Question

how do you enter an IRA contribution with a high MAGI and an employer who does not provide a retirement plan?

Forum|Forum|11 months ago
April 8, 2025
1 reply
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My understanding is that you can still contribute to a traditional IRA with a high MAGI as long as your employer does not offer a plan. When I enter the contribution the system states that I am above the MAGI limit.

SusanY1

This is true if you nor your spouse (if filing a joint return) is covered by a retirement plan at work. This definition also includes things like SEP-IRA for those who are self-employed.

Double-check your physical W2s as well as any W-2 entries for a check box beside "retirement plan". If this box is checked it disqualifies you from being able to deduct a contribution to your IRA (though you can still make it, it just can't be deducted).

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F

fcarniAuthor

Thank you. Last year I elected to fund a SEP IRA against earnings from my LLC. Can I elect not to contribute to the SEP IRA this year and take the larger deduction for me and my spouse via the traditional IRA? My W2 earnings company does not offer me a plan and the W2 box is not checked.

SusanY1

Yes, you can elect to not have an employer plan for your LLC this year. Is it an S-corp where you pay yourself via W-2? If so, you just need to correct that checkbox both in TurboTax and via a corrected W-2 filing (so it matches IRS databases.)

If you don't have a W-2 with this marked, you want to be sure that there are no numbers listed in the "pension plans" section of your expenses for your business and that you've not completed the self-employed retirement worksheets. If you entered that section to test for the potential contribution, you may need to delete the associated worksheet from your forms. In the desktop version of TurboTax you do this by clicking on the Forms icon in the upper right then looking for the form in the column on the left.

In TurboTax online follow these steps:

From the left rail menu in TurboTax Online, select Tax Tools (You may have to scroll down on the left rail menu.)
On the drop-down select Tools
On the Pop-Up menu titled “Tools Center,” select Delete a Form
This will show all of the forms in your return
Scroll down to the form you want to delete (SEP Wks)
Select the Form
Click on Delete.

Always use extreme caution when deleting information from your tax return.  There could be unintended consequences.

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