Roth IRA Contributions incorrect?

[Moosbrug]

TurboTax is saying my husbands Roth IRA contribution is over the limit. He contributed about 10,500. We called his financial institution and they are insisting the limit for this year is 19,500, not the 6,000 TurboTax is saying. They said 6,000 does pertain to Roth IRA but for something else? Any insight on how to this? Am I entering it correctly? I did it under deductions and credits. Thanks!

[LinaJ2020]

The question here is do you contribute to a Roth IRA or Roth 401K?  

For the Roth IRA contribution, the limit is $6,000 per year.  Click here to see limits.

However, for a "Roth 401(k)", the contribution limit is $19,000 in 2019, which has increased to $19,500 for 2020.  I believe that's what his financial adviser insisted on.  

A Roth 401(k) is an employer-sponsored investment savings account that is funded with after-tax dollars up to the plan's contribution limit. This type of investment account is well-suited for people who think they will be in a higher tax bracket in retirement than they are now and their withdrawals are tax-free.  Employers can make contributions to a Roth 401(k) by matching employee contributions up to a certain percentage or dollar amount. They can also make elective contributions that don't depend on employee contributions.

A Roth IRA is a tax-advantaged retirement savings account that allows you to withdraw your savings tax-free.

If you only contribute to a Roth IRA, see the definition, your contribution limit is $6,000.  If you contribute to the Roth 401K, you do not enter the amount on your tax return. 

[VolvoGirl]

If it comes out of his paychecks you only enter it from the W2.  Nowhere else.  You do not enter it as a contribution under Deductions & Credits.  

[Moosbrug]

This was so helpful, and solved my problem. You are correct that he contributed to a Roth 401k, thank you!!!

[BlueDevil78]

I got the same message - for the last two tax years, TurboTax said that my Roth contributions to my 401K is over the limit.  I contributed over $7K each year for the last two years, thinking my limit was $19.5K.   I called my financial institution and they confirmed that my limit for this past year was $19,500, not the $6,000 TurboTax is saying.  All I did was enter my Roth contributions to my 401k into TurboTax as stated on my W2 - using the "AA" code in the 12c box from my W2.  But, somehow, TurboTax thinks my limit is $6,000 and is hitting me with a penalty.  How did this happen?  And how do I fix this problem for the last two tax years?  An amended return?  If an amended return is the answer, what do I do differently?  Thanks.

[macuser_22]

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@BlueDevil78 wrote:

I got the same message - for the last two tax years, TurboTax said that my Roth contributions to my 401K is over the limit.  I contributed over $7K each year for the last two years, thinking my limit was $19.5K.   I called my financial institution and they confirmed that my limit for this past year was $19,500, not the $6,000 TurboTax is saying.  All I did was enter my Roth contributions to my 401k into TurboTax as stated on my W2 - using the "AA" code in the 12c box from my W2.  But, somehow, TurboTax thinks my limit is $6,000 and is hitting me with a penalty.  How did this happen?  And how do I fix this problem for the last two tax years?  An amended return?  If an amended return is the answer, what do I do differently?  Thanks.

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You enter your W-2 into the W-2 interview and that is the *only* place you enter it.   You do NOT also enter it in the IRA contribution section because a  401(k) Roth is NOT an IRA.    Your employer reports the 401(k) contribution, not you.    If entered in the IRA contribution section and you filed, then you need to amend to remove it.

[BlueDevil78]

That's just it.  I did not enter this amount in the ROTH IRA section - I ONLY entered it in the from my W-2 into the TurboTax W-2 interview section and nowhere else.  Now TurbTax is telling me that i have a penalty to pay.

[macuser_22]

Exactly what does it say?

If you had two of more employers (or one that allowed you to contribute more than the yearly permitted amount) then TurboTax might tell you that you have an excessive deferral.

[macuser_22]

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@BlueDevil78 wrote:

That's just it.  I did not enter this amount in the ROTH IRA section - I ONLY entered it in the from my W-2 into the TurboTax W-2 interview section and nowhere else.  Now TurbTax is telling me that i have a penalty to pay.

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I would suggest totally deleting the W-2 with the box 12 amount and then repeat the interview section that said you have a penalty and if still present then it is coming from something else you entered and not the W-2.