entering pre-tax contributions

Forum|Forum|8 months ago
September 29, 2025
2 replies
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purchased additional 414h retirement service time which is not reported in the W-2 and is federally tax deductible, but cannot find where to enter the data

VolvoGirl

Level 15

How did you buy it? From what kind of account? Ask the plan how they handle it and if you get a tax deduction now. When I bought more air time in my ~~401k~~ pension plan, the plan kept track of it for me and when you start taking retirement it will be allocated. Part of it will come out tax free and not be taxable. Unless you buy it with pre-tax money like from a Traditional IRA.

GrlndnthnAuthor

Level 2

Thank you for your reply. The account is a public employee pension based account, not a 401k or IRA account. I paid with a check through the system's third party payment which made an automatic withdrawal from my checking account to buy-back the additional service not accounted for when I began with the employer. As such, the purchase was made with out-of-pocket funding. I checked the IRS site and it shows that such a cost is Federally deductible. However, it does not reflect in the W-2. In addition, the W-2 as issued is not accepted in Turbo Tax despite the information as entered being exact to what is reflected in the document. Therefore, I can't complete either entry which I should be able to.

Opus 17

Level 15

It's not tax deductible when purchased. Instead, it creates a taxable basis in your retirement account. The plan will keep track, and a portion of future withdrawals will be non-taxable at that time.

GrlndnthnAuthor

Level 2

Thank you for your reply. I checked the IRS site and as you've stated, that would be the case unless there are certain circumstances where the ability to deduct the cost does apply. In this case, with what they call an 'employer pick-up' which was purchased with pre-tax dollars and there's a check confirming said purchase, I should be able to deduct it. The issue at hand here is where to apply the cost since it does not reflect in the W-2. I hope that I've provided a more detailed overview of the matter. Thank you.

VolvoGirl

Level 15

My husband retired from California state govt and gets a pension. Before he retired he bought 5 years of "air time" with checking account money too. Sorry it is not a pre-tax deduction now. But like I said above.....

The plan will keep track of it and when you start taking retirement it will be allocated. Part of it will come out tax free and not be taxable. It will be allocated and the non taxable amount will be in box 5 in your 1099R for it. Unless you bought it with pre-tax money like a Transfer from a Traditional IRA. ASK YOUR HR DEPT.