ROTH Contributions

[jkerseyab]

My modified adjusted gross income for 2019 is $200,242.  I am contributing to a ROTH Savings account through my employer, and they say it is not a Roth 401K, it is a Roth Savings account.  The code on my W2 is showing "AA Roth Contributions to a 401(k) plan".     Per TurboTax, I have too  much money in my Roth, and need to take out $5054, stating I can only contribute up to $7K, but with my MAGI, I can only contribute around $2,000.  I don't want to take it out if I don't have to, but what would the code be for those deductions in block 12 if it is truly Roth Savings, I don't see a code in there that fits.

[Opus 17 · Accepted solution]

With a Roth 401(k), your annual contribution limit should be $19,500, or $26,000 if you are age 50 or over.  Turbotax is telling you something different?  This might be a bug.  Or, are you telling Turbotax you made Roth IRA contributions in addition to the Roth 401(k) that gets automatically pulled in from the W-2.  If so, take that back out.  A Roth 401(k) is completely different kind of account than a Roth IRA, and it sounds like you did not contribute to a Roth IRA. 

 @dmertz do you have any comments?

[dmertz]

It appears that you have mistakenly entered this as a Roth IRA contribution.  A Roth 401(k) is not a Roth IRA.  Enter amounts shown in box 12 of your Form 1099-R only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.  Go back to the Traditional and Roth IRA Contributions section and remove the W-2 box 12 code AA amount that you mistakenly entered there.

[Dkg1]

I contributed $23050.00 (catch up over 65 yrs old) to my company 401k Roth and $7,000 to my individual Roth IRA. My income was $127K. Turbo tax says I have excessive contribution and need to remove the excess to avoid penalty. I don't know what to do. How much excess to I need to remove?

[dmertz]

If by "income" you mean AGI, if you are filing single and your modified AGI is $127,000, the maximum you can contribute to a Roth IRA for 2019 is $4667.

Based on the precise amounts on your tax return TurboTax will tell you how much of the Roth IRA contribution is excess.

[Dkg1]

So is my individual Roth IRA different from my Employee 401K Roth (catch up amount contributed $23,050)? I can have both? I am filing Jointly and our AGI is $182,400. So where does TB tell me how much I can contribute to the individual Roth IRA?

[dmertz]

"So is my individual Roth IRA different from my Employee 401K Roth?"

Yes, they are two different types of Roth accounts.

" I can have both?"

Yes.  It appears that your modified AGI is below the amount where your Roth IRA contribution would be limited by modified AGI.

To get TurboTax to tell you if a Roth IRA contribution is limited to less than the annual maximum, enter the annual maximum (for 2019, $7,000 for being age 50 or over) as your Roth IRA contribution and TurboTax will tell you if any of it is an excess contribution.  If any portion is excess, you can then go back and alter your original $7,000 entry.

[Dkg1]

Thanks. So when I did that and I get to the Enter Excess Contributions page it says Dales Excess Roth IRA contributions for prior years $23,050. Remember that excess contributions should be withdrawn to avoid additional tax.  The $23,050 amount is the same as the amount on my 401K Roth catch up contribution on my W2 Form. What do I do?

Also if I want TB to Track y Roth IRA base do I just put my individual IRA amount or do I need to include all of my other 401K Roth IRA's?

[Opus 17]

In current or prior years, did you list the Roth 401(k) contributions as if they were Roth IRA contributions? If so, this was incorrect.

[jkerseyab]

This is my first year doing a Roth.  I retired from Civil Service and still have my regular 401k, untouched.

[Opus 17]

@dmertz  may be able to tell you where you went wrong.  Turbotax should not even know about the after-tax 401(k) contributions ("Roth 401(k)") except as an item in your W-2, box 12 with code "AA".  The fact that turbotax is reporting your Roth 401(k) contributions as excess Roth IRA contributions means you reported something in the wrong place.  

[dmertz]

Examine TurboTax's IRA Contribution Worksheet and IRA Information worksheet.  It's likely that the $23,050 appears somewhere on those when it shouldn't since the $23,050 was not a Roth IRA contribution.

[nelsonaf91]

Same issue. I used the code given to me by my employer AA - Roth contributions and Turbotax is assuming that contribution is a Roth IRA instead of the Roth 401k that it actually is.  There is a $7000 limit for Roth IRA contributions (I'm over 50), but Roth 401k contributions is combined with regular 401k contributions to max out at $19,500.

[dmertz]

TurboTax makes no assumption that code AA in box 12 of your W-2 has anything to do with a Roth IRA.  TurboTax only treats as Roth IRA contributions amounts that you explicitly enter as Roth IRA contributions under Deductions & Credits.

If TurboTax is indicating that you made an excess Roth IRA contribution, either you entered one under Deductions & Credits or your previous year's tax return had an excess Roth IRA contribution that transferred into the tax return that you are currently preparing.   IF you entered a Roth IRA contribution under Deductions & Credits and did not actually make a Roth IRA contribution, go back and remove that entry that you made.

[SLYKTAX]

I need help with this. I used the Deluxe. My wife and I both contribute our after tax money to ROTH IRA (we wrote checks to fund) since 2016.  I read elsewhere that I may not have to enter that in my tax return but TT has it asked. I believe TT got me wrong as the questions asked were too confusing. In the end, I saw my 2019 IRA information worksheets and prior has lines 7 ( Basis in IRA Conversions)  & Line 9 Conversion basis carryover as of 12/31/2029) filled with $6,500 for my spouse column & also Lines 23, 51 & 52 filled.  There were no entry  on Line 33 (Regular Roth IRA contribution). Does that mean, a mistake was made meaning my spouse made a conversion of $6,500 from her pre-tax IRA and the $6,500 was added to our AGI for 2019 and we got extra tax. I just found out that when doing my 2020 tax the same way; as soon as I entered $7000 ROTH contribution, we tax number increases right away. Thanks