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Penalty on excess contributions to 401(K) Account

Forum|Forum|4 years ago
January 5, 2022
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In August, 2021 I raised the contribution election to my Pre tax 401(K) Account. Now, while preparing my 2021 Tax Return Turbo Tax calculated a penalty for excess contributions because my contributions exceeded the $7,000 limit. I am confused because when I received the confirmation letter from the Plan Administrator regarding the change in contribution rate it included a statement "Contribution limits for pre-tax contributions is $19,500 for 2021". My contributions for 2021 are well within that limit. Is the software wrong or am I entering something wrong?

Best answer by VolvoGirl

You are probably entering it as a IRA contribution. You do not enter 401K separately. Delete it. Only enter it from your W2, nowhere else. Have you gotten your W2 yet? Might be early. They have until Jan 31 to send it to you. Just wait.

VolvoGirlAnswer

Employee

You are probably entering it as a IRA contribution. You do not enter 401K separately. Delete it. Only enter it from your W2, nowhere else. Have you gotten your W2 yet? Might be early. They have until Jan 31 to send it to you. Just wait.

P

PERRY8WAHLINAuthor

Thanks so much for your help. You are correct. I have not received my W-2 yet but I have a record of my contributions so I entered it into Turbo Tax. I used Code D in box 12a ((Elective deferrals to a section401(k)) and checked the box identified as "Retirement plan" in box 13. This is how I have handled it in prior years without any problems but, apparently it was never over that lower limit. I will wait for the download of my W-2, but I would appreciate any comments you may have regarding how I entered the info.

VolvoGirl

Employee

So you only entered it in the W2 section? 7,000 is the max for IRA contributions. Delete it wherever you entered it and wait for the actual W2. Sure sounds like you also entered it as a IRA contribution in Deductions.