Never ran into this before, and wondering if TT glitch?
I have an employer sponsored 401k, and am equally contributing between a traditional and a Roth. When walking through TT 2021 H&B, it said I over contributed by $3900.
It is basically telling me that there is a $7000 contribution limit?
I found a few websites online with differing information. There is a listed $7000 limit, then on the same, and another website, it says that the contribution limit is $19,500.
Is there a difference whether or not your 401k is employer sponsored, or not? Doesn't make sense. Below is a website with conflicting information with quotes from the same site.
If anyone can shed some light here, I would appreciate it. Will make a difference if I need to contact my HR and get a redistribution and an amended W-2. Thank you
Both below from same website... fool dot com/retirement/plans/401k/over-contribution
"Since you have a 401(k) at work, you'll have to be conscious of income limits that can affect your eligibility to deduct your contribution on your tax return, or, in the case of a Roth IRA, to contribute at all. For 2021 and 2022 the contribution limit is $6,000, with an additional $1,000 catch-up contribution limit for those age 50 and older."
"For both 2020 and 2021, the IRS limits 401(k) employee contributions to $19,500. If you're 50 or older, you can contribute an extra $6,500 as a catch-up contribution."
Since you are making contributions to your 401k through your employer, the amount that was contributed should be reported on your W-2 in box 12. Entering that W-2 into your return is the only thing you need to do to account for the contributions. These contributions should be going to a 401k and Roth 401k, not a Traditional IRA and Roth IRA.
You do not need to enter them into the IRA Contributions section of your return, because the contributions to the 401k plan are not IRA contributions. Therefore, there are different contribution limits for each type of account.
If you did enter the contribution amounts into the IRA Contribution section of your return, be sure to go back to delete those entries.