Linda Adams

Thank you for your response. That helps. I will just only allow the pretax limit for transit and parking each to be $255 for 2017 and $260 for 2018. Any additional post tax transit or parking ee payroll deductions will not have an IRS limit. That is my understanding of your guidance. If I am misunderstanding...please let me know. Thanks again. Much appreciated. -LInda

I have a question regarding the IRS 2017 Transit/Parking limit of $255/ month. We have some clients who have set up pretax transit/parking and also after tax parking/transit employee deductions. From an IRS limit perspective under the cafeteria plans, do I also include EE after tax transit/parking payroll deductions combined with the EE pretax transit/parking deduction limit of $255/ month? Or is the limit of $255 just for pretax transit/parking ee payroll deductions and the employee can contribute more than $255/ month for aftertax transit/parking to their account? I work for a payroll software company and we want to put a WARNING message on the employee's payroll when they exceed the $255/month limit...but I am not sure if the limit includes after tax transit/parking EE contributions so that is why I am asking. Thank you, Linda Adams

Thank you all for your responses. I appreciate your feedback;) Linda A.

Perfect, thank you all for your quick response. That helps clarify for me. I appreciate your patience. I read thru the responses earlier...but it just wasn't clicking for me:) This lets me know that catchup is required to be separated for the current year testing only. Enjoy the rest of your week...you have been very helpful. Much appreciated, Linda A.

Thank you David for your response. It is very helpful. I am learning about the 401k tests and how catchup is related. If I understand you correctly....the catchup amounts are required for the top-heavy ratio testing. So does it mean that some testing does not include the catchup amounts and thus you have to have a separate total of the catchup amount. My concern is not to eliminate catchup contributions from totals....but to determine if catchup contributions are required to be reported separately ....meaning some tests don't include catchup and some do. So for example if a person has 401k contributions of $24K as of 12/31/11....I could assume that $6K is catchup. Do I need to define their EE contirbutions specifically as $18K 401k and $6K 401k catchup ? Or can I just combine all EE contributions and report them as $24K 401k? That is my main objective....to find out if from a payroll withholding standpoint if I have to define 401k catchup contributions? Please let me know your thoughts. I know it sounds like a simple question....but just trying to get to the root of why we have a separate EE deduction amount for catchup. The IRS says that you can't make catchup contributions until you reach your $18K 401k contributions. I cant figure out why they say that? I don't see anywhere that catchup is required to be separated from a reporting standpoint. Based on your response...the only reason I can see is for the 401k testing? Thank you again for your feedback...looking forward to your response. Linda A.

Follow up to David Rigby.....Thank you for your response. In terms of the Catchup being included in the subsequent TH analysis....does this subsequent analysis require the Catchup balance amounts be separated or can it just be a lump sum combined balance for 401k and catchup? We are thinking of not separating EE contributions for our payroll software system and that is why I am asking such detailed questions. We don't want to not separate the EE catchup contributions and then find out we needed them segregated:) Thanks again to everyone who responded so quickly. This is a great website and I appreciate your feedback. Linda A.

Thank you for the responses. I greatly appreciate it. I guess I should have also asked if the catchup amounts need to be separately identified for 401k plan testing purposes? I didn't think of that. I am not a benefits expert...my background is payroll tax. Thank you, Linda A.

Are there any regulations regarding the allocation of EE 401k (pretax) and 401k Roth ( after tax) contributions on the paycheck that an employee reaches their annual IRS limit of $18K or $24K if catchup qualifies? If the EE is contributing to both pretax and post tax 401k plans and maxes out ....is there an obligation to apply all employee elected contributions for that pay period to the pretax 401k plan first? By obligation, I am referring to legal requirements by the IRS or any other institution? I would assume that whatever 401k EE election % was used would be applied in this situation and it is possible that a person reaches the annual combined 401k/Roth 401k limit of $18K w/out all EE contributions being applied to the pretax 401k limit first. Is there a standard methodology for applying pretax 401k and after tax Roth EE contributions as they reach the annual IRS limits? Thank you, Linda A

Is there a requirement for 401k catchup annual limit amounts ( $6000 for 2017 tax year) to be separately identified from an employees regular 401k annual limit amt of $18,000 for 2017 tax year for payroll deduction purposes? The IRS makes a statement that the $18,000 limit has to be reached before 401k catchup contributions begin; however, does that imply that the catchup amounts have to be reported separately to third party 401k administrators or the IRS? I don't see any requirements for W2 purposes in breaking out the catchup amounts for 2017 tax year. I am not sure if the Form 5500 requires catchup contributions separated? Any advice here would be appreciated as to whether catchup has to be separated for reporting purposes. Thank you, Linda A.