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#1
Old 02-14-2016, 05:30 PM
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Question for a CPA - W2: Box 13 "Retirement Plan" incorrectly unchecked

Finally started to sit down and prepare the taxes. My wife's W2 in Box 13 where it should be checked for "Retirement Plan" is unchecked. She did contribute to a 401(k) that year and that is reflected in Box 12D.

My first thought was, get a corrected W2 from the employer. Not a small task, they are very frustrating to deal with.

So I wondered, what happens if on the taxes (using Turbotax) is we check this that she does have a Retirement Plan, because she really does, and go ahead and file the taxes as normal.

What is the downside to doing this? What does the employer checking or unchecking Box 13 "Retirement Plan" actually do? Or is there merely a static being collected by the IRS?

When the corrected W2 finally arrives, would any of the other data parts of the form be changed because the employer now checks Box 13 "Retirement Plan"? If not, can I go ahead and select it as checked in Turbotax knowing the employer will eventually send a corrected W2?

Or is the IRS going to bounce back this return or whatever they do because their information from the employer's W2 won't match what we provide in the tax return? And I'm better off waiting for the corrected W2?

I guess I could file the return and provide the incorrect information as stated on the W2 so we can get our refund sooner, and then amend it afterwards. Just wondering if this "Retirement Plan" from Box 13 has any other ramifications I'm not considering? Thanks!
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#2
Old 02-15-2016, 12:12 PM
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Location: Southeast Florida USA
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IANA expert, but as best I know the presence or absence of that checkmark indicates whether pre-tax 401K contributions are legal and the thresholds for whether traditional IRA contribs are deductible or not.

Since you do have 401K contributions I'd get the W-2 fixed first. As it is the form's a non sequitur that'll flag immediately. IOW, when filing as-is you're looking at creating a mess that's harder to clean up than it is to prevent. However hard & slow her employer is to deal with, the IRS is worse.

Remember you can request an automatic 6 month extension to file as long as you pay what you'll owe by tax day, typically April 15th.

If you're expecting a refund you've got that covered already and the only remaining challenge is that your wife's employer's screw-up is delaying your refund.

If you expect to owe, it's not hard to rough out your taxes now, send the payment in April using 1040V with an extra $100 just in case, & continue to wrassel with her employer all the way until mid-October. Surely they're not that hard to deal with?

Last edited by LSLGuy; 02-15-2016 at 12:14 PM.
#3
Old 02-15-2016, 04:21 PM
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See "Are you covered for a plan year?" on page 11 of Publication 590A. Sometimes when the employer's plan year does not match the employee's tax year (the employee's tax year is almost always the calendar year), you get non-intuitive results.

Did your wife begin working at this job in the last half of the year? Or become eligible to participate in the last half of the year?

I would just leave it alone. Don't try to correct it yourself. Just type in whatever your employer put in that box. About the only thing this box is used for (that I'm aware of) is to determine whether certain high-income taxpayers can take a deduction for a contribution to a traditional IRA.
#4
Old 02-15-2016, 05:40 PM
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IANA practicing accountant, but I don't believe that error will affect you in any major way. The Box 12 information is what the IRS would care about. Checking the box may make some tax software ask an extra question to make sure that there isn't a credit that you are missing or forgot to declare, but if you're sure you're doing everything else right, it shouldn't be a problem. As far as I know the software will use the code D in preference.

What I'd be more concerned about is checking with the employer if it is just an error, or whether they didn't check some box in their internal forms (not W2), so she is "improperly" enrolled in the 401(k).
#5
Old 02-15-2016, 09:34 PM
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Quote:
Originally Posted by Alley Dweller View Post
See "Are you covered for a plan year?" on page 11 of Publication 590A. Sometimes when the employer's plan year does not match the employee's tax year (the employee's tax year is almost always the calendar year), you get non-intuitive results.

Did your wife begin working at this job in the last half of the year? Or become eligible to participate in the last half of the year?

I would just leave it alone. Don't try to correct it yourself. Just type in whatever your employer put in that box. About the only thing this box is used for (that I'm aware of) is to determine whether certain high-income taxpayers can take a deduction for a contribution to a traditional IRA.
She did change jobs during 2015 and had to wait 3 months until she was able to contribute to the company's 401(k) plan. But everything she contributed with this company in 2015 was entirely all pre-tax legit contributions. So I was surprised the employer didn't check this, but their payroll and benefits department have been a constant mess. I was just hoping to spare ourselves one more source of frustration with them.
#6
Old 02-16-2016, 04:55 AM
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Quote:
Originally Posted by edwardcoast View Post
She did change jobs during 2015 and had to wait 3 months until she was able to contribute to the company's 401(k) plan. But everything she contributed with this company in 2015 was entirely all pre-tax legit contributions. So I was surprised the employer didn't check this, but their payroll and benefits department have been a constant mess. I was just hoping to spare ourselves one more source of frustration with them.
No one did anything that wasn't legit. It's just that the employer's plan uses a fiscal year that doesn't correspond to the calendar year. Your wife became eligible for the plan after the 2015 plan year ended. There's nothing to worry about.
#7
Old 02-16-2016, 05:07 AM
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Quote:
Originally Posted by Alley Dweller View Post
No one did anything that wasn't legit. It's just that the employer's plan uses a fiscal year that doesn't correspond to the calendar year. Your wife became eligible for the plan after the 2015 plan year ended. There's nothing to worry about.
Interesting. If that's the case, I'm wondering why this matters to the IRS then. Does it change the status of the pre-tax 401(k) contribution that it is unchecked?
#8
Old 02-16-2016, 05:19 AM
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I did find this, but it says any part of the tax year. If I understand this correctly, it should be checked in Box 13 for Retirement plan.

https://irs.gov/Retirement-Plans...tirement-Plans

Form W-2, Box 13
The “Retirement plan” indicator in Box 13 shows whether an employee is an active participant in your company’s plan. If this box is checked, it lets the recipient know that depending on their filing status and modified adjusted gross income, they may not be entitled to a full deduction for their traditional IRA contributions. You should check the retirement plan box if an employee was an “active participant” for any part of the year in:
  • a qualified pension, profit-sharing, or stock-bonus plan under Internal Revenue Code Section 401(a) (including a 401(k) plan).
  • an annuity plan under IRC Section 403(a).
  • an annuity contract or custodial account under IRC Section 403(b).
  • a simplified employee pension (SEP) under IRC Section 408(k).
  • a SIMPLE retirement account under IRC Section 408(p).
  • a trust described in IRC Section 501(c)(18).
  • a plan for federal, state, or local government employees or by an agency or instrumentality thereof (other than a 457(b) plan).

Last edited by edwardcoast; 02-16-2016 at 05:20 AM.
#9
Old 02-16-2016, 09:26 AM
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Try running your taxes both ways to see the effects on your bottom line.
#10
Old 02-16-2016, 01:59 PM
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Quote:
Originally Posted by edwardcoast View Post
Interesting. If that's the case, I'm wondering why this matters to the IRS then. Does it change the status of the pre-tax 401(k) contribution that it is unchecked?
No it doesn't. As I said, all it affects is the ability of some high-income taxpayers to deduct a contribution to their traditional IRA. If you or your spouse are covered by a retirement plan, your ability to deduct a contribution to your traditional IRA is limited based on your income. Again, please read the link I posted earlier.

Last edited by Alley Dweller; 02-16-2016 at 02:00 PM.
#11
Old 02-16-2016, 02:27 PM
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All the provisions about not tax advice, not your CPA, etc.

As an individual income tax preparer, I mostly care about the rare circumstance that someone is covered by an employer plan with no deferred compensation (for example, a SIMPLE IRA with an employer who contributes 2% of salary instead of 3% matching). Such a W2 should have that box checked, but you won't see box 12 entries or deductions from the employee's gross income. The presence of a plan matters in regards to active participation limits for deductible traditional IRA limits.

So... as long as you know she was covered, and as long as there's no issue with deductible traditional IRA contributions, ignore it.

As a payroll preparer, I spend much more time thinking about that check box, but that's the employer's problem, not the individual's.
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