W2 Retirement Plan Box 13

[BillLefebvre]

My W2 has the "Retirement Plan" box 13 checked but I have not made any contributions to the plan. This situation prevents me contributing to my personal IRA. Should this box be left unchecked? If so, do I need a corrected W2?

[DoninGA]

If your employer offers a retirement plan the box 13 will be checked, whether you contribute to the plan or not.

[dmertz]

Also, box 13 being marked does not prevent you from contributing to a traditional IRA, it just means that the contribution might not be deductible, depending on your modified AGI for the purpose.  Not being deductible means that portions of future distributions will be nontaxable instead of being taxable.

[Jamie-pays-taxes]

IRS Publication 590-A page 11 lower left states: "Defined contribution plan. Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year." My wife's W-2 has box 13 retirement plan checked, though she doesn't have an account, nor knew her employer had a plan, to which it does not contribute. So she not only has no account, she had no amounts contributed or allocated to her account (because she has no account). TurboTax should allow for a taxpayer to override whether she can contribute to a traditional IRA with the deduction at the higher income limits, whereas right now TurboTax tells me she is covered because of the checked box. I called the IRS and the rep with whom I spoke agreed that the employer should not have checked the box, and if the employer is stubborn and will not correct the W-2, then I can show an auditor the text I quoted above supporting that she is not covered by an employer retirement plan. Your thoughts?

[dmertz]

If the employer provides a pension (defined benefit) plan, she is covered, even if she is not yet vested in the pension plan.  Otherwise, with no employer-provided retirement account in her name, she is not covered.  If the employer marked Box 13 Retirement plan inappropriately and will not provide a correction, you'll need to enter the W-2 without marking this box in TurboTax and include an explanation statement with your mailed tax return.

If you've already done this and the IRS is questioning her deduction for a traditional IRA contribution, you'll need to provide information to the IRS to substantiate that the employer marked box 13 inappropriately.  That would be information describing the employer's retirement plans, not a quotation from IRS Pub 590-A.  You need to establish that the employer, not the IRS, has made a mistake.