Turbo tax mishandling of 403B contribution by employer.

[halds]

My university (employer) withheld $28,999.92 to my 403b that we set up for 2020. This is the limit because I am over 65 ($26,000) and they contributed an additional $3000 for the 15 year catch contribution.However, Turbo tax is stating that I overpaid in my 403B by $3000 and I need to file an amended 1099-B. How can I correct this error.

[macuser_22]

A 1099-B reports stock sales.

A 403(b) employer plan is only reported in box 12 on your W-2 with a code E - nowhere else.

[halds]

Sorry I meant TT is asking to submit a 1099-R for the $3000. It does not recognize my $3000 15 year catch up contribution as valid, which it is. I have screen shots of the error message and TT help link, but it does not address this situation.

[halds]

I do not have a sufficient answer to my problem. This seems to be a flaw in TT, not taking into consideration 15 year catch up. How do I address this to TT support?

[Opus 17 · Accepted solution]

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@halds wrote:

I do not have a sufficient answer to my problem. This seems to be a flaw in TT, not taking into consideration 15 year catch up. How do I address this to TT support?

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You are correct.  Turbotax does not recognize the special $3000 catch-up provision for certain employees of hospitals, universities and other employers.  This has been reported by us several times and there has been no recognition this is a defect or something that needs to be fixed.  I can't give you any good advice on how to file your return.  

[halds]

I would like to add a note to the return to explain the additional $2999.92 for the 15 year catch up, but  TT does not have the option to create unique notes for the return  (arrrgh). Is there a way to add an electronic note? I guess I will just submit the return and if there is an issue, I signed up for TT audit protection, and they can handle it.

[Opus 17]

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@halds wrote:

I would like to add a note to the return to explain the additional $2999.92 for the 15 year catch up, but  TT does not have the option to create unique notes for the return  (arrrgh). Is there a way to add an electronic note? I guess I will just submit the return and if there is an issue, I signed up for TT audit protection, and they can handle it.

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I haven't run this situation enough to know if Turbotax may end up charging you a penalty for the "excess" contributions.  While the IRS might not assess a penalty (because they understand the catch-up rules), if Turbotax assesses a penalty, the IRS won't pay it back to you.  At the very least, you need to print your return before you file and carefully review it to make sure you don't have any penalties included.  

@dmertz  @macuser_22 do you have any further comments?

[halds]

Thank you for the advice. I did look through the TT forms and did not see any assessed penalty.  But TT did provide a warning in the interview process to tell me that the $29,000 contribution is above the max allowed at $26,000 or my age. It stated to read IRS Pub 560,  find out the max salary deferral for the type of plan, and find there what I need to do to correct the $3000 over payment.  Of course Pub 560 does not even MENTION 403B plans. It should be Pub 571!  Then it provided a help link to steps I need to take: 1. notify the plan administrator that there was an excess salary deferral ASAP, 2. withdraw the funds no later than May 17, 2021 to avoid paying additional taxes on the excess deferral, and 3. report the excess deferral on the 2020 return, with only very cursory instructions that were not helpful. I made screen shots of the the dialogue boxes, but can not share them here, but can provide to TT support if needed. Of course I ignored all of this because it does not pertain to my situation. There was no excess deferral. So short answer, TT dropped the ball (with no real solution).

[halds]

Here it is 2022 and the 2021 Turbo Tax NEVER GOT FIXED!!! This is unacceptable. I know I am not the only person who has made a 15 year catch up contribution to a 403B.  Please someone give me an answer from a tax expert at Turbo Tax.

[halds]

My university (employer) withheld $28,999.92 to my 403b that we set up for 2020. This is the limit because I am over 65 ($26,000) and they contributed an additional $3000 for the 15 year catch contribution. However, Turbo tax is stating that I overpaid in my 403B by $3000 and I need to file an amended 1099-B. How can I correct this error.  I am allowed the full $28,999.92.

This same problem occurred last year and Turbo Tax never provided an answer. please help  I  want to make sure it is entered correctly on the tax forms. This seems like it would be an easy issue to correct and Turbo Tax had a year to fix it! I am sure I am not the only person in this situation.

[Opus 17]

@halds 

Turbotax has apparently decided that this is a situation they will not cover. There is nothing that anyone on this forum can do about that. If you need to file a 2021 tax return that includes the extra catch-up provision, and you want advice on how to prepare an override to remove any penalties, we can help you do that. Or, if you upgrade to TurboTax live online, your live expert can prepare a correct return. Or, you will need to use a different tax software provider. 

[halds]

Thanks Opus, but I am not sure how to find out if Tubotax is adding any penalties. The forms are very complicated. Some advice on where to look would be great.

[RobertB4444]

@halds  Once you have completed the guided tax preparation in TurboTax and paid for the software you will be able to look at your tax forms before you file.  When you do you will see additional taxes and penalties carried over from schedule 2 if there are any, as well as form 5329.