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Maximum employer-provided 401K contributiion for over 55 (year 2019)

Hello, I'm over 50 and for 2019 I contributed 24985.00 to my employer provided 401K.  I understand that is in keeping with the rules ($19,000 in 2019 plus catch-up contribution limits if you're 50 or older of $6,000 for workplace plan), for a total of 25,000. So I'm within that. However, TurboTax will only recognize only a deducation of $12,155 and states I over-funded by $12,930. I have tried multiple times to enter the info and I always get the same result. Please help!

3 Replies
Level 15

Maximum employer-provided 401K contributiion for over 55 (year 2019)

That's a tough one, and I'm not sure anyone can figure it out from those numbers, since they don't really make any obvious sense.  BUT some things to watch out for, (IF...if  you are talking only about a traditional 401k and not a ROTH 401k  )


1) make sure you are using the Desktop software, and that you have run the software updates from the selections at the top of the TTX screen.


2)  Make sure you've entered that data ONLY as a part of your W-2 entries.  Do not ...... do not double-enter those contributions on the Deductions&Credits page as IRA contributions....401k contributions are not IRA contributions.


3)  If you are married, your spouse is working too, and you've entered your spouse's W-2....make absolutely sure you have not entered your spouse's W-2 as belonging to you. And then  make sure your W-2 is not entered as belonging to that spouse either, (Could also delete the spouse's W-2 and see what happens about the over-contribution).


4)  Delete your entire W-2, and re-enter it in another box after each box entry to make sure every value records properly.  Box 1 must be less than box 5, by at least 24985  (some other pretax things can affect box 1, so it could be more.).  Box 5 must have a value considerably  greater than 24985.


5) make sure box 12 on the W-2 shows a code D and 24985 as one of it's entries.


6) ???? go back and check the birth year you entered for yourself on the Personal Info page in the software.


Beyond that, I can't think of much else that could be wrong.....unless you had ROTH-401K contributions, then some of the above doesn't help.   ( You did only work at one employer in 2019???  IF you had two employers and both had 401k contributions, you might exceed the limits that way...but wouldn't likely be the numbers you showed)


Also, you must be entering the exact data from your paper W-2 this point in time (late Nov 2020) don't try to import a 2019 W-2 from a W-2 provider into the software.



*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
Level 15

Maximum employer-provided 401K contributiion for over 55 (year 2019)

Just to add a bit of clarification to what @SteamTrain said:  you don't actually take a tax deduction for your 401K contributions.  Instead, your employer doesn't include those amounts in your taxable income for the year.  This means that your contributions have already been deducted from your income before tax is applied.  Those contributions are normally reported in Box 12 of your W2, with code letter D.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

Level 15

Maximum employer-provided 401K contributiion for over 55 (year 2019)

You refer to an "employer-provided 401(k)."  However, that TurboTax is calculating a deduction for contributions to a 401(k) seems to imply that you are self-employed (either a sole proprietor or a partner in a partnership) and are reporting contributions to a self-employed 401(k) plan.  There is no deduction on your individual tax return for 401(k) contributions made to a 401(k) plan of some other employer (including an S corp of which you might be a shareholder).


Assuming that you are contributing to a self-employed 401(k) plan, in addition to the $19,000 regular employee contribution limit, $6,000 catch-up limit on employee contributions and the employer contribution limit, there is the limit imposed by net earnings from self-employment.  If TurboTax is limiting your self-employed retirement deduction to $12,155, this implies that your net profit from self-employment is only $13,079.  Your contribution to a self-employed 401(k) is not permitted to be more than your net profit minus the deductible portion of self-employment taxes.  If your net profit is only $13,079, it's not clear where the money came from that you used to contribute the $12,930 that TurboTax is showing as an excess contribution since it did not come from your compensation.


Note that if you are partner in a partnership, only your income from the partnership that is net profit from self-employment, shown with code A in box 14 of the Schedule K-1 (Form 1065) is income on which your self-employed retirement contribution can be based.  Other types of income from the partnership are not part of your compensation and do not factor into the calculation of your maximum permissible self-employed retirement contribution.


Assuming that you did make a $12,930 excess deferral, that amount is not deductible and you'll pay taxes on that money again when later distributed from the 401(k).  Also, the fact that the plan administrator allowed you to make an excess contribution could result in disqualification of the plan.

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