Why does the Bus. sec. of Keogh/Sep Wk, error Ln 6a, Taxpayer elective deferrals to individ 401K and to Roth 401K <19K? My acct says I can contribute more.

Forum|Forum|6 years ago
March 16, 2020
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TurboTax Online

Employee

The maximum regular deferral or Roth contribution to an individual 401(k) for 2019 is $19,000 combined and 2019 TurboTax properly flags as a error any amount exceeding that maximum. If you are over age 50, you can make a separate catch-up elective deferral or Roth contribution for 2019 of up to $6,000 combined, but that must be entered separately into TurboTax on the line(s) for the purpose.

If explicitly entering contributions, employer contributions are entered separately. You can also use TurboTax's Maximize function to calculate the total maximum for employee and employer contributions combined.

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DHTAuthor

Employee

For my Individual 401K (my max allowable business profit sharing contribution is $31,400) - I have entered 6a-19K (currently red), 6b-0, 6c-6K, 6D-calcualtes to 25K. 6E-6,400 and I have an available max salary deferral of 25K so I have entered 7a-20K towards a Roth 401(k) and have $4,500 that has been contributed via W-2 wages. Do you have recommendation for where to enter these values that allows the form to process without errors? Thank you.

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dmertz

Employee

OK, there is a lot more going on here than indicated in your original question. Since you've contributed $20,000 to a Roth 401(k) for 2019 at a different employer, the maximum elective deferral you can make for 2019 to your individual 401(k) is $5,000. The sum of your elective deferrals and Roth contributions to all plans combined is limited to $25,000.

TurboTax's Maximize function cannot handle the case where you have made contributions to another employer's plan. You'll need to limit your elective deferral to the individual 401(k) (line 6a) to $5,000, then use TurboTax's Maximize function for a SEP plan or Keogh Profit Sharing plan to cause TurboTax to calculate only the maximum permissible employer contribution.

Regarding "my max allowable business profit sharing contribution is $31,400," I think you meant to say that the maximum allowable profit sharing contribution is $6,400; elective deferrals are not part of the profit-sharing contribution. Without knowing the amount in box 3 of your W-2, I can't tell exactly how much net profit would be needed to result in a maximum $6,400 employer profit-sharing contribution, but it would have to be somewhere between $32,433 (it your W-2 box 3 amount is $132,900 or more) and $34,431 (if W-2 box 3 is $101,103 or less)