Discussion:Weird W-2 problem--a client contributed too much...
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AugustaCPA (talk|edits) said: | 11 April 2007 |
| to his 401(k). I have a client who is single--during 2006 his company allowed him to not only contribute more than 20,000 to his 401(k)--it reduced his Box 1 wages by $20,000 as well. Does he just need to get a corrected W-2?
Thanks! | |
Inagpurwala (talk|edits) said: | 11 April 2007 |
| I am not sure about your posting.
Box 1 should be lower by the amount contributed to 401K.Inagpurwala 13:05, 11 April 2007 (CDT) | |
AugustaCPA (talk|edits) said: | 11 April 2007 |
| But the contibution limit for 2006 was $15,000 I thought. | |
AugustaCPA (talk|edits) said: | 11 April 2007 |
| 29 | |
| April 11, 2007 | |
| You're right, then. $15K limit for 2006. Would be $20K if 50 or older. Maybe that is what the employer thought? I don't know...sorry... | |
| 11 April 2007 | |
| Your post is ambiguous. How much is "more than $20,000?" You say his Box 1 wages are reduced by $20,000. That would seem to indicate the excess if $5k.
Two issues here: The excess contribution is not deductible and needs to be added back to W-2 wages and therefore included in 2006 taxable income. (Apparently only $5k of the unspecified excess has been excluded from wages). Additionally, if the excess is not refunded before 4/17 it is subject to a 6% excise tax for excess contributions for each year until it is corrected, AND it will be taxable a second time when the excess is refunded. So tell your client to get his rear in gear and get the excess refunded before 4/17. | |
| 11 April 2007 | |
| Are you sure it was for a 401(k)? There could be a 125 deduction of $5000 for something like heath ins or child care. Maybe the W-2 isn't detailed correctly. Check with the employer before you do anything. | |
