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Returning Member
posted Mar 11, 2024 3:29:02 PM

Why would my 2022 employee payroll Roth 401K contribution ($7142) be limited to $6000?

I started working August 14, 2022.  It appears that Turbotax is handling this as a personal contribution instead of a retirement plan contribution.

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8 Replies
Level 15
Mar 11, 2024 3:36:27 PM

If this is an employer provided Roth 401(k) account then your contribution will be on your W-2 in box 12.  They are not entered anywhere else on a tax return.

Returning Member
Mar 11, 2024 5:58:49 PM

DoninGA - It was reported on the W-2 Box 12 and entered that way in Turbotax, but I received the following message from Turbotax:

 

Your Roth Contribution Was Too High

Roth IRAs offer some great benefits, but there is a maximum contribution of $6000 ($7000 if age 50 or older). You contributed $7142, resulting in an excess contribution of $1142. Learn more.

 

You Currently Have a Penalty

Because you make an excess contribution of $1142 to your Roth IRA, you will owe a 6% penalty ($68) each year that excess money remains in the IRA.

But don't worry. You can remove this penalty by taking action before April 18, 2023 (or October 16, 2023, if you're filing an extension). What can I do?

Enter any contribution that you withdrew before April 18, 2023 (or October 16, 2023, if you're filing an extension).

Note: You must pay the penalty every year until the situation is fixed.

 

Is it possible that IRA information was input twice?

RFR7063

Level 15
Mar 11, 2024 6:02:05 PM

Yes it was entered under Deductions & Credits as a IRA contribution.  Go delete it from there. It should only be entered from your W2.

Federal On left

Deductions and Credits

Then scroll down to Retirement and Investments

Traditional and ROTH IRA Contributions - Click the Start or Update button

 

Returning Member
Mar 11, 2024 6:30:54 PM

VolvoGirl/DoninGA - I opened the 2022 file and processed to Deductions and Credits > Retirement and Investments > Traditional and Roth IRA Contributions and the amount is $0.  I also reviewed the PDF file that I saved and $0 contributions are  listed. This appears to be an issue within Turbotax.  Is that possible?

RFR7063

Level 15
Mar 11, 2024 6:40:39 PM

What is the code in box 12  of the W-2 for your Roth 401(k) contribution?  Is it an AA ?

 

Returning Member
Mar 11, 2024 6:52:55 PM

VolvoGirl/DoninGA - The code in Box 12 of the W-2 is AA. That also appears in my PDF file in the Wage and Tax Statement for Box 12.

RFR7063

Returning Member
Mar 20, 2024 12:21:43 PM

VolvoGirl/DoninGA - I have not been able to resolve this issue. All my research indicates that there is not a $6000 limit on payroll contributions. Should I have received the same penalty notification when preparing my 2023 return (which did not occur)? 2023 contribution was over $18000 and a penalty message was not generated. Is it possible that there is an error in the TurboTax programming for 2022? 

RFR7063

Level 15
Mar 20, 2024 12:33:48 PM

A Roth 401K plan is NOT the same as a Roth IRA.  When you are asked if you made IRA contributions, say no.  Go back and change your answer.