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20% Was Withheld But Not Sent to IRS Until Subsequent Plan Year
BenefitsLink Message BoardsLink to more items from this source
Mar. 24, 2021

"Terminated employee in DC Plan elected a lump sum. 20% was withheld as required. The 20% sat in the plan until the following plan year when it was sent to the IRS. The 80% that the employee received as a lump sum was shown on the 5500-SF in the year it was received. The 20% withholding was shown on the following year's 5500-SF (because it sat in the plan assets until the following plan year). Are there potential penalties for this? Can this be rectified?"

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