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April 16, 2021
Question

Turbo Tax is wrong about the max allowed 403(b)

  • April 16, 2021
  • 2 replies
  • 0 views
I see others have the same problem as me, but i don't see where there was any resolution or correction by Turbo Tax.  This chat room is petty much useless unless someone with Turbo Tax (TT) reads the posts and does something about their obvious errors.  TT please advise.

2 replies

Employee
April 16, 2021
April 17, 2021

If you follow along with all the various catch up provisions noted in their example below, pulled from the link you posted:    A 15 yr employee can defer an extra $3000 to bring the total up to $22,500 that she can defer for tax year 2020.  In addition a person that is over 50 can defer another $6500 to bring the total up to $29,000 (22,500 + 6500). 

 

Turbo Tax will not let me submit my return because they claim I am only entitled a $26,000 deferment and not the actual $29,000 that my employer pulled from my monthly paychecks.  I went thru this with Turbo Tax for tax years 2019 & 2018.  They finally rewrote their software to allow the $29,000 deferment, but not until the very last moment before the deadline.  Why can they make that a permanent change to their software instead of making people like me go thru this heartache every year?

 

Example: Assume Pat, age 50, has worked as a teacher in the XYZ School District for 15 years; is eligible for the 15 years of service catch-up; and has eligible compensation of $70,000 for 2020. The maximum employee and employer contributions to the XYZ 403(b) plan for 2020 for Pat would be $63,500 ($57,000 annual addition + $6,500 age 50 catch-up):

    • Pat made elective salary deferrals to the 403(b) plan in 2020 totaling $22,500 ($19,500 plus $3,000 15 years of service catch-up)
    • An employer contribution of $34,500, brings the total employee and employer contributions to $57,000, the annual additions limit in 2020.
    • Pat may also defer an additional $6,500 age 50 catch-up contribution in 2020.
April 16, 2021

I forgot to mention in my original post that TT needs to review IRS Publication 4482.

April 16, 2021