Where in TurboTax do I add my spouse's elective contribution to my solo / individual 401(k) (and the businesses corresponding profit sharing contribution).

[user09958]

My spouse is (the only) W2  employee (non-owner, part-time) in my sole proprietorship business. Where in TurboTax do I add my spouse's elective contribution to my solo / individual 401(k) (and the businesses corresponding profit sharing contribution). If I enter her contribution manually it requests that I withdraw the contribution. 

My understanding is that she is uniquely eligible to participate in my solo 401(k) being my spouse... elective up to 18K of income + profit sharing of 25% of her salary. I understand this is also in addition to my 54K limit. Is this entered in TurboTax or would it need to be processed on her W2 as a elective deferral? That still wouldn't answer the profit sharing component. 

[dmertz · Accepted solution]

Since you are using TurboTax Home & Business, I assume that you are a sole proprietor filing Schedule C.  401(k) contributions for W-2 employees go on Schedule C as a business expense.  Enter under Business Income & Expenses -> Business Expenses -> Other Common Business Expenses -> Employee Expenses -> Pension Plan.

TurboTax does not calculate or enforce any maximum plan contributions for W-2 employees.  You'll have to make sure the her elective deferrals, when combined with any elective deferrals at other companies, do not exceed $18,000 if under age 50 or $24,000 if age 50 or over, and your employer profit-sharing contribution is calculated on her W-2-reported compensation using the same base percentage as used to calculate your own contribution or is made for you and your spouse as matching contributions under the same formula.  Your base percentage is shown on TurboTax's Keogh, SEP and SIMPLE Contribution Worksheet Part III Rate line A.

Her traditional 401(k) elective deferrals must be reported on Form W-2 in box 12 with code D.  The employer profit sharing or matching contribution is not reported on her W-2; it's only included on line 19 of your Schedule C along with the elective deferral.  Box 1 of her W-2 will be reduced by the amount of her elective deferrals, but will not be reduced by the employer profit sharing or matching contribution; only the amount reported on in box 1 of her W-2 should be included as wages on Schedule C line 26.

[dmertz]

Also note that your spouse's 401(k) account is a separate account within your 401(k) plan.  Each participant must have a separate account.