457(b) contributions and tax software

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Topic Author
tomforshort
Posts: 25
Joined: Mon Jan 16, 2012 11:54 am

457(b) contributions and tax software

Post by tomforshort »

Hello all,

Does anyone have experience with the various tax software packages and 457(b) contributions?

In particular, through my employer I can contribute to both a 457(b) and a 403(b) plan. As noted in the wiki (http://www.bogleheads.org/wiki/457-b, under Contributions), the passage of the EGTRRA in 2001 made these plans uncoordinated such that their contribution limits are independent. My contributions to each plan totaled less than $17k for 2012, but my net contributions for both plans exceeded $17k.

Unfortunately, the H&R Block at Home software incorrectly handles this situation. It sums the contributions before comparing to the $17k limit and reports an excessive contribution. A bit of research shows that this bug was introduced in 2011 and has not been fixed: http://www.amazon.com/Bugs-403-457-cont ... B00604ICGO.

I have contacted H&R Block, but they are unable to help. So, I am considering purchasing another tax software package, but I do not want to switch to another that also cannot handle this situation. Is anyone else out there in the same boat (net contributions greater than $17k, but under the limit for each of the 457(b) and another plan)? If so, can you recommend some software that correctly handles the contributions? Alternatively, I may try out the fillable forms at http://www.irs.gov/uac/Free-File:-Do-Yo ... s-for-Free. Any experience with those?

Thanks,
tomforshort
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jeffyscott
Posts: 13438
Joined: Tue Feb 27, 2007 8:12 am

Re: 457(b) contributions and tax software

Post by jeffyscott »

Don't have that problem, since I have only a 457 and my wife has only 403b, but I have used the free fillable forms for a few years. I assume the issue with the software is the figures appear on your W-2 forms and you enter that information into the software and it then reports the issue. The 457 and 403b contributions are not reported as income and don't get entered anywhere on the actual tax forms.

With the free fillable forms, I don't think you would have a problem because I don't think they take any info from the W-2. You only enter the W-2 info at the end if you are e-filing. Worst case would be they reject your electronic filing and you could print and mail the forms instead.

But perhaps you could just print and file with the software you are already using by tricking it. Delete the either the 457 or 403b contributions and then print the forms and mail with your actual W-2?
Topic Author
tomforshort
Posts: 25
Joined: Mon Jan 16, 2012 11:54 am

Re: 457(b) contributions and tax software

Post by tomforshort »

Thanks for the feedback. Yes, I enter the 457/403 contributions from my W2 into the software and it apparently then later handles them incorrectly (they have separate codes in box 12, so it should be clear that some of the contributions correspond to a 457b account). I think I will try to use the free fillable IRS forms this weekend and see if I can complete my taxes that way. If nothing else, I can use the H&R Block software to double check my results by (as you say above) simply not including my retirement contributions when entering my W2 information into the software.
ilisira
Posts: 130
Joined: Tue Mar 11, 2008 3:04 pm

Re: 457(b) contributions and tax software

Post by ilisira »

My wife is eligible for both 403(B), and 457(B), and maxed both of them last year, and turbotax online version did not have any issues with the combined contribution.

I would suggest you to use turbotax to check the numbers at least (it is free, and you can do everything except for filing/printing without paying)..
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