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February 4, 2023
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403b maximim deferral

  • February 4, 2023
  • 1 reply
  • 26 views

Turbotax keeps telling me that $30,000 dollars I had deferred from my salary and put in a 403b exceeds the limit by $3,000. However, the limits are as follows:$20,500 ordinary limit + $6,500 over age 55 'catch-up' limit + $3,000 '15 years with same employer' catch-up. 

This is from the IRS website: 

  • Employees eligible for both types of catch-ups may contribute up to $3,000 extra for the 15-year catch-up, together with an extra $7,500 for the age 50 catch-up (in 2023; $6,500 in 2020, 2021 and 2022 and $6,000 in 2017, 2018 and 2019).

It is unfortunate TurboTax is in error on this point, as it sent me on a wild goose chase looking for info on the internet and talking to my 403b plan administrator just to confirm that the correct amount had been deferred. Will Turbotax then make an error in calculating my taxes, since it sees $3,000 dollars as incorrectly deferred and thus taxable?

    Best answer by DanaB27

    No, TurboTax won't add the incorrectly recognized  $3,000 excess deferral to your wages without you making an excess deferral entry in other income earned. Since there isn't a penalty calculated for an excess 403 (b) deferral you can ignore the excess deferral warning since you didn't make an excess deferral (IRS).

     

     

    1 reply

    DanaB27Employee Tax ExpertAnswer
    Employee Tax Expert
    February 4, 2023

    No, TurboTax won't add the incorrectly recognized  $3,000 excess deferral to your wages without you making an excess deferral entry in other income earned. Since there isn't a penalty calculated for an excess 403 (b) deferral you can ignore the excess deferral warning since you didn't make an excess deferral (IRS).

     

     

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