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julian-herrera-h
Level 1

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

Or should I include the total amount of money that went from my paychecks to the savings account in 2020, even though all of that is pre-tax money?
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Accepted Solutions
dmertz
Level 15

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

If the amount taken from your pay is shown in box 12 of your W-2, it's not a contribution to a payroll deduction IRA and is to be entered only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.

 

If it truly is a payroll deduction IRA contribution where your employer deposits a portion of your pay into your IRA account (an account not associated with any employer-provided retirement plan) on your behalf simply for your convenience so that you do not have to make the deposit yourself, it's your contribution and does need to be entered under Deductions & Credits -> Retirement and Investments -> Traditional and Roth IRA Contributions.

 

Also, the term "savings account" is typically not used to refer to an IRA, so your question is not entirely clear.

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6 Replies
dmertz
Level 15

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

If the amount taken from your pay is shown in box 12 of your W-2, it's not a contribution to a payroll deduction IRA and is to be entered only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.

 

If it truly is a payroll deduction IRA contribution where your employer deposits a portion of your pay into your IRA account (an account not associated with any employer-provided retirement plan) on your behalf simply for your convenience so that you do not have to make the deposit yourself, it's your contribution and does need to be entered under Deductions & Credits -> Retirement and Investments -> Traditional and Roth IRA Contributions.

 

Also, the term "savings account" is typically not used to refer to an IRA, so your question is not entirely clear.

julian-herrera-h
Level 1

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

Thank you so much!

And my bad, by savings account I just meant my IRA, thank you for noting that 

VolvoGirl
Level 15

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

If it was deducted from your pay pretax it is not an IRA but probably to a 401K plan.  Is it on your W2 in box 12?  Does it go to a personal IRA Account you set up outside of work like at a bank?

dmertz
Level 15

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

VolvoGirl, julian-herrera-h specifically made mention of a "payroll deduction IRA" which is the term used by the IRS to refer to regular personal IRA contributions made by direct deposit of some portion of one's pay into an IRA in lieu of depositing it into an ordinary savings or checking account; some employers allow pay to be direct-deposited among several accounts.  If that's truly the case, it's not associated with any retirement plan of the employer and would not appear in box 12 of the W-2.

 

Payroll deduction IRAs are somewhat uncommon, though, so it's good to confirm that these contributions do not appear in box 12 of the W-2 before reporting them on the tax return as either deductible or nondeductible traditional IRA contributions.

julian-herrera-h
Level 1

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

It does appear on box 12 and it looks like it's a 401k plan, not an IRA. I didn't set up any account at any bank or anything like that. All I know is that my employer takes out some pre-tax money from my paycheck and puts it somewhere, matches part of it, and saves it for retirement. I apologize for mixing up the terms; I'm still trying to understand everything.

npierson7
Level 1

Is my IRA contribution 0 if I have a payroll deduction IRA (meaning my employer takes out money from every paycheck -which is pre tax - and puts it in a savings account)

It is most likely 401(k) plan. Employer's match is taxable income for you and it is reported on your W-2 in box 12. Contact your employer or plan administrator to make sure what type of retirement account you have. 

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