IRS to Host Free Webinar on Small Business Retirement Plans
On April 7, 2011, the
Internal Revenue Service (IRS) will host a free webinar titled
Easy, Low Cost Ways to Start Your Small Business Retirement Plan.
Learn What Will Work for Your Small Business
Watch this free webinar to learn about the following:
- Low-cost retirement plans
- Low-maintenance alternatives to traditional 401(k)s
- Points to consider in choosing the right plan for your business
- Types of advisors who can help you set up and operate your plan
- How to avoid plan mistakes
- How the IRS can help correct mistakes in your plan
Small Businesses Can Benefit from This Webinar
The webinar is suited for the following:
- Small businesses and sole practitioners
- Tax professionals working with small business
- Enrolled Retirement Plan Agents
- Enrolled Agents
Contact Vision Payroll Today
Contact Vision Payroll today if you have further questions on small business retirement plans.
This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 12, codes.
Box Identifiers a, b, c, and d Are not Codes
Enter codes and amounts in boxes 12a, 12b, 12c, and 12d. The letters a, b, c, and d do not relate to the codes, but are strictly for identification purposes. If an employee has code C for $100 and that is the only code for that employee, the employer may enter code C in box 12a; it does not need to be entered in box 12c. If filing copy A on paper, enter only four codes on one Form W-2. Employers should use multiple forms for employees with more than four codes. There is no limit on the number of codes on any other copy of Form W-2. Enter the code and amount without dollar signs or commas.
The codes and their descriptions are as follows:
| Code A | Uncollected social security or RRTA tax on tips |
| Code B | Uncollected Medicare tax on tips |
| Code C | Taxable cost of group-term life insurance over $50,000 |
| Code D | Elective deferrals under §401(k) cash or deferred arrangement (plan) |
| Code E | Elective deferrals under §403(b) salary reduction agreement |
| Code F | Elective deferrals under §408(k)(6) salary reduction SEP |
| Code G | Elective deferrals and employer contributions (including nonelective deferrals) to any governmental or nongovernmental §457(b) deferred compensation plan |
| Code H | Elective deferrals under §501(c)(18)(D) tax-exempt organization plan |
| Code J | Nontaxable sick pay |
| Code K | 20% excise tax on excess golden parachute payments |
| Code L | Substantiated employee business expense reimbursements |
| Code M | Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (for former employees) |
| Code N | Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees) |
| Code P | Excludable moving expense reimbursements paid directly to employee |
| Code Q | Nontaxable combat pay |
| Code R | Employer contributions to an Archer MSA |
| Code S | Employee salary reduction contributions under a §408(p) SIMPLE |
| Code T | Adoption benefits |
| Code V | Income from the exercise of nonstatutory stock option(s) |
| Code W | Employer contributions to a Health Savings Account (HSA) |
| Code Y | Deferrals under a §409A nonqualified deferred compensation plan |
| Code Z | Income under §409A on a nonqualified deferred compensation plan |
| Code AA | Designated Roth contributions under a §401(k) plan |
| Code BB | Designated Roth contributions under a §403(b) plan |
| Code CC | HIRE exempt wages and tips |
Employers should combine elective deferrals and elective catch-up contributions into one sum and report under the appropriate elective deferral plan code.
Box 13, Checkboxes Is the Next Topic
The next topic in this continuing series will be Box 13, checkboxes. Contact Vision Payroll with any questions on the 2010 Form W-2.
2010 Form W-2 Tips, Part 2, Box 1 Wages, Tips, Other Compensation
This is one in a continuing series on the 2010
Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 1, wages, tips, other compensation.
Box 1 May Include Several Adjustments To Gross Wages
Box 1 shows the amount employees must enter on line 7 of Form 1040, US Individual Income Tax Return. It may be, but is not necessarily, equal to gross wages. Common adjustments that increase or decrease gross wages include the following:
- Employee elective deferral to qualified retirement plans such as §401(k) plans, SIMPLE plans, and §403(b) plans (decrease).
- Amounts withheld for non-taxable benefits elected under §125 plans (decrease).
- Taxable non-cash fringe benefits, such as personal use of company automobile (increase).
- Certain clergy housing allowances (decrease).
- Reported tips (increase).
- Expense reimbursements paid under a non-accountable plan (increase).
- Accident and health insurance premiums for so-called 2% S corporation shareholders (increase).
- Cost of group-term life insurance in excess of $50,000 (increase).
Box 2, Federal Income Tax Withheld Is the Next Topic
The next topic in this continuing series will be Box 2, federal income tax withheld. Contact Vision Payroll with any questions on the 2010 Form W-2.
IRS Announces 401(k), 403(b), and 457(e)(15) Deferral Limits for 2011
In
IR-2010-108, the Internal Revenue Service (IRS) announced the limits on deferral contributions for 2011 under
§401(k),
§403(b), and
§457(e)(15). These limitations are codified in those sections of the Internal Revenue Code of 1986 (IRC). Under
IRC §415, the Commissioner of the IRS is required to adjust the plan limitations to keep pace with inflation.
2011 Contribution Limits Remains Unchanged
For 2011, the deferral contribution limitation will remain at $16,500. The age 50 and over catch-up contribution will remain at $5,500 for 2011 for individuals who plan to reach age 50 before the end of 2011.
Contact Vision Payroll for More Information on 2011 Retirement Plan Changes
Contact Vision Payroll if you have questions on changes to the 2011 Retirement Plan Contribution and Compensation Limitations or get further information at Important Facts and Figures.
In Notice 2010-48, the Internal Revenue Service (IRS) provided administrative “relief to sponsors of defined contribution pre-approved plans (i.e., master and prototype (‘M&P’) and volume submitter (‘VS’) plans).” Notice 2010-48 extended the following from April 30, 2010 to July 30, 2010:
- Deadline for restating affected pre-approved defined contribution plans,
- Deadline for submitting determination letters to the Service, and
- The § 401(b) remedial amendment period with respect to these plans.
The notice lists how a plan is considered in an affected area and lists the eight affected areas, all of which received previous relief from the IRS. The areas are the following:
- Connecticut
- Tennessee
- Alabama
- Mississippi
- New Jersey
- Massachusetts
- Rhode Island
- West Virginia
Contact Vision Payroll for further information on Notice 2010-48.
The US Department of Labor recently announced the publication of a final rule to protect employee contributions deposited to small pension and welfare benefit plans with fewer than 100 participants by providing a safe harbor period of seven business days following receipt or withholding by employers.
“This rule will give employers greater clarity in remitting participant contributions to small pension and welfare plans in a timely manner,” said Phyllis C. Borzi, assistant secretary of labor for the department’s Employee Benefits Security Administration. “We estimate participant accounts could grow by $19 to $44 million as a result of these rules.”
Currently, employers of all sizes must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the general assets of the employer, but no later than the 15th business day of the month following the month in which contributions are received or withheld by the employer. The latest date for forwarding participant contributions to health plans is 90 days from the date on which such amounts are received or withheld by the employer.
The final rule amends the participant contribution rules to create a safe harbor period under which participant contributions to a small plan will be deemed to comply with the law if those amounts are deposited with the plan within seven business days of receipt or withholding. The final rule is consistent with the proposed rule. The department did not expand the safe harbor to cover plans with 100 or more participants due to a lack of information and data sufficient to evaluate current practices of such employers and assess the costs, benefits and risks to participants associated with extending the safe harbor to large plans.
The final rule was published in the January 14, 2010, edition of the Federal Register and was effective on the date of publication. Contact Vision Payroll if you have further questions.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 12, codes.
Enter codes and amounts in boxes 12a, 12b, 12c, and 12d. The letters a, b, c, and d do not relate to the codes, but are strictly for identification purposes. If an employee has code C for $100 and that is the only code for that employee, the employer may enter code C in box 12a; it does not need to be entered in box 12c. If filing copy A on paper, enter only four codes on one Form W-2. Employers should use multiple forms for employees with more than four codes. There is no limit on the number of codes on any other copy of Form W-2. Enter the code and amount without dollar signs or commas.
The codes and their descriptions are as follows:
| Code A | Uncollected social security or RRTA tax on tips |
| Code B | Uncollected Medicare tax on tips |
| Code C | Taxable cost of group-term life insurance over $50,000 |
| Code D | Elective deferrals under §401(k) cash or deferred arrangement (plan) |
| Code E | Elective deferrals under §403(b) salary reduction agreement |
| Code F | Elective deferrals under §408(k)(6) salary reduction SEP |
| Code G | Elective deferrals and employer contributions (including nonelective deferrals) to any governmental or nongovernmental §457(b) deferred compensation plan |
| Code H | Elective deferrals under §501(c)(18)(D) tax-exempt organization plan |
| Code J | Nontaxable sick pay |
| Code K | 20% excise tax on excess golden parachute payments |
| Code L | Substantiated employee business expense reimbursements |
| Code M | Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (for former employees) |
| Code N | Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees) |
| Code P | Excludable moving expense reimbursements paid directly to employee |
| Code Q | Nontaxable combat pay |
| Code R | Employer contributions to an Archer MSA |
| Code S | Employee salary reduction contributions under a §408(p) SIMPLE |
| Code T | Adoption benefits |
| Code V | Income from the exercise of nonstatutory stock option(s) |
| Code W | Employer contributions to a Health Savings Account (HSA) |
| Code Y | Deferrals under a §409A nonqualified deferred compensation plan |
| Code Z | Income under §409A on a nonqualified deferred compensation plan |
| Code AA | Designated Roth contributions under a §401(k) plan |
| Code BB | Designated Roth contributions under a §403(b) plan |
Employers should combine elective deferrals and elective catch-up contributions into one sum and report under the appropriate elective deferral plan code.
The next topic in this continuing series will be Box 13, checkboxes. Contact Vision Payroll with any questions on the 2009 Form W-2.
This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 1, wages, tips, other compensation.
Box 1 shows the amount employees must enter on line 7 of Form 1040, US Individual Income Tax Return. It may be, but is not necessarily, equal to gross wages. Common adjustments that increase or decrease gross wages include the following:
- Employee elective deferral to qualified retirement plans such as §401(k) plans, SIMPLE plans, and §403(b) plans (decrease).
- Amounts withheld for non-taxable benefits elected under §125 plans (decrease).
- Taxable non-cash fringe benefits, such as personal use of company automobile (increase).
- Certain clergy housing allowances (decrease).
- Reported tips (increase).
- Expense reimbursements paid under a non-accountable plan (increase).
- Accident and health insurance premiums for so-called 2% S corporation shareholders (increase).
- Cost of group-term life insurance in excess of $50,000 (increase).
The next topic in this continuing series will be Box 2, federal income tax withheld. Contact Vision Payroll with any questions on the 2009 Form W-2.
The Internal Revenue Service (IRS) recently released Notice 2009-65, Adding Automatic Enrollment to Section 401(k) Plans – Sample Amendments. The Notice contains two sample amendments that allow employers to change existing §401(k) plans as late as the last day of the first plan year beginning after December 31, 2008. For government plans, the amendment may be adopted as late as the last day of the first plan year beginning after December 31, 2010. Plan sponsors are not required to adopt the amendments and may need to tailor the amendments to match provisions of their specific plans.
The first sample amendment can be used to add an automatic contribution arrangement to a §401(k) plan. The second sample amendment can be used to add an automatic contribution arrangement described in §414(w) of the Internal Revenue Code of 1986 (permitting 90-day withdrawals) to a §401(k) plan.
Contact Vision Payroll if you have any further questions on Notice 2009-65.
The Internal Revenue Service (IRS) recently released Revenue Ruling 2009-32, Paid Time Off Contributions at Termination of Employment. This Revenue Ruling addressed two issues:
- Do the amendments described [in the ruling] to an existing qualified profit sharing plan requiring or permitting certain contributions to the plan of the dollar equivalent of unused paid time off at a participant’s termination of employment cause the plan to fail to meet the requirements of §401(a) and, if applicable, §401(k) of the Internal Revenue Code of 1986 (IRC)?
- When is a participant required to recognize gross income with respect to the contributions to the qualified profit-sharing plan and payments to the participant as described [in the ruling]?
In situation 1, the IRS concludes as follows:
Under the facts presented, the amendments requiring or permitting certain contributions of the dollar equivalent of unused paid time off to a qualified profit-sharing plan do not cause the plan to fail to meet the qualification requirements of IRC §401(a), provided that the contributions satisfy the applicable requirements of IRC §401(a)(4) and IRC §415(c) and, where applicable, IRC §401(k) and IRC §401(a)(30).
In situation 2, the IRS concludes as follows:
Under the facts presented, assuming the applicable qualification requirements are satisfied, a participant does not include in gross income contributions of the dollar equivalent of unused paid time off to the profit sharing plan in accordance with IRC §402(a) until distributions are made to the participant from the plan and does not include in gross income an amount paid for the dollar equivalent of unused paid time off that is not contributed to the profit-sharing plan until the taxable year in which the amount is paid to the participant.
Contact Vision Payroll if you have any further questions on annual paid time off contributions.
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