Excess salary deferrals on a Simple Plan

Forum|Forum|3 months ago
March 16, 2026
2 replies
21 views

I have several clients that are under 25 employees and are able under Secure Act 2.0 to allow their employees to defer the higher amount of 17,600 standard deferral and 3,850 catchup deferral for a total of 21,450. I have input the W2's into Lacerte W2 box 12A code S-21,450 and I am receiving a critical diagnostic for excess salary deferrals exceeding the 20k limit.

How do I clear this diagnostic? Is there an option to show this is a small business exception and the higher amount is allowed?

Lacerte Tax

Best answer by Cstoll

In screen 10, under the box 12 input area, there is a box to check: "Elect to apply the increased elective deferral 408(p) SIMPLE plan limits and makes and additional employer contributions". This will apply the higher limits and remove the diagnostic.

George4Tacks

Level 15

I think it is a WARNING and all you need to do is check the box to say "I understand this is unusual, but my research tells me that the return is good to go." It will not hamper e-filing.

Answers are easy. Questions are hard!

C

CstollAnswer

Level 3

In screen 10, under the box 12 input area, there is a box to check: "Elect to apply the increased elective deferral 408(p) SIMPLE plan limits and makes and additional employer contributions". This will apply the higher limits and remove the diagnostic.

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