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Level 2
March 24, 2023
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Self-Employed Simple IRA matching contribution

  • March 24, 2023
  • 1 reply
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Hi!

I've entered our self-employed employee contribution of $14K on line 5a of the "Keogh, SEP, & SIMPLE Contribution worksheet" but when I enter our 3% employer match on line 5d of $22 I am getting an error "line 5d should not be greater than line 5c." I have played around with all different fixes but it won't allow me to contribute more that 14K for employer match. Help!

Thanks,
Kayla

    Best answer by dmertz

    TurboTax is correctly flagging as invalid an employer matching contribution that exceeds the employee contribution.  Matching contributions are a dollar-for-dollar match of what the employee contributes, limited to 3% of compensation, so matching contributions must equal employee contributions unless limited to a lower amount by compensation.  (A full $14k of matching contributions would require $466,667 or more of compensation.)

     

    Perhaps you are confusing the 3% match with the optional 2% non-elective employer contribution.  However when determining the 2% non-elective employer contribution, only $305,000 of compensation is permitted to be considered for 2022, making the maximum possible 2% non-elective contribution $6,100.

    1 reply

    dmertzAnswer
    Level 15
    March 25, 2023

    TurboTax is correctly flagging as invalid an employer matching contribution that exceeds the employee contribution.  Matching contributions are a dollar-for-dollar match of what the employee contributes, limited to 3% of compensation, so matching contributions must equal employee contributions unless limited to a lower amount by compensation.  (A full $14k of matching contributions would require $466,667 or more of compensation.)

     

    Perhaps you are confusing the 3% match with the optional 2% non-elective employer contribution.  However when determining the 2% non-elective employer contribution, only $305,000 of compensation is permitted to be considered for 2022, making the maximum possible 2% non-elective contribution $6,100.

    kpfaffAuthor
    Level 2
    March 27, 2023

    Great, thanks so much for your help!