Does proseries automatically calculate the penalty for SEP over contributions, or do I manually have to enter the information on form 5329?

Forum|Forum|1 year ago
February 22, 2025
2 replies
24 views

My client over contributed $14K in his SEP in 2023. He did not report it on his tax return. I entered his 2023 return with the excess contribution and proseries calculated the correct deduction but did not flag the overage with a penalty. Do I manually prepare form 5329 in order to calculate the penalty?

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George4Tacks

Level 15

Did they "fix" it? https://www.irs.gov/retirement-plans/sep-plan-fix-it-guide-contributions-to-the-sep-ira-exceeded-the-maximum-legal-limits

Does the penalty still apply for 2024?

Answers are easy. Questions are hard!

C

Camille1Author

Level 2

Thank you for the link. It will apply to 2024 if my client does not fix it.

He has the same problem in 2024 but has not filed his taxes yet.

qbteachmt

Level 15

Did you look at the calculations for the allowable SEP contribution? How did you know it's an excess contribution? What was the deposit date, "in 2023" but for which tax year?

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C

Camille1Author

Level 2

Yes, I looked at the SEP limits. He is a sole proprietor, no employees. He contributed in 2024 for both designated to 2023 and 2024. $20K for each year(total $40K). His allowable contribution is only $6K for both years. I was curious as to why proseries did not flag the overage. It looks like I have to manually complete form 5329.

My plan was to amend 2023 with penalty, roll over the excess to 2024 and have him remove any excess designated to 2024 to get him square.

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