IRA account

[bmelissadb]

I am a federal employee and contribute to the Thrift Savings Plan (TSP). My contributions are into a traditional IRA. For 2022, the IRS maximum contribution to regular TSP is $20,500. For those 55 and older the catch-up annual contributions limit is an additional $6,500. 

I am having an issue with TurboTax. On my W-2 box 12, I have DD $5527.08 and D $20,188.00. When this populated to Retirement and Investments section and I answered the questions, it appears as though I have over paid into an IRA by $13,188. It penalized me (amount unknown) and tells me I need to withdraw the excess funds and if I do not, then I will be penalized every year until this is done.  

My questions is why TurboTax is not recognizing that federal employees TSP is a little different from a regular IRA. I am sure my taxes are not correct for a couple of past years and I am not sure how to fix this or if I can.  What do I need to do in order for TurboTax to know I can contribute the amount I have and not get me return deducted?

[MonikaK1]

Your Form 1099-R from the Federal Thrift Savings Plan is not treated the same way as an IRA. Check your entries in TurboTax to be sure you didn't identify your TSP as an IRA, because the contribution limits are different.

Your participation in the TSP does not affect your eligibility to also separately contribute to an IRA. However, the Internal Revenue Code (IRC) establishes limits on the dollar amount that you can contribute to eligible employer plans like the TSP and to individual retirement accounts such as traditional IRAs and Roth IRAs.

The IRC § 402(g) elective deferral limit (which applies to the TSP) for 2022 is $20,500. This limit applies to the traditional (tax-deferred) and Roth contributions made by an employee during the calendar year. The combined total of traditional (tax-deferred) and Roth contributions made during the calendar year cannot exceed the elective deferral limit. The elective deferral limit does not apply to Agency/Service Automatic (1%) Contributions, Agency/Service Matching Contributions, catch-up contributions, traditional contributions made from tax-exempt pay, or amounts transferred or rolled over into the TSP.  See here for more information about the TSP.

See here for more information from the IRS on contribution limits for 2022.

[bmelissadb]

We don't receive a 1099-R from Thrift Savings Plan. I used my W-2 and box #12 has code DD $5,527.08 and  code D $20,188.00 (Elective deferrals to 401(K)). The D amount is what populated to Traditional and Roth IRA Contributions. When you go here to update and answer questions such as what kind of IRA you own, I have mine in Traditional. You get additional questions. Another question asks for total amount put into a Traditional IRA, here is where the $20,188 populated but if I change it to zero then I don't get that penalty verbiage. Should this still be the $20,188 I contributed?

[DaveF1006]

You do not report the contribution amount into the Thrift Savings plan. The contribution is already reported for you in the W2. It is a pre-taxed contribution for you as it is excluded from Box 1 wages from your W2.

When you go to federal>deductions and credits>retirement and investments>traditional Roth IRA Contributions, you will only report the amount of the  IRA contribution and not the contribution into the Thrift Savings plan.

[dmertz]

The federal TSP is not an IRA.  Enter amounts shown in box 12 of your W-2 only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.  Go back an remove the $20,188 that you entered under Deductions & Credits.