Does 401 K count as investment? And a question about unvested employer contributions.

[Python0608]

Dear Community,

Happy Holidays!

I have two questions. First, I have meet all other situations for deluxe except the 401 K gives me confusion. Does it count as investment that pushed me to the premier version, since it’s invested in stock? I don’t buy or sell investments in other places.

Second question is in addition to match a portion of my 401 k contribution, my employer also contributes a bit more which won’t be vested after 2026. Does this complicates my tax?

[xmasbaby0 · Accepted solution]

No, having a 401K does not push you into a higher version of the software.   The information about your 401k will be on your W-2, and will be entered when you enter the W-2.   You will not be entering it anyplace else like an "investment" section of the software.   You will just enter the information from each box of your W-2 exactly as it appears, and worry no more about the 401k.

[Mike9241]

One thing about the company's  401(k) plan. Annually it must do discrimination testing 

401k discrimination testing is a set of tests that evaluate the benefits plans of highly compensated employees (HCEs) and non-highly compensated employees (NHCEs). The tests ensure that a 401k plan does not favor HCEs or key employees over other employees in terms of deferral contributions, employer matching contributions, and percentage of assets in the plan. The three primary tests are the actual deferral percentage test (ADP), the actual contribution percentage test (ACP), and the top-heavy test. There are also additional tests that check for other aspects of nondiscrimination.

If the tests aren't passed some of the contributions  are returned to the HCEs