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Level 2

Question

401(k)

4 replies
34 views

My wife and I are both retired. I am 67 and she is 60. We contributed $7,000 each to our 401(k) accounts. We received part time income of $11,000 for me and $38.00 for my wife. We also received $26,000 in 1099 interest and $35,000 in dividends. Why is TurboxTax stating we must remove $2900.00 from my wife's 401(k) account or we will pay a penalty ?

Level 15

Because you over contributed ... the max you could put in was the total of the wages for you both. The investment income doesn't count for an IRA.

Level 2

Thank you for your prompt response. I should have stated the contributions were to our IRA accounts, not 401(k) accounts. I thought that you are allowed to contribute up to $7,000 each to an IRA account even if you did not have any wages ??

Level 15

Sorry no. See, IRS Pub 590-A IRA Contributions

https://www.irs.gov/pub/irs-pdf/p590a.pdf