Question
Splitting a return into MFS and 401k contributions
I'm splitting a client's return into MFS due to California Behavioral Health Services Tax using community property rules.
Lacerte allocates each spouse's 401(k0 contribution evenly between the spouses in Box 12, Code D. But in this case, that throws a critical diagnostic because one spouse is eligible for the extra age 60-63 catchup, and the other is not.
The IRS rules in Treas. Reg. § 1.414(v)-1 seems to say that 401(k) contributions stay with each spouse, and don't get split and allocated.
Is Lacerte's split and allocate correct? If so, I do I avoid one spouse going over her limit when she is not yet 60?
