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New Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

TurboTax Premier is stating I have exceeded the max income limits for contributing to my Roth IRAs.  Our Married Joint W-2 income is $163K, but with my military pension, it is over the $189-199K max.  I am being told by TurboTax that I have excess Roth IRA contributions and will be paying the 6% penalty for the $4200 (each) we contributed this year. 

6 Replies
Returning Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

Your Roth IRA contribution might be limited based on your filing status and income, which includes the pension and W-2s. Please see 2018 - Amount of Roth IRA Contributions You Can Make for 2018 for details on the limit.

Excess contributions are taxed at 6% per year as long as the excess amounts remain in the IRA. The tax can’t be more than 6% of the combined value of all your IRAs as of the end of the tax year.

To avoid the excess contributions tax:

  • withdraw the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
  • withdraw any income earned on the excess contribution.
New Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

This did not answer my question.  The question is "Why is TurboTax adding my military pension to my modified AGI which then puts me above the limits mentioned?"  

Per IRS p590A, military pensions are NOT compensation and therefore are not allowed for Roth IRA contributions.
New Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

My W-2 listed income is (married joint) $163K, which is still under the Roth IRA contribution limit.  With the military pension amount listed on my 1099R, this puts me over the contribution limits.  I don't think that is correct, as military pensions are excluded from "compensation" as defined in IRS p590a.
Returning Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

If you follow the link provided above it shows that your Roth IRA contribution might be limited based on the MAGI which includes the military pension. To calculate your modified adjusted gross income, take your AGI and add back certain deductions. If you are over a certain MAGI then you cannot contribute to a Roth IRA.
You are mixing it up with the annual limit, these are two different criteria:
For 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than:

$5,500 ($6,500 if you’re age 50 or older), or
your taxable compensation for the year, if your compensation was less than this dollar limit.
New Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

That just seems odd that you can't use the military pension to contribute to the Roth, but it IS counted toward your MAGI, to limit your contribution amounts.  Thank you for the explanation!
Returning Member

Why is my military pension being used on roth ira max contributions for Married Joint, with W-2 totals of $163K but TurboTax with military puts me over the $199K max?

You are welcome! Glad to help!