W-2 Box 13 " Active Participant"

[Guest Wolves1962]

I have a client who says although a employee is eligible to be in the plan has opted not to. Her husband says since she has not put any money into the plan box 13 on the W-2 should NOT be checked. The employer says they have to check the box. What is the answer to this question concerning active employee. The cpa husband says this will interfere with his IRA contributions?

HELP!

Lisa

[Appleby]

Lisa, it depends on the type of plan

See http://www.investopedia.com/articles/retir...t/05/032305.asp

[Guest Wolves1962]

This basically means that to be actice they have to be receiving money and not just " eligible". Does anyone have the form 87-16?

Thank you

[Guest Wolves1962]

Information from that site that you gave me. This is wonderful.. good resource for information...... Thanks so much!

401(k) and 403(b) Plans

If you make salary-deferral contributions to a 401(k) or 403(b) plan, you are considered an active participant for the year to which your salary-deferral contributions apply. If you are eligible to make salary-deferral contributions but elect not to, you are not considered an active participant for that year.

[Appleby]

You are welcome.

Did you mean Notice 87-16 instead of Form 87-16? if so, it is available at www.irs.gov/pub/irs-tege/notice87_16.pdf

[JanetM]

Is this deferal only plan? Employer money counts too.

[Guest jduns01]

In addition, a plan that has employer money for individuals who earn a year of service can trigger a correct answer of "yes" to participant status even though a normally part time person may never expect to earn any employer contribution (or to become vested in any small benefit that they might earn).

[saabraa]

Sometimes an employer contribution that's for a prior year can impact this year's box 13. For example, an employee deferred $2 into a 401k in 2004. The employer matches on a DISCRETIONARY basis; in January of 2005 the board of directors decides to match the employee $1. The "x" goes in the active participant/pension plan box on the 2005 w-2.

Or just a regular profit-sharing contribution. Same scenario as above, except the employee deferred $0. The employer still contributes profit sharing for the employee in 2005. The employee is an active p for 2005.

[Shelly B]

@saabraa What happens if a participant, we'll call her Sue, terminates in June of 2016. But, because there's no last day allocation requirement for the 401(k) plan's profit sharing contribution, she receives a portion of the profit sharing contribution made for 2016 during 2017. 

Sue was not on the company's payroll during 2017, and she is not set to receive a W2 at all for 2017 from the company. Must the company issue a 2017 W2 for the sole purpose of checking box 13? 

[Tom Poje]

well, the instruction for the W-2 for who must file W-2 are as follows:

Complete and file Form W-2 for each employee for whom any of the following applies (even if the employee is related to you).

 

You withheld any income, social security, or Medicare tax from wages regardless of the amount of wages; or

 

You would have had to withhold income tax if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4; or

 

You paid $600 or more in wages even if you did not withhold any income, social security, or Medicare tax.

........

there is no "oh, and by the way, if they had no income but received a profit contribution for the prior year that was contribution in the current year, you need to provide a W-2 so they don't make a possible non-deductible IRA contribution"

Guess it is sort of like working for two companies and coordinating deferrals. It is up to the individual to monitor whether he has an excess deferral, not one or other of the companies.