Maximum deduction for individual 401k not considered?

Forum|Forum|5 years ago
March 29, 2021
5 replies
41 views

I qualify for the maximum 57,000 deduction plus the $6,500 catch up totaling $63,500. Turbo Tax is only acknowledging $25,500 when it reduces my tax burden. Shouldn't the entire $63,500 be considered pre tax?

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SweetieJean

Alumni - Champ

Through your business, you can make contributions as an employee via salary deferrals, and also contribute as an employer through contributions made by your business. For deductible contributions, the employer contributions may not exceed 25% of an employee's compensation (or 20% of your net profits from self-employment for contributions to your account as an owner-employee). Employee and employer contributions in total can't exceed $57,000 for 2020 ($63,500 if you're age 50 or older and your plan allows catch-up contributions).

taxmountain21Author

Level 2

Thank you!! Yes I understand this , I think...However when I enter into Turbo Tax, it will not recognize half! I am fully qualified to receive the full deduction. Do I understand correctly that the entire $63,500 is PRETAX?