Can I amend the Turbo Tax ceiling of $26,000 for salary deferral retirement plans as my employer advises me that the ceiling in my case is $29,000?

[chrconsta]

My employer advised me that since I have been with them for longer than 15 years, the maximum contribution for 2020 is $29,000. Turbo Tax does not have this alternative written in its software.

[VolvoGirl]

For what kind of plan?  A 401K?  The limit is 26,000 for both 2020 and 2021.  Better double check with the employer.  Never heard of any special amounts for that.  

https://www.aarp.org/retirement/planning-for-retirement/info-2020/401k-contribution-limits.html?CMP=... 

[chrconsta]

The benefits specialist at the university where I am a professor advised me that the ceiling negotiated by the TIAA (Teachers Insurance and Annuity Association) with the IRS for someone in my position is $29,000. How do I make this clear on my return (prepared with Turbo Tax) before I submit it, to avoid unpleasantness with the IRS later on?

[VolvoGirl]

I don't know anymore.  Maybe someone else will show up and reply.  I'll page some people

@dmertz  @rjs  @Critter 

[chrconsta]

Thanks for your replies. The plan is a 403(b). FYI, in case someone else asks the same question: have a look at the material posted on your-guide-to-tax-deferred-annuities.pdf (tiaa.org).

[Opus 17]

Your link is broken, I think you inadvertently used your university's filtered/protected system.

There is a special catchup provision of up to $3000 for certain employee covered by a 403(b), see here, https://www.irs.gov/retirement-plans/403b-plans-catch-up-contributions

I haven't seen this issue in Turbotax before.  Are you getting an excess contribution message after entering your W-2?  What code does your W-2 use in box 12 for your contributions?

[dmertz]

The extra $3,000 is a special catch-up contribution to a 403(b) plan.  The code E or code BB in box 12 of  your W-2 tells the IRS it's a 403(b) contribution:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-l...

You should be able to just ignore any TurboTax message indicating that you have contributed too much since the reduction in 2020 AGI that results from this contribution is already reflected in the amount your employer reported in box 1 of your W-2.  It's not deducted anywhere on your tax return.  The only place the number might appear on your tax return is on Form 8880 if you qualify for a Retirement Savings Contributions Credit.  I think only online TurboTax makes the mistake of flagging this as a error.  If online TurboTax will not allow you to proceed with this entry, you might either need to switch to the CD/download version of TurboTax or split the W-2 into two and split the contribution between the two.

TurboTax Product Quality has been informed of this bug in the past but they've done nothing to correct it.

[chrconsta]

Thanks for your reply. Yes, I did get the message about excess contributions. The code in box 12 on my W2 is E. When I finished the return (I haven't sent it in yet), the checking function found it to be without errors. This is what puzzled me.

[chrconsta]

Thank you for the information. I have used the CD version of Turbo Tax. After all the discussion and good advice I have received, I think I will send my return to the IRS.

[rjs]

It's not a bug. It's listed in the Unsupported Calculations document for 2020 TurboTax. The Unsupported Calculations document says the following. (It's the last item on page 10).

"Catch-up contributions to 403(b): Catch-up contributions to 403(b) for employees with 15 years of service are not supported."

There are some calculations that TurboTax does not handle. This is a design decision based on a number of factors, such as the amount of programming effort required, the likely number of users affected, etc. For more information about unsupported calculations, or to download the complete document, see the following FAQ.

Are there any personal (individual) tax situations or calculations that TurboTax doesn't handle?

[chrconsta]

Fair enough. But then Turbo Tax should add a caveat to their advertising, something along the lines "This software is not perfect. There are certain computations that it is not programmed to handle." Or words to that effect.

[melreever]

So what do I do? Can I not continue using and filing my 2020 taxes via TT because of this?

[Opus 17]

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@melreever wrote:

So what do I do? Can I not continue using and filing my 2020 taxes via TT because of this?

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One possibility would be to simply use a lower number for your box 12 contributions that won't trigger the error.  This may delay your refund or result in an IRS letter, since the date that was transmitted with your e-filed return would not match what they have on file.  But it does not change your taxes or penalties in any way, so I don't know if the IRS would consider it an error or not. 

If you reduced the box 12 number, then filed by mail, the IRS would not get an electronic copy of your W-2 so there wouldn't be any possibility of a computer mismatch, you would include a paper copy of the W-2 along with your printed tax return and that would not result in any errors.  However, filing by mail is not a good choice this year because the IRS is significantly backed up.  

Or see if another software produce will cover this situation. 

[Critter-3]

Just reduce the code E to the allowed amount ... this info is NOT sent to the IRS because they already have it on the W-2 form they get  AND making the change will NOT affect your return.  So if this is an error that MUST be corrected to efile then that is how to fix it.  Otherwise you can ignore the warning message in the wages entry section.