USERRA

[Nassau]

Can you tell me if a participant returns from Military leave and wants to make up a missed contribution for a prior tax year, does the participant have to amend that prior year's tax return or does the participant just claim it on the current year's tax form?

Can you provide me with the Regulations that provides this information? Thanks.

[ETA Consulting LLC]

The only simular provision would appear to be under a Qualified Reservist Distribution. In such event, the reserve member would be able to redeposit amounts withdrawn from a qualified plan into a Traditional IRA without regard to any IRA funding limits. Also, no income tax deduction would be allowed on such redeposit.

Not sure if this is what you're referring to.

Good Luck!

[GMK]

From the general instructions for W-2's:

http://www.irs.gov/instructions/iw2w3/ch01.html

"Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) makeup amounts to a pension plan. If an employee returned to your employment after military service and certain makeup amounts were contributed to a pension plan for a prior year(s) under the USERRA, report the prior year contributions separately in box 12. See the TIP above Code D on page 15. You also may report certain makeup amounts in box 14. See Box 14—Other on page 17.

Instead of reporting in box 12 (or box 14), you may choose to provide a separate statement to your employee showing USERRA makeup contributions. The statement must identify the type of plan, the year(s) to which the contributions relate, and the amount contributed for each year. "

And in the W-2 instructions to the employee, it says that if a year is listed after a "D" (elective deferral to 401(k)) in box 12, then the person is to go back to the year shown to check if they made excess deferrals, and if no year is shown then the contributions are for the current year.

From all this, I'd guess they should go back and adjust the applicable previous years' returns, but I didn't find where it says that explicitly.

[GMK]

This newsletter (June 2007)

http://www.ars401k.com/news_0101/07_Military.html

ends with this example:

Example - Deductibility of Make-Up Contributions

If the employer makes a contribution on March 4, 2006, to make-up a 2004 profit sharing contribution, the employer should be able to deduct the contribution for its 2005 taxable year since the contribution was made before the due date of that return. Alternatively, the employer could take the deduction in 2006, which is the year in which the contribution is made.

Apparently the employer cannot deduct this contribution on an amended 2004 return, but still don't know for sure if it's the same for the employee's make up deferrals.