Smart Check Error regarding FormW-2: Nonqualified Distribution (State Amoun)

[BlackBox2024]

Smart Check is incorrectly identifying the following error: "Form W-2: Nonqualified Distribution (State Amount) - The total amount of Sect. 457 (or nonqualified) state distributions does not match with the amount of Sect. 457 (or nonqualified) distribution reported on the federal return." I believe the software maybe incorrectly trying to match the total state nonqualified distribution allocations to a W-2 amount, but the W-2 amount is 0 because in prior year (perhaps earlier), the software reclassifies the non-qualified plan distributions reported on W-2 as Other Income. A workaround may be to just ignore the Smart Check error as long as the distribution amounts appear correctly in the 1040 and State Schedules, but TT should investigate and correct as appropriate.

[CatinaT1]

TurboTax programmers are currently implementing some recent IRS changes for reporting SEP and SIMPLE plan contributions. While there isn't an estimated date when the changes will be done, you can test this by editing your W-2 every 5-7 days to check on the status. 

On January 8, 2024, the IRS released a notice describing many changes required to implement the Secure Act 2.0. If you try to enter Code S for Box 12 of your W-2, you may see this message: "We're updating how SEP and simple plan contributions are reported on the tax return based on new guidance from the IRS." 

Section 601 of the Secure Act 2.0 refers specifically to Simple and SEP Roth IRAs. Code S in box 12 defines how to handle a SIMPLE plan. 

These last-minute IRS (and law) changes often cause implementation delays for TurboTax and other tax processors.  

Please be patient while TurboTax works to understand all the ramifications of this IRS Notice then code and test the changes. Note that the IRS is not open for e-filing until January 29th. 

[BlackBox2024]

A reply to another post indicated this is a known issue that is more extensively described in the W-2 forum and will not be addressed by TT until after 2/2/2024.  A community member described the error potentially resulting from comparing the Box 11 state allocated nonqualified distribution total to a rounded total on Schedule 1 (Line 8?).  To get the totals to match, you would have to "correct" the Box 11 number in the second field containing the distribution amount by rounding it to the same number on Schedule 1.  Do not correct the Box 11 number in the first field which corresponds to what is provided on the W-2.  The Box 11 number in the third field will automatically be populated using the number in the second field assuming you only have one state distribution in your allocation.  Supposedly this will eliminate the Smart Check error although some members indicated it did not work for them.

[JFS24]

Thank you.  I had this issue and the error code is now resolved with this advice.