (w/ profit sharing contribution) max option does not seem to adj for separate company 401k contributions unrelated to self-employment.

I worked in 2018 as self-employed for first part of year and then moved over to full time employment. Noticed that Turbotax for mac doesn't seem to take into account the company 401k contributions when trying to calculate the max contribution for an individual 401k that was used for self-employment. Am I missing something here, there's a bug or just need to adj something for this to correctly show in Turbotax.

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dmertz
Level 15

Individual self-employment 401k (w/ profit sharing contribution) max option does not seem to adj for separate company 401k contributions unrelated to self-employment.

You are correct.  The Maximize function for an individual 401(k) contribution does not account for elective deferrals or Roth contributions to other 401(k) plans.  You can select the Maximize function for a SEP or profit sharing plan to allow TurboTax to calculate the maximum employer contribution to the individual 401(k) and then explicitly enter the permissible amount of individual elective deferral or Roth contribution, taking into account those at your other employer.

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3 Replies
dmertz
Level 15

Individual self-employment 401k (w/ profit sharing contribution) max option does not seem to adj for separate company 401k contributions unrelated to self-employment.

You are correct.  The Maximize function for an individual 401(k) contribution does not account for elective deferrals or Roth contributions to other 401(k) plans.  You can select the Maximize function for a SEP or profit sharing plan to allow TurboTax to calculate the maximum employer contribution to the individual 401(k) and then explicitly enter the permissible amount of individual elective deferral or Roth contribution, taking into account those at your other employer.

null204
New Member

Individual self-employment 401k (w/ profit sharing contribution) max option does not seem to adj for separate company 401k contributions unrelated to self-employment.

I've suggested to TurboTax that they correct this many times over the years. Now TurboTax won't let you electronically file returns with the adjustment made because they flag it as an error - even though it's correct. Great!

Individual self-employment 401k (w/ profit sharing contribution) max option does not seem to adj for separate company 401k contributions unrelated to self-employment.

This problem still persists.  I relied on the maximize function for my new self-employed 401k, not realizing it didn't take into consideration the contributions made to a company 401k (even though those are designated by Code D on the W-2).  I now realize that TurboTax permits the deferral total to exceed the max ($22,500 for 2023).  So I now must amend my return (and pay more tax).   

To be fair, when you go to the fine print of TurboTax's Keogh, SEP and SIMPLE Worksheet, it says:  "Note: Maximum contribution calculations herein assume only one plan.  Multiple plan contributions: see Help."  But why can't that same warning show up in the step-by-step instructions, especially when the TurboTax coders should easily be able to make a connection between Code D on a W-2 and the Keogh, SEP calculation page.

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