Question

401(K) deductions clarification

Forum|Forum|4 years ago
April 15, 2022
1 reply
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Can someone please clarify some typically recondite IRS language?

I am trying to determine my 2021 401(K) contribution limit. I am filing Married, Filing Jointly.

My wife, who is over 50, has the 401(K) with her employer and I am a retired spouse.

TT, and the following IRS Guide, say the max contribution is $7000 but the IRS 401(k) Resource Guide > Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits > Deferral Limits for 401(K) Plans say

$19,500 for 2021.

Can someone untangle this for me?

Thank for your help.

S Resource Guide > Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits>

Deferral Limits for 401(K) Plans

E

ErnieS0

401(k)s and IRAs are two different types of retirement plans and have different limits. You can contribution to both,

A 401(k) plan is sponsored through your employer (or yourself if self-employed). You can contribute up to $19,500 plus another $6,500 catch-up contribution for participants s age 50 or older.

An individual retirement account is a plan outside work. You can contribute $6,000 plus another $1,000 for participants s age 50 or older.

You can no longer make 2021 401(k) contributions. You can still make IRA contributions.

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A

aFp4tFTTaAuthor

ErnieS0,

Thank you for your quick reply.

But a problem now emerges.

My TT Premier 2021 Windows desktop version does not appear to have the ability to input traditional 401(K) contributions, only IRA.

When I input our $9170 contribution for the 401(K) into the IRA contribution area, i.e. "Retirement and Investments", TT automatically reduces it to the maximum IRA limit of $7000. But we should be able to take the full $9170 contribution since it is a 401(K) - not an IRA. And as your answer above correctly points out, the maximum 401(K) contribution is $19500 - not $7000, as in an IRA.

Is not providing a separate input area for a 401(K) entry an omission on the part of TT, or did I overlook another area where the 401(K) contribution can be entered properly? And if not, is there a work-around?

Again - thank you for your help.