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Screen Keogh - Keogh, 401(k), SEP, SIMPLE Contributions (1040)
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Overview
Use this screen to enter Keogh, 401(k), SEP, and SIMPLE plan contribution deduction information to complete the Keogh/SEP/SIMPLE Worksheet and the allowable contribution for Schedule 1, line 16.
You can include a custom paragraph in the transmittal letter to report the calculated self-employed retirement deduction, any contributions already made to the plan, any remaining balance of contributions which still need to be made, or, if applicable, any excess contributions that exist.
To select this custom paragraph on a client basis, select custom paragraph
Keogh/SEP Plan Contrib (TL)
from one of the Paragraph Description
fields in the Letter screen. To select this custom paragraph to print for all clients when applicable, choose Setup > 1040 Individual, select either the Letters & Emails button in the Federal tab, select the Custom Paragraphs tab, and mark the Keogh/SEP Plan Contrib (TL)
box. For additional information, refer to the Custom paragraphs FAQs.Keogh, 401(k), SEP, and SIMPLE Contributions
Use this section to enter Keogh, 401(k), SEP, and SIMPLE information that transfers to Form 1040, Schedule 1, line 16. UltraTax CS uses self-employment income from the related activity for the plan participant and reduces it by the self-employment tax deduction for purposes of the overall limitation of Keogh, 401(k), SEP, and SIMPLE contributions. If the taxpayer or spouse has made contributions to more than one Keogh or SEP plan, except for defined benefit plans, UltraTax CS applies an overall limitation of the lesser of 20 percent (.25/1.25) of net earnings or $61,000.
Activity identification - Form / Schedule / Unit#
UltraTax CS transfers the net earnings from the related activity under which the self-employed retirement plan was established. These fields contain information about the business unit activity. UltraTax CS uses this information to gather and coordinate information for the business unit activity. For example, these fields enable linking of information (such as income, loss, sales, credits, and asset detail) for the activity.
Description
This mandatory field provides the unit description.
State
The code you enter in this field is used to determine in-state and out-of-state Keogh, 401(k), SEP, and SIMPLE contribution amounts if you are processing multiple states. For more information, refer to Processing multiple-state returns.
Refer to State fields in UltraTax CS/1040 for more information.
Compute maximum allowable contribution
Enter
1
, 2
, 3
, 4
, 5
, or 6
in this field to calculate the maximum allowable Keogh, SEP, SIMPLE 401(k), Solo 401(k), SIMPLE IRA, or SARSEP contribution, respectively.Enter
1
in this field to calculate the maximum allowable Keogh deduction. The maximum allowable deduction amount is automatically limited to the lesser of 20 percent (.25/1.25) of net earnings or a maximum of $61,000.Enter
2
in this field to calculate the maximum allowable SEP deduction. The maximum allowable deduction amount is automatically limited to the lesser of 20 percent (.25/1.25) of net earnings or a maximum of $61,000.Enter
3
in this field to calculate the maximum allowable SIMPLE 401(k) deduction. The maximum allowable deduction is limited to net self-employment earnings reported on Schedule SE or $14,000 plus the lesser of $14,000 or three percent (.03) of net self-employment earnings (up to $305,000), whichever is smaller. For example, the taxpayer has net self-employment earnings of $200,000 so the deduction is calculated as $14,000 plus the lesser of $14,000 or $6,000 ($200,000 x .03) for a deduction of $20,000. The maximum allowable SIMPLE 401(k) plan deduction is $23,150 (excluding catch-up contributions).note
If you want to include catch-up contributions when calculating SIMPLE contributions, mark the
Include
catch-up contribution in calculating maximum allowable contribution
field. If the taxpayer / spouse reaches age 50 as of the end of the tax year, the catch-up contributions calculate up to the applicable limit. It is important that you review your client's retirement plan prior to marking these fields.Enter
4
in this field to calculate the maximum allowable solo 401(k) deduction. The maximum allowable deduction amount is automatically limited to the lesser of 20 percent (.25/1.25) of net earnings or a maximum of $61,000.note
When
4
is entered in the Compute maximum allowable contribution
field, UltraTax CS will automatically mark the Include elective deferral in computing maximum allowable contribution
field. UltraTax CS will calculate the allowable elective deferrals when calculating the maximum allowable contribution. If you want to exclude the elective deferrals when calculating the maximum contribution, clear the field. If you want to include catch-up contributions when calculating Keogh or SEP contributions, mark the Include catch-up contribution in computing maximum allowable contribution
field. If the taxpayer / spouse reaches age 50 as of the end of the tax year, UltraTax CS will calculate the catch-up contributions up to the applicable limit. It is important that you review your client's retirement plan prior to marking these fields.Enter
5
in this field to calculate the maximum allowable SIMPLE IRA deduction. The maximum allowable deduction is limited the same as a SIMPLE 401(k), except that there is no limitation on compensation. The maximum allowable SIMPLE IRA deduction is $28,000 (excluding catch-up contributions).note
If you want to include catch-up contributions when calculating SIMPLE contributions, mark the
Include
catch-up contribution in computing maximum allowable contribution
field. If the taxpayer / spouse reaches age 50 as of the end of the tax year, UltraTax CS will calculate the catch-up contributions up to the applicable limit. It is important that you review your client's retirement plan prior to marking these fields.Enter
6
in this field to calculate the maximum allowable SARSEP deduction. The maximum allowable deduction amount is automatically limited to the lesser of 20 percent (.25/1.25) of net earnings or a maximum of $61,000.note
When
6
is entered in the Compute maximum allowable contribution
field, UltraTax CS will automatically mark the Include elective deferral in computing maximum allowable contribution
field. UltraTax CS will calculate the allowable elective deferrals when calculating the maximum allowable contribution. If you want to exclude the elective deferrals when calculating the maximum contribution, clear the field. If you want to include catch-up contributions when calculating Keogh or SEP contributions, mark the Include catch-up contribution in computing maximum allowable contribution
field. If the taxpayer / spouse reaches age 50 as of the end of the tax year, UltraTax CS will calculate the catch-up contributions up to the applicable limit. It is important that you review your client's retirement plan prior to marking these fields.Limitation percentage (Force)
If the plan contribution is not 25 percent of the Keogh deduction, enter the full contribution rate to be used for the Keogh calculation. If the plan contribution is not 25 percent of the SEP deduction, enter the full contribution rate to be used for the SEP calculation.
Also, when calculating the allowable SIMPLE plan deduction, UltraTax CS will use the maximum three percent (.03) of net self-employment earnings when calculating the allowable employer match of the contribution. You may enter a smaller percentage in this field when calculating the SIMPLE contribution (such as two percent for nonelective contributions). Entries larger than three percent for SIMPLE contributions will not be used.
Adjustment to earned income
Enter the amount of the adjustment to calculated self-employment income for purposes of the Keogh, 401(k), SEP, and SIMPLE deduction calculations only. Also use this field for amounts not subject to self-employment taxes due to religious beliefs but that are considered qualified compensation for purposes of Keogh, 401(k), SEP, and SIMPLE deduction calculations. Negative entries are treated as subtractions from self-employment income.
Increased SIMPLE Deferral Limits
Mark this field to apply the increased elective contribution and additional catch-up contribution limits beginning at age 50 for a SIMPLE IRA or a SIMPLE 401(k) plan for certain eligible employers.
Total Keogh contributions
Enter the total amount of Keogh contributions before limitation in this field. UltraTax CS limits amounts entered to the lesser of 20 percent (.25/1.25) of net earnings or $61,000. If you enter code
1
in the Compute maximum allowable deduction
field, no entry is necessary in this field.Total Solo 401(k) contributions
Enter the total amount of 401(k) contributions before limitation in this field. UltraTax CS limits amounts entered to the lesser of 20 percent (.25/1.25) of net earnings or $61,000. If you enter code
4
in the Compute maximum allowable deduction
field, no entry is necessary in this field. Do not enter SIMPLE 401(k) contributions in this field.Total SEP contributions
Enter the total amount of SEP contributions before limitation in this field. UltraTax CS limits amounts entered to the lesser of 20 percent (.25/1.25) of net earnings or $61,000. If you entered code
2
in the Compute maximum allowable deduction
field, no entry is necessary.note
The limit in compensation 2023 is $305,000.
Total SARSEP contributions
Enter the total amount of SARSEP contributions before limitation. UltraTax CS limits amounts entered to the lesser of 20 percent (.25 / 1.25) of net earnings or $61,000. If you enter code
6
in the Compute maximum allowable deduction
field, no entry is necessary in this field.Total defined benefit plan contributions
Enter the total amount of contributions made to a defined benefit plan. No limitations are applied to amounts entered here. These amounts are included in line 16 of Schedule 1 and the notation "DB" prints to the left of the line.
Total contributions made to a profit-sharing plan
Enter the total amount of contributions made to a profit-sharing plan before limitation. UltraTax CS limits amounts entered to the lesser of 20 percent (.25/1.25) of net earnings or $66,000.
note
The limit in compensation for 2023 is $305,000.
Total contributions made to a money purchase plan
Enter the total amount of contributions made to a money-purchase plan before limitation in this field. Amounts entered are limited to the lesser of 20 percent (.25/1.25) of net earnings or $61,000.
Total contributions to SIMPLE 401(k) plan
Enter the total amount of contributions made to a SIMPLE 401(k) plan before limitation in this field. Amounts entered here will be limited to net self-employment earnings reported on Schedule SE or $14,000 plus the lesser of $14,000 or three percent (.03) of net self-employment earnings up to a maximum of $305,000 of net earnings, whichever is smaller. For example, the taxpayer has net self-employment earnings of $200,000 so the deduction would be calculated as $14,000 plus the lesser of $14,000 or $6,000 ($200,000 x .03) for a deduction of $20,000. The maximum allowable SIMPLE 401(k) plan deduction is $23,150 (excluding catch-up contributions).
Total contributions to SIMPLE IRA
Enter the total amount of contributions before limitation made to a SIMPLE IRA plan. The maximum allowable SIMPLE IRA plan deduction is $28,000. Amounts entered in this field are limited to net self-employment earnings reported on Schedule SE for this activity, or $14,000 plus the lesser of $14,000 or three percent of net self-employment earnings. For example, if the taxpayer has net self-employment earnings of $500,000, the maximum deduction would be calculated as $14,000 plus the lesser of $14,000 or three percent of net self-employment earnings ($500,000 x .03 = $15,000) for a maximum deduction of $28,000.
SIMPLE employer matching contributions (Force)
Enter the amount of SIMPLE employer-matching contributions if different from the calculated amount. UltraTax CS defaults to a three-percent employer match on net self-employment earnings when calculating the allowable employer match with respect to the SIMPLE contribution. To indicate a different percentage for the employer match (such as two percent for nonelective contributions) rather than a specified amount, use the
Limitation percentage (Force)
field. Entries larger than three percent for SIMPLE contributions will not be used.Catch-up Contributions
Use this section to enter catch-up contribution information.
Refer to IRS Publication 560, Retirement Plans for Small Businesses, for information regarding eligibility and plan requirements for catch-up contributions. Generally, SEP and Keogh plans (with the exception of 401(k) plans) do not permit catch-up contributions unless the plan documents state otherwise.
Include catch-up contribution in computing maximum allowable contribution
Mark this field to include catch-up contributions in the maximum allowable contributions calculation using the Compute maximum allowable contribution field. To calculate the allowable catch-up contributions for Salary Reduction Simplified Employee Pension Plans (SARSEPs), mark this field.
note
Refer to IRS Publication 560, Retirement Plans for Small Businesses, for information regarding eligibility and plan requirements for catch-up contributions. Generally, SEP and Keogh plans (with the exception of 401(k) plans) do not permit catch-up contributions unless the plan documents state otherwise.
Catch-up contribution - Solo 401(k)/SARSEP
Enter the amount of catch-up contributions made for a taxpayer / spouse who is 50 years of age or older at the end of the tax year. Include in this amount catch-up contributions designated as qualified Roth contributions.
note
- UltraTax CS will automatically calculate this amount if theCompute maximum allowable deductionandInclude catch-up contribution in computing maximum allowable contributionfields are marked, and the taxpayer is 50 years of age or older as of the end of the tax year.
- Refer to IRS Publication 560, Retirement Plans for Small Businesses, for information regarding eligibility and plan requirements for catch-up contributions. Generally, SEP and Keogh plans (with the exception of 401(k) plans) do not permit catch-up contributions unless the plan documents state otherwise.
Catch-up contribution - SIMPLE plans
Enter the amount of catch-up contributions made in this field for a taxpayer / spouse who is 50 years of age or older at the end of the plan year, which may be different from the tax year.
note
- UltraTax CS will automatically calculate this amount if theCompute maximum allowable deductionandInclude catch-up contribution in computing maximum allowable contributionfields are marked, and the taxpayer is 50 years of age or older as of the end of the tax year.
- Refer to IRS Publication 560, Retirement Plans for Small Businesses, for information regarding eligibility and plan requirements for catch-up contributions. Generally, SEP and Keogh plans (with the exception of 401(k) plans) do not permit catch-up contributions unless the plan documents state otherwise.
Elective Deferrals
Use these fields to include elective deferrals in the maximum allowable contributions calculation using the
Compute maximum allowable contribution
field.Include elective deferral in computing maximum allowable contribution
Mark this field to include elective deferrals in the maximum allowable contributions calculation using the
Compute maximum allowable contribution
field. If you enter 4
in the Compute maximum allowable contribution
field, UltraTax CS will automatically mark this field. To calculate the allowable elective deferrals for Salary Reduction Simplified Employee Pension Plans (SARSEPs), mark this field.note
UltraTax CS uses the maximum elective deferral amount of $20,500 for 2023 when calculating the maximum allowable contribution. UltraTax CS automatically reduces the $20,500 maximum by any contributions entered in the W2 screen or in a separate Keogh screen made on behalf of the same individual.
For example, a taxpayer with $5,000 in elective deferrals in Form W-2, box 12, Section 401(k) contributions will be limited to a maximum of $15,500 when including an elective deferral in the contribution deduction calculation in the Keogh screen.
Elective deferral amounts - Solo 401(k)/SARSEP
Enter the amount of elective deferral contributions made by the taxpayer / spouse. Amounts entered in this field are used when the
Compute maximum allowable contribution
field has not been used. Include in this amount elective deferral amounts designated as qualified Roth contributions.note
UltraTax CS uses the maximum elective deferral amount of $20,500 for 2023 when calculating the maximum allowable contribution. UltraTax CS automatically reduces the $20,500 maximum by any contributions entered in the W2 screen or in a separate Keogh screen made on behalf of the same individual.
For example, a taxpayer with $5,000 in elective deferrals in Form W-2, box 12, Section 401(k) contributions will be limited to a maximum of $15,500 when including an elective deferral in the contribution deduction calculation in the Keogh screen.
Elective deferrals designated as Roth contributions
Enter the portion of elective deferrals (including catch-up contributions) entered in the
Elective deferral amounts - 401(k)/SARSEP
and Catch-up contribution - 401(k)/SARSEP
fields that are designated Roth contributions. Alternatively, if a code is selected in the Compute maximum allowable contribution
field, enter the amount the employee chooses to designate as a qualified Roth contribution. Designated Roth contributions reduce the maximum deductible contribution reported on Form 1040.Contribution Reconciliation & Custom Paragraph Info
Use these fields to indicate the amount of any self-employed retirement contributions already made to the self-employed individual's retirement plan prior to completion of the return. The amounts entered are used to complete the Keogh/401(k)/SEP/SIMPLE Contribution Reconciliation Worksheet.
You can include a custom paragraph in the transmittal letter to report the calculated self-employed retirement deduction, any contributions already made to the plan, any remaining balance of contributions which still need to be made, or, if applicable, any excess contributions that exist. To select this custom paragraph on a client basis, select custom paragraph
Keogh/SEP Plan Contrib (TL)
from one of the Paragraph Description
field in the Letter screen. To select this custom paragraph to print for all clients when applicable, choose Setup > 1040 Individual, select either the Letters & Emails button in the Federal tab, select the Custom Paragraphs tab, and mark the Keogh/SEP Plan Contrib (TL)
box. Keogh/Solo 401(k)/profit-shr/defined benefit/money-purchase contributions already made
Enter the total Keogh, Solo 401(k) profit-sharing, defined benefit or money-purchase contributions the taxpayer made for the current tax year, prior to completing the return. Using the contribution deduction calculated on the Keogh, 401(k), and SEP Plan Contribution Worksheet along with the amount entered here, UltraTax CS will automatically complete the Keogh/401(k)/SEP/SIMPLE Contribution Reconciliation Worksheet to calculate any remaining or excess contributions, if applicable.
SEP/SARSEP contributions already made
Enter the total SEP or SARSEP plan contributions the taxpayer made for the current tax year, prior to completion of the return. Using the contribution deduction calculated on the Keogh, 401(k), and SEP Plan Contribution Worksheet along with the amount entered here, UltraTax CS will automatically complete the Keogh/401(k)/SEP/SIMPLE Contribution Reconciliation Worksheet to calculate any remaining or excess contributions, if applicable.
SIMPLE 401(k)/SIMPLE IRA salary reduction contributions already made
Enter the total SIMPLE 401(k) or SIMPLE IRA salary reduction contributions the taxpayer made for the current tax year, prior to completion of the return. Using the contribution deduction calculated on the SIMPLE Plan Contribution Worksheet along with the amount entered here, UltraTax CS will automatically complete the Keogh/401(k)/SEP/SIMPLE Contribution Reconciliation Worksheet to calculate any remaining or excess contributions, if applicable.
SIMPLE 401(k)/SIMPLE IRA matching/nonelective contributions already made
Enter the total SIMPLE 401(k) or SIMPLE IRA matching/nonelective contributions the taxpayer made for the current tax year, prior to completion of the return. Using the contribution deduction calculated on the SIMPLE Plan Contribution Worksheet along with the amount entered here, UltraTax CS will automatically complete the Keogh/401(k)/SEP/SIMPLE Contribution Reconciliation Worksheet to calculate any remaining or excess contributions, if applicable.