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E-file State Return Only

E File Tax Extension For FreeFile State Taxes For Free OnlineFiling Back Taxes OnlineH&r Block Free Tax1040x Form InstructionsFree State File TaxesFree Site To File State TaxesWww.1040x1040ez InstructionsFile My 2009 Taxes Online FreeHow Do I Amend My 2010 Taxes2011 Tax Forms 1040ezFirst Time Filing Taxes College StudentForms TaxH&r Block Taxes OnlineTurbo Tax 2012Free State Tax Filing 2014Print 2011 Tax Forms1040 Ez 2012Amended Tax Forms1040nr Ez Online FreeHow To Do A 1040x FormHow To File A State Tax ReturnFree Irs FormsIrs 2011 Tax FormFile Federal And State Taxes Free OnlineFile My 2012 Taxes2012 Irs Form 1040ez1040nr Tax ReturnFiling An Amended Tax ReturnFiling Taxes For Free1040ez 2012 Form2013 1040ez Tax FormFile A 1040ez OnlineFree Federal Tax Filing 20121040x Amended Tax Form1040nr10 40 EzState Tax FormFree State Return Only

E-file State Return Only

E-file state return only Index A Actual knowledge Innocent spouse relief, Actual Knowledge or Reason To Know Separation of liability relief, Actual Knowledge Assistance (see Tax help) B Burden of proof, separation of liability, Burden of proof. E-file state return only C Comments on publication, Comments and suggestions. E-file state return only Community property law, relief from liability arising from, Community Property Laws Community property laws, Community Property Laws D Decedent, Form 8857 filed by or on behalf of a decedent. E-file state return only Domestic violence (separation of liability), Exception for spousal abuse or domestic violence. E-file state return only E Equitable relief Conditions for getting, Conditions for Getting Equitable Relief Factors for determining whether to grant, Factors for Determining Whether To Grant Equitable Relief Refunds, Refunds Under Equitable Relief Erroneous items, Erroneous Items Executors (see Decedent) F Flowcharts, Flowcharts Form 8857 Filled-in example, Filled-in Form 8857 For decedent, Form 8857 filed by or on behalf of a decedent. E-file state return only Tax Court review, Tax Court Review of Request When to file, When to file Form 8857. E-file state return only Free tax services, How To Get Tax Help H Help (see Tax help) How to request relief, How To Request Relief I Indications of unfairness Innocent spouse relief, Indications of Unfairness for Innocent Spouse Relief Injured spouse relief, Publication 971 - Additional Material Innocent spouse relief, Innocent Spouse Relief J Joint and several liability, Publication 971 - Additional Material L Limitations on Relief, Limitations on Relief M More information (see Tax help) N No joint return filed, Relief for Married Persons Who Did Not File Joint Returns P Partial relief, innocent spouse relief, Partial relief when a portion of erroneous item is unknown. E-file state return only Publications (see Tax help) Q Questions & Answers, Publication 971 - Additional Material R Reason to know, Actual Knowledge or Reason To Know Refunds, Refunds Limit on amount of refund, Limit on Amount of Refund Proof required, Proof Required Under equitable relief, Refunds Under Equitable Relief S Separation of liability relief, Separation of Liability Relief Spousal abuse, The IRS Must Contact Your Spouse or Former Spouse, Exception for spousal abuse or domestic violence. E-file state return only Spousal notification, The IRS Must Contact Your Spouse or Former Spouse, Publication 971 - Additional Material Suggestions for publication, Comments and suggestions. E-file state return only T Tax Court review, Tax Court Review of Request Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. E-file state return only TEFRA partnership proceedings, Exception for agreements relating to TEFRA partnership proceedings. E-file state return only Transferee liability, Transferee liability not affected by innocent spouse relief provisions. E-file state return only Transfers of property to avoid tax, Transfers of Property To Avoid Tax TTY/TDD information, How To Get Tax Help U Underpaid tax, Equitable Relief Understated tax, Understated Tax United States Tax Court, Tax Court Review of Request W When to file Form 8857, When to file Form 8857. E-file state return only Prev  Up     Home   More Online Publications
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Whenever You Take Your Car in for Repairs:

  • Choose a reliable repair shop. Family, friends or an independent consumer rating organization should be able to help you. Look for shops that display various certifications that are current. You should also check out the shop's record with your local consumer protection office or Better Business Bureau.
  • Describe the symptoms. Don't try to diagnose the problem.
  • Make it clear that work cannot begin until you have a written estimate and you give your okay. . Never sign a blank repair order. If the problem can't be diagnosed on the spot, insist that the shop contact you for authorization once the trouble has been found.
  • Ask the shop to keep the old parts for you.
  • If a repair is covered under warranty, follow the warranty instructions..
  • Get all repair warranties in writing.
  • Keep copies of all paperwork.

Some states, cities and counties have special laws that deal with auto repairs. For information on the laws in your state, contact your state or local consumer protection office. In addition, the FTC provides a complete consumer guide to auto repair.

The E-file State Return Only

E-file state return only 4. E-file state return only   Qualified Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Kinds of PlansDefined Contribution Plan Defined Benefit Plan Qualification RulesEarly retirement. E-file state return only Loan secured by benefits. E-file state return only Waiver of survivor benefits. E-file state return only Waiver of 30-day waiting period before annuity starting date. E-file state return only Involuntary cash-out of benefits not more than dollar limit. E-file state return only Exception for certain loans. E-file state return only Exception for QDRO. E-file state return only SIMPLE and safe harbor 401(k) plan exception. E-file state return only Setting Up a Qualified PlanAdopting a Written Plan Investing Plan Assets Minimum Funding RequirementDue dates. E-file state return only Installment percentage. E-file state return only Extended period for making contributions. E-file state return only ContributionsEmployer Contributions Employee Contributions When Contributions Are Considered Made Employer DeductionDeduction Limits Deduction Limit for Self-Employed Individuals Where To Deduct Contributions Carryover of Excess Contributions Excise Tax for Nondeductible (Excess) Contributions Elective Deferrals (401(k) Plans)Limit on Elective Deferrals Automatic Enrollment Treatment of Excess Deferrals Qualified Roth Contribution ProgramElective Deferrals Qualified Distributions Reporting Requirements DistributionsRequired Distributions Distributions From 401(k) Plans Tax Treatment of Distributions Tax on Early Distributions Tax on Excess Benefits Excise Tax on Reversion of Plan Assets Notification of Significant Benefit Accrual Reduction Prohibited TransactionsTax on Prohibited Transactions Reporting RequirementsOne-participant plan. E-file state return only Caution: Form 5500-EZ not required. E-file state return only Form 5500. E-file state return only Electronic filing of Forms 5500 and 5500-SF. E-file state return only Topics - This chapter discusses: Kinds of plans Qualification rules Setting up a qualified plan Minimum funding requirement Contributions Employer deduction Elective deferrals (401(k) plans) Qualified Roth contribution program Distributions Prohibited transactions Reporting requirements Useful Items - You may want to see: Publications 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 3066 Have you had your Check-up this year? for Retirement Plans 3998 Choosing A Retirement Solution for Your Small Business 4222 401(k) Plans for Small Businesses 4530 Designated Roth Accounts under a 401(k), 403(b), or governmental 457(b) plans 4531 401(k) Plan Checklist 4674 Automatic Enrollment 401(k) Plans for Small Businesses 4806 Profit Sharing Plans for Small Businesses Forms (and Instructions) www. E-file state return only dol. E-file state return only gov/ebsa/pdf/2013-5500. E-file state return only pdf www. E-file state return only dol. E-file state return only gov/ebsa/pdf/2013-5500-SF. E-file state return only pdf W-2 Wage and Tax Statement Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. E-file state return only 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. E-file state return only 1040 U. E-file state return only S. E-file state return only Individual Income Tax Return Schedule C (Form 1040) Profit or Loss From Business Schedule F (Form 1040) Profit or Loss From Farming 5300 Application for Determination for Employee Benefit Plan 5310 Application for Determination for Terminating Plan 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5330 Return of Excise Taxes Related to Employee Benefit Plans 5500 Annual Return/Report of Employee Benefit Plan. E-file state return only For copies of this form, go to: 5500-EZ Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan. E-file state return only For copies of this form, go to: 8717 User Fee for Employee Plan Determination Letter Request 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs 8955-SSA Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits These qualified retirement plans set up by self-employed individuals are sometimes called Keogh or H. E-file state return only R. E-file state return only 10 plans. E-file state return only A sole proprietor or a partnership can set up one of these plans. E-file state return only A common-law employee or a partner cannot set up one of these plans. E-file state return only The plans described here can also be set up and maintained by employers that are corporations. E-file state return only All the rules discussed here apply to corporations except where specifically limited to the self-employed. E-file state return only The plan must be for the exclusive benefit of employees or their beneficiaries. E-file state return only These qualified plans can include coverage for a self-employed individual. E-file state return only As an employer, you can usually deduct, subject to limits, contributions you make to a qualified plan, including those made for your own retirement. E-file state return only The contributions (and earnings and gains on them) are generally tax free until distributed by the plan. E-file state return only Kinds of Plans There are two basic kinds of qualified plans—defined contribution plans and defined benefit plans—and different rules apply to each. E-file state return only You can have more than one qualified plan, but your contributions to all the plans must not total more than the overall limits discussed under Contributions and Employer Deduction, later. E-file state return only Defined Contribution Plan A defined contribution plan provides an individual account for each participant in the plan. E-file state return only It provides benefits to a participant largely based on the amount contributed to that participant's account. E-file state return only Benefits are also affected by any income, expenses, gains, losses, and forfeitures of other accounts that may be allocated to an account. E-file state return only A defined contribution plan can be either a profit-sharing plan or a money purchase pension plan. E-file state return only Profit-sharing plan. E-file state return only   Although it is called a “profit-sharing plan,” you do not actually have to make a business profit for the year in order to make a contribution (except for yourself if you are self-employed as discussed under Self-employed Individual, later). E-file state return only A profit-sharing plan can be set up to allow for discretionary employer contributions, meaning the amount contributed each year to the plan is not fixed. E-file state return only An employer may even make no contribution to the plan for a given year. E-file state return only   The plan must provide a definite formula for allocating the contribution among the participants and for distributing the accumulated funds to the employees after they reach a certain age, after a fixed number of years, or upon certain other occurrences. E-file state return only   In general, you can be more flexible in making contributions to a profit-sharing plan than to a money purchase pension plan (discussed next) or a defined benefit plan (discussed later). E-file state return only Money purchase pension plan. E-file state return only   Contributions to a money purchase pension plan are fixed and are not based on your business profits. E-file state return only For example, if the plan requires that contributions be 10% of the participants' compensation without regard to whether you have profits (or the self-employed person has earned income), the plan is a money purchase pension plan. E-file state return only This applies even though the compensation of a self-employed individual as a participant is based on earned income derived from business profits. E-file state return only Defined Benefit Plan A defined benefit plan is any plan that is not a defined contribution plan. E-file state return only Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. E-file state return only Actuarial assumptions and computations are required to figure these contributions. E-file state return only Generally, you will need continuing professional help to have a defined benefit plan. E-file state return only Qualification Rules To qualify for the tax benefits available to qualified plans, a plan must meet certain requirements (qualification rules) of the tax law. E-file state return only Generally, unless you write your own plan, the financial institution that provided your plan will take the continuing responsibility for meeting qualification rules that are later changed. E-file state return only The following is a brief overview of important qualification rules that generally have not yet been discussed. E-file state return only It is not intended to be all-inclusive. E-file state return only See Setting Up a Qualified Plan , later. E-file state return only Generally, the following qualification rules also apply to a SIMPLE 401(k) retirement plan. E-file state return only A SIMPLE 401(k) plan is, however, not subject to the top-heavy plan rules and nondiscrimination rules if the plan satisfies the provisions discussed in chapter 3 under SIMPLE 401(k) Plan. E-file state return only Plan assets must not be diverted. E-file state return only   Your plan must make it impossible for its assets to be used for, or diverted to, purposes other than the benefit of employees and their beneficiaries. E-file state return only As a general rule, the assets cannot be diverted to the employer. E-file state return only Minimum coverage requirement must be met. E-file state return only   To be a qualified plan, a defined benefit plan must benefit at least the lesser of the following. E-file state return only 50 employees, or The greater of: 40% of all employees, or Two employees. E-file state return only If there is only one employee, the plan must benefit that employee. E-file state return only Contributions or benefits must not discriminate. E-file state return only   Under the plan, contributions or benefits to be provided must not discriminate in favor of highly compensated employees. E-file state return only Contributions and benefits must not be more than certain limits. E-file state return only   Your plan must not provide for contributions or benefits that are more than certain limits. E-file state return only The limits apply to the annual contributions and other additions to the account of a participant in a defined contribution plan and to the annual benefit payable to a participant in a defined benefit plan. E-file state return only These limits are discussed later in this chapter under Contributions. E-file state return only Minimum vesting standard must be met. E-file state return only   Your plan must satisfy certain requirements regarding when benefits vest. E-file state return only A benefit is vested (you have a fixed right to it) when it becomes nonforfeitable. E-file state return only A benefit is nonforfeitable if it cannot be lost upon the happening, or failure to happen, of any event. E-file state return only Special rules apply to forfeited benefit amounts. E-file state return only In defined contribution plans, forfeitures can be allocated to the accounts of remaining participants in a nondiscriminatory way, or they can be used to reduce your contributions. E-file state return only   Forfeitures under a defined benefit plan cannot be used to increase the benefits any employee would otherwise receive under the plan. E-file state return only Forfeitures must be used instead to reduce employer contributions. E-file state return only Participation. E-file state return only   In general, an employee must be allowed to participate in your plan if he or she meets both the following requirements. E-file state return only Has reached age 21. E-file state return only Has at least 1 year of service (2 years if the plan is not a 401(k) plan and provides that after not more than 2 years of service the employee has a nonforfeitable right to all his or her accrued benefit). E-file state return only A plan cannot exclude an employee because he or she has reached a specified age. E-file state return only Leased employee. E-file state return only   A leased employee, defined in chapter 1, who performs services for you (recipient of the services) is treated as your employee for certain plan qualification rules. E-file state return only These rules include those in all the following areas. E-file state return only Nondiscrimination in coverage, contributions, and benefits. E-file state return only Minimum age and service requirements. E-file state return only Vesting. E-file state return only Limits on contributions and benefits. E-file state return only Top-heavy plan requirements. E-file state return only Contributions or benefits provided by the leasing organization for services performed for you are treated as provided by you. E-file state return only Benefit payment must begin when required. E-file state return only   Your plan must provide that, unless the participant chooses otherwise, the payment of benefits to the participant must begin within 60 days after the close of the latest of the following periods. E-file state return only The plan year in which the participant reaches the earlier of age 65 or the normal retirement age specified in the plan. E-file state return only The plan year in which the 10th anniversary of the year in which the participant began participating in the plan occurs. E-file state return only The plan year in which the participant separates from service. E-file state return only Early retirement. E-file state return only   Your plan can provide for payment of retirement benefits before the normal retirement age. E-file state return only If your plan offers an early retirement benefit, a participant who separates from service before satisfying the early retirement age requirement is entitled to that benefit if he or she meets both the following requirements. E-file state return only Satisfies the service requirement for the early retirement benefit. E-file state return only Separates from service with a nonforfeitable right to an accrued benefit. E-file state return only The benefit, which may be actuarially reduced, is payable when the early retirement age requirement is met. E-file state return only Required minimum distributions. E-file state return only   Special rules require minimum annual distributions from qualified plans, generally beginning after age  70½. E-file state return only See Required Distributions , under Distributions, later. E-file state return only Survivor benefits. E-file state return only   Defined benefit and money purchase pension plans must provide automatic survivor benefits in both the following forms. E-file state return only A qualified joint and survivor annuity for a vested participant who does not die before the annuity starting date. E-file state return only A qualified pre-retirement survivor annuity for a vested participant who dies before the annuity starting date and who has a surviving spouse. E-file state return only   The automatic survivor benefit also applies to any participant under a profit-sharing plan unless all the following conditions are met. E-file state return only The participant does not choose benefits in the form of a life annuity. E-file state return only The plan pays the full vested account balance to the participant's surviving spouse (or other beneficiary if the surviving spouse consents or if there is no surviving spouse) if the participant dies. E-file state return only The plan is not a direct or indirect transferee of a plan that must provide automatic survivor benefits. E-file state return only Loan secured by benefits. E-file state return only   If automatic survivor benefits are required for a spouse under a plan, he or she must consent to a loan that uses as security the accrued benefits in the plan. E-file state return only Waiver of survivor benefits. E-file state return only   Each plan participant may be permitted to waive the joint and survivor annuity or the pre-retirement survivor annuity (or both), but only if the participant has the written consent of the spouse. E-file state return only The plan also must allow the participant to withdraw the waiver. E-file state return only The spouse's consent must be witnessed by a plan representative or notary public. E-file state return only Waiver of 30-day waiting period before annuity starting date. E-file state return only    A plan may permit a participant to waive (with spousal consent) the 30-day minimum waiting period after a written explanation of the terms and conditions of a joint and survivor annuity is provided to each participant. E-file state return only   The waiver is allowed only if the distribution begins more than 7 days after the written explanation is provided. E-file state return only Involuntary cash-out of benefits not more than dollar limit. E-file state return only   A plan may provide for the immediate distribution of the participant's benefit under the plan if the present value of the benefit is not greater than $5,000. E-file state return only   However, the distribution cannot be made after the annuity starting date unless the participant and the spouse or surviving spouse of a participant who died (if automatic survivor benefits are required for a spouse under the plan) consents in writing to the distribution. E-file state return only If the present value is greater than $5,000, the plan must have the written consent of the participant and the spouse or surviving spouse (if automatic survivor benefits are required for a spouse under the plan) for any immediate distribution of the benefit. E-file state return only   Benefits attributable to rollover contributions and earnings on them can be ignored in determining the present value of these benefits. E-file state return only   A plan must provide for the automatic rollover of any cash-out distribution of more than $1,000 to an individual retirement account or annuity, unless the participant chooses otherwise. E-file state return only A section 402(f) notice must be sent prior to an involuntary cash-out of an eligible rollover distribution. E-file state return only See Section 402(f) Notice under Distributions, later, for more details. E-file state return only Consolidation, merger, or transfer of assets or liabilities. E-file state return only   Your plan must provide that, in the case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan, each participant would (if the plan then terminated) receive a benefit equal to or more than the benefit he or she would have been entitled to just before the merger, etc. E-file state return only (if the plan had then terminated). E-file state return only Benefits must not be assigned or alienated. E-file state return only   Your plan must provide that a participant's or beneficiary's benefits under the plan cannot be taken away by any legal or equitable proceeding except as provided below or pursuant to certain judgements or settlements against the participant for violations of plan rules. E-file state return only Exception for certain loans. E-file state return only   A loan from the plan (not from a third party) to a participant or beneficiary is not treated as an assignment or alienation if the loan is secured by the participant's accrued nonforfeitable benefit and is exempt from the tax on prohibited transactions under section 4975(d)(1) or would be exempt if the participant were a disqualified person. E-file state return only A disqualified person is defined later in this chapter under Prohibited Transactions. E-file state return only Exception for QDRO. E-file state return only   Compliance with a QDRO (qualified domestic relations order) does not result in a prohibited assignment or alienation of benefits. E-file state return only   Payments to an alternate payee under a QDRO before the participant attains age 59½ are not subject to the 10% additional tax that would otherwise apply under certain circumstances. E-file state return only Benefits distributed to an alternate payee under a QDRO can be rolled over tax free to an individual retirement account or to an individual retirement annuity. E-file state return only No benefit reduction for social security increases. E-file state return only   Your plan must not permit a benefit reduction for a post-separation increase in the social security benefit level or wage base for any participant or beneficiary who is receiving benefits under your plan, or who is separated from service and has nonforfeitable rights to benefits. E-file state return only This rule also applies to plans supplementing the benefits provided by other federal or state laws. E-file state return only Elective deferrals must be limited. E-file state return only   If your plan provides for elective deferrals, it must limit those deferrals to the amount in effect for that particular year. E-file state return only See Limit on Elective Deferrals later in this chapter. E-file state return only Top-heavy plan requirements. E-file state return only   A top-heavy plan is one that mainly favors partners, sole proprietors, and other key employees. E-file state return only   A plan is top-heavy for a plan year if, for the preceding plan year, the total value of accrued benefits or account balances of key employees is more than 60% of the total value of accrued benefits or account balances of all employees. E-file state return only Additional requirements apply to a top-heavy plan primarily to provide minimum benefits or contributions for non-key employees covered by the plan. E-file state return only   Most qualified plans, whether or not top-heavy, must contain provisions that meet the top-heavy requirements and will take effect in plan years in which the plans are top-heavy. E-file state return only These qualification requirements for top-heavy plans are explained in section 416 and its regulations. E-file state return only SIMPLE and safe harbor 401(k) plan exception. E-file state return only   The top-heavy plan requirements do not apply to SIMPLE 401(k) plans, discussed earlier in chapter 3, or to safe harbor 401(k) plans that consist solely of safe harbor contributions, discussed later in this chapter. E-file state return only QACAs (discussed later) also are not subject to top-heavy requirements. E-file state return only Setting Up a Qualified Plan There are two basic steps in setting up a qualified plan. E-file state return only First you adopt a written plan. E-file state return only Then you invest the plan assets. E-file state return only You, the employer, are responsible for setting up and maintaining the plan. E-file state return only If you are self-employed, it is not necessary to have employees besides yourself to sponsor and set up a qualified plan. E-file state return only If you have employees, see Participation, under Qualification Rules, earlier. E-file state return only Set-up deadline. E-file state return only   To take a deduction for contributions for a tax year, your plan must be set up (adopted) by the last day of that year (December 31 for calendar-year employers). E-file state return only Credit for startup costs. E-file state return only   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a qualified plan that first became effective in 2013. E-file state return only For more information, see Credit for startup costs under Reminders, earlier. E-file state return only Adopting a Written Plan You must adopt a written plan. E-file state return only The plan can be an IRS-approved master or prototype plan offered by a sponsoring organization. E-file state return only Or it can be an individually designed plan. E-file state return only Written plan requirement. E-file state return only   To qualify, the plan you set up must be in writing and must be communicated to your employees. E-file state return only The plan's provisions must be stated in the plan. E-file state return only It is not sufficient for the plan to merely refer to a requirement of the Internal Revenue Code. E-file state return only Master or prototype plans. E-file state return only   Most qualified plans follow a standard form of plan (a master or prototype plan) approved by the IRS. E-file state return only Master and prototype plans are plans made available by plan providers for adoption by employers (including self-employed individuals). E-file state return only Under a master plan, a single trust or custodial account is established, as part of the plan, for the joint use of all adopting employers. E-file state return only Under a prototype plan, a separate trust or custodial account is established for each employer. E-file state return only Plan providers. E-file state return only   The following organizations generally can provide IRS-approved master or prototype plans. E-file state return only Banks (including some savings and loan associations and federally insured credit unions). E-file state return only Trade or professional organizations. E-file state return only Insurance companies. E-file state return only Mutual funds. E-file state return only Individually designed plan. E-file state return only   If you prefer, you can set up an individually designed plan to meet specific needs. E-file state return only Although advance IRS approval is not required, you can apply for approval by paying a fee and requesting a determination letter. E-file state return only You may need professional help for this. E-file state return only See Rev. E-file state return only Proc. E-file state return only 2014-6, 2014-1 I. E-file state return only R. E-file state return only B. E-file state return only 198, available at www. E-file state return only irs. E-file state return only gov/irb/2014-1_IRB/ar10. E-file state return only html, as annually updated, that may help you decide whether to apply for approval. E-file state return only Internal Revenue Bulletins are available on the IRS website at IRS. E-file state return only gov They are also available at most IRS offices and at certain libraries. E-file state return only User fee. E-file state return only   The fee mentioned earlier for requesting a determination letter does not apply to employers who have 100 or fewer employees who received at least $5,000 of compensation from the employer for the preceding year. E-file state return only At least one of them must be a non-highly compensated employee participating in the plan. E-file state return only The fee does not apply to requests made by the later of the following dates. E-file state return only The end of the 5th plan year the plan is in effect. E-file state return only The end of any remedial amendment period for the plan that begins within the first 5 plan years. E-file state return only The request cannot be made by the sponsor of a prototype or similar plan the sponsor intends to market to participating employers. E-file state return only   For more information about whether the user fee applies, see Rev. E-file state return only Proc. E-file state return only 2014-8, 2014-1 I. E-file state return only R. E-file state return only B. E-file state return only 242, available at www. E-file state return only irs. E-file state return only gov/irb/2014-1_IRB/ar12. E-file state return only html, as may be annually updated; Notice 2003-49, 2003-32 I. E-file state return only R. E-file state return only B. E-file state return only 294, available at www. E-file state return only irs. E-file state return only gov/irb/2003-32_IRB/ar13. E-file state return only html; and Notice 2011-86, 2011-45 I. E-file state return only R. E-file state return only B. E-file state return only 698, available at www. E-file state return only irs. E-file state return only gov/irb/2011-45_IRB/ar11. E-file state return only html. E-file state return only Investing Plan Assets In setting up a qualified plan, you arrange how the plan's funds will be used to build its assets. E-file state return only You can establish a trust or custodial account to invest the funds. E-file state return only You, the trust, or the custodial account can buy an annuity contract from an insurance company. E-file state return only Life insurance can be included only if it is incidental to the retirement benefits. E-file state return only You set up a trust by a legal instrument (written document). E-file state return only You may need professional help to do this. E-file state return only You can set up a custodial account with a bank, savings and loan association, credit union, or other person who can act as the plan trustee. E-file state return only You do not need a trust or custodial account, although you can have one, to invest the plan's funds in annuity contracts or face-amount certificates. E-file state return only If anyone other than a trustee holds them, however, the contracts or certificates must state they are not transferable. E-file state return only Other plan requirements. E-file state return only   For information on other important plan requirements, see Qualification Rules , earlier in this chapter. E-file state return only Minimum Funding Requirement In general, if your plan is a money purchase pension plan or a defined benefit plan, you must actually pay enough into the plan to satisfy the minimum funding standard for each year. E-file state return only Determining the amount needed to satisfy the minimum funding standard for a defined benefit plan is complicated, and you should seek professional help in order to meet these contribution requirements. E-file state return only For information on this funding requirement, see section 412 and its regulations. E-file state return only Quarterly installments of required contributions. E-file state return only   If your plan is a defined benefit plan subject to the minimum funding requirements, you generally must make quarterly installment payments of the required contributions. E-file state return only If you do not pay the full installments timely, you may have to pay interest on any underpayment for the period of the underpayment. E-file state return only Due dates. E-file state return only   The due dates for the installments are 15 days after the end of each quarter. E-file state return only For a calendar-year plan, the installments are due April 15, July 15, October 15, and January 15 (of the following year). E-file state return only Installment percentage. E-file state return only   Each quarterly installment must be 25% of the required annual payment. E-file state return only Extended period for making contributions. E-file state return only   Additional contributions required to satisfy the minimum funding requirement for a plan year will be considered timely if made by 8½ months after the end of that year. E-file state return only Contributions A qualified plan is generally funded by your contributions. E-file state return only However, employees participating in the plan may be permitted to make contributions, and you may be permitted to make contributions on your own behalf. E-file state return only See Employee Contributions and Elective Deferrals later. E-file state return only Contributions deadline. E-file state return only   You can make deductible contributions for a tax year up to the due date of your return (plus extensions) for that year. E-file state return only Self-employed individual. E-file state return only   You can make contributions on behalf of yourself only if you have net earnings (compensation) from self-employment in the trade or business for which the plan was set up. E-file state return only Your net earnings must be from your personal services, not from your investments. E-file state return only If you have a net loss from self-employment, you cannot make contributions for yourself for the year, even if you can contribute for common-law employees based on their compensation. E-file state return only Employer Contributions There are certain limits on the contributions and other annual additions you can make each year for plan participants. E-file state return only There are also limits on the amount you can deduct. E-file state return only See Deduction Limits , later. E-file state return only Limits on Contributions and Benefits Your plan must provide that contributions or benefits cannot exceed certain limits. E-file state return only The limits differ depending on whether your plan is a defined contribution plan or a defined benefit plan. E-file state return only Defined benefit plan. E-file state return only   For 2013, the annual benefit for a participant under a defined benefit plan cannot exceed the lesser of the following amounts. E-file state return only 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. E-file state return only $205,000 ($210,000 for 2014). E-file state return only Defined contribution plan. E-file state return only   For 2013, a defined contribution plan's annual contributions and other additions (excluding earnings) to the account of a participant cannot exceed the lesser of the following amounts. E-file state return only 100% of the participant's compensation. E-file state return only $51,000 ($52,000 for 2014). E-file state return only   Catch-up contributions (discussed later under Limit on Elective Deferrals) are not subject to the above limit. E-file state return only Employee Contributions Participants may be permitted to make nondeductible contributions to a plan in addition to your contributions. E-file state return only Even though these employee contributions are not deductible, the earnings on them are tax free until distributed in later years. E-file state return only Also, these contributions must satisfy the actual contribution percentage (ACP) test of section 401(m)(2), a nondiscrimination test that applies to employee contributions and matching contributions. E-file state return only See Regulations sections 1. E-file state return only 401(k)-2 and 1. E-file state return only 401(m)-2 for further guidance relating to the nondiscrimination rules under sections 401(k) and 401(m). E-file state return only When Contributions Are Considered Made You generally apply your plan contributions to the year in which you make them. E-file state return only But you can apply them to the previous year if all the following requirements are met. E-file state return only You make them by the due date of your tax return for the previous year (plus extensions). E-file state return only The plan was established by the end of the previous year. E-file state return only The plan treats the contributions as though it had received them on the last day of the previous year. E-file state return only You do either of the following. E-file state return only You specify in writing to the plan administrator or trustee that the contributions apply to the previous year. E-file state return only You deduct the contributions on your tax return for the previous year. E-file state return only A partnership shows contributions for partners on Form 1065. E-file state return only Employer's promissory note. E-file state return only   Your promissory note made out to the plan is not a payment that qualifies for the deduction. E-file state return only Also, issuing this note is a prohibited transaction subject to tax. E-file state return only See Prohibited Transactions , later. E-file state return only Employer Deduction You can usually deduct, subject to limits, contributions you make to a qualified plan, including those made for your own retirement. E-file state return only The contributions (and earnings and gains on them) are generally tax free until distributed by the plan. E-file state return only Deduction Limits The deduction limit for your contributions to a qualified plan depends on the kind of plan you have. E-file state return only Defined contribution plans. E-file state return only   The deduction for contributions to a defined contribution plan (profit-sharing plan or money purchase pension plan) cannot be more than 25% of the compensation paid (or accrued) during the year to your eligible employees participating in the plan. E-file state return only If you are self-employed, you must reduce this limit in figuring the deduction for contributions you make for your own account. E-file state return only See Deduction Limit for Self-Employed Individuals , later. E-file state return only   When figuring the deduction limit, the following rules apply. E-file state return only Elective deferrals (discussed later) are not subject to the limit. E-file state return only Compensation includes elective deferrals. E-file state return only The maximum compensation that can be taken into account for each employee in 2013 is $255,000 ($260,000 for 2014). E-file state return only Defined benefit plans. E-file state return only   The deduction for contributions to a defined benefit plan is based on actuarial assumptions and computations. E-file state return only Consequently, an actuary must figure your deduction limit. E-file state return only    In figuring the deduction for contributions, you cannot take into account any contributions or benefits that are more than the limits discussed earlier under Limits on Contributions and Benefits, earlier. E-file state return only Table 4–1. E-file state return only Carryover of Excess Contributions Illustrated—Profit-Sharing Plan (000's omitted) Year Participants' compensation Participants' share of required contribution (10% of annual profit) Deductible  limit for current year (25% of compensation) Contribution Excess contribution carryover used1 Total  deduction including carryovers Excess contribution carryover available at end of year 2010 $1,000 $100 $250 $100 $ 0 $100 $ 0 2011 400 165 100 165 0 100 65 2012 500 100 125 100 25 125 40 2013 600 100 150 100 40 140 0  1There were no carryovers from years before 2010. E-file state return only Deduction Limit for Self-Employed Individuals If you make contributions for yourself, you need to make a special computation to figure your maximum deduction for these contributions. E-file state return only Compensation is your net earnings from self-employment, defined in chapter 1. E-file state return only This definition takes into account both the following items. E-file state return only The deduction for the deductible part of your self-employment tax. E-file state return only The deduction for contributions on your behalf to the plan. E-file state return only The deduction for your own contributions and your net earnings depend on each other. E-file state return only For this reason, you determine the deduction for your own contributions indirectly by reducing the contribution rate called for in your plan. E-file state return only To do this, use either the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed in chapter 5. E-file state return only Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. E-file state return only Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. E-file state return only For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120, or Form 1120S. E-file state return only Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. E-file state return only (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you get from the partnership. E-file state return only ) Carryover of Excess Contributions If you contribute more to the plans than you can deduct for the year, you can carry over and deduct the difference in later years, combined with your contributions for those years. E-file state return only Your combined deduction in a later year is limited to 25% of the participating employees' compensation for that year. E-file state return only For purposes of this limit, a SEP is treated as a profit-sharing (defined contribution) plan. E-file state return only However, this percentage limit must be reduced to figure your maximum deduction for contributions you make for yourself. E-file state return only See Deduction Limit for Self-Employed Individuals, earlier. E-file state return only The amount you carry over and deduct may be subject to the excise tax discussed next. E-file state return only Table 4-1, earlier, illustrates the carryover of excess contributions to a profit-sharing plan. E-file state return only Excise Tax for Nondeductible (Excess) Contributions If you contribute more than your deduction limit to a retirement plan, you have made nondeductible contributions and you may be liable for an excise tax. E-file state return only In general, a 10% excise tax applies to nondeductible contributions made to qualified pension and profit-sharing plans and to SEPs. E-file state return only Special rule for self-employed individuals. E-file state return only   The 10% excise tax does not apply to any contribution made to meet the minimum funding requirements in a money purchase pension plan or a defined benefit plan. E-file state return only Even if that contribution is more than your earned income from the trade or business for which the plan is set up, the difference is not subject to this excise tax. E-file state return only See Minimum Funding Requirement , earlier. E-file state return only Reporting the tax. E-file state return only   You must report the tax on your nondeductible contributions on Form 5330. E-file state return only Form 5330 includes a computation of the tax. E-file state return only See the separate instructions for completing the form. E-file state return only Elective Deferrals (401(k) Plans) Your qualified plan can include a cash or deferred arrangement under which participants can choose to have you contribute part of their before-tax compensation to the plan rather than receive the compensation in cash. E-file state return only A plan with this type of arrangement is popularly known as a “401(k) plan. E-file state return only ” (As a self-employed individual participating in the plan, you can contribute part of your before-tax net earnings from the business. E-file state return only ) This contribution is called an “elective deferral” because participants choose (elect) to defer receipt of the money. E-file state return only In general, a qualified plan can include a cash or deferred arrangement only if the qualified plan is one of the following plans. E-file state return only A profit-sharing plan. E-file state return only A money purchase pension plan in existence on June 27, 1974, that included a salary reduction arrangement on that date. E-file state return only Partnership. E-file state return only   A partnership can have a 401(k) plan. E-file state return only Restriction on conditions of participation. E-file state return only   The plan cannot require, as a condition of participation, that an employee complete more than 1 year of service. E-file state return only Matching contributions. E-file state return only   If your plan permits, you can make matching contributions for an employee who makes an elective deferral to your 401(k) plan. E-file state return only For example, the plan might provide that you will contribute 50 cents for each dollar your participating employees choose to defer under your 401(k) plan. E-file state return only Matching contributions are generally subject to the ACP test discussed earlier under Employee Contributions. E-file state return only Nonelective contributions. E-file state return only   You can also make contributions (other than matching contributions) for your participating employees without giving them the choice to take cash instead. E-file state return only These are called nonelective contributions. E-file state return only Employee compensation limit. E-file state return only   No more than $255,000 of the employee's compensation can be taken into account when figuring contributions other than elective deferrals in 2013. E-file state return only This limit is $260,000 in 2014. E-file state return only SIMPLE 401(k) plan. E-file state return only   If you had 100 or fewer employees who earned $5,000 or more in compensation during the preceding year, you may be able to set up a SIMPLE 401(k) plan. E-file state return only A SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy plan requirements discussed earlier under Qualification Rules. E-file state return only For details about SIMPLE 401(k) plans, see SIMPLE 401(k) Plan in chapter 3. E-file state return only Distributions. E-file state return only   Certain rules apply to distributions from 401(k) plans. E-file state return only See Distributions From 401(k) Plans , later. E-file state return only Limit on Elective Deferrals There is a limit on the amount an employee can defer each year under these plans. E-file state return only This limit applies without regard to community property laws. E-file state return only Your plan must provide that your employees cannot defer more than the limit that applies for a particular year. E-file state return only For 2013 and 2014, the basic limit on elective deferrals is $17,500. E-file state return only This limit applies to all salary reduction contributions and elective deferrals. E-file state return only If, in conjunction with other plans, the deferral limit is exceeded, the difference is included in the employee's gross income. E-file state return only Catch-up contributions. E-file state return only   A 401(k) plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. E-file state return only The catch-up contribution limit for 2013 and 2014 is $5,500. E-file state return only Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the $17,500 limit, the actual deferral percentage (ADP) test limit of section 401(k)(3), or the plan limit (if any). E-file state return only However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. E-file state return only The catch-up contribution limit. E-file state return only The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. E-file state return only Treatment of contributions. E-file state return only   Your contributions to your own 401(k) plan are generally deductible by you for the year they are contributed to the plan. E-file state return only Matching or nonelective contributions made to the plan are also deductible by you in the year of contribution. E-file state return only Your employees' elective deferrals other than designated Roth contributions are tax free until distributed from the plan. E-file state return only Elective deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. E-file state return only Forfeiture. E-file state return only   Employees have a nonforfeitable right at all times to their accrued benefit attributable to elective deferrals. E-file state return only Reporting on Form W-2. E-file state return only   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. E-file state return only You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. E-file state return only You must also include them in box 12. E-file state return only Mark the “Retirement plan” checkbox in box 13. E-file state return only For more information, see the Form W-2 instructions. E-file state return only Automatic Enrollment Your 401(k) plan can have an automatic enrollment feature. E-file state return only Under this feature, you can automatically reduce an employee's pay by a fixed percentage and contribute that amount to the 401(k) plan on his or her behalf unless the employee affirmatively chooses not to have his or her pay reduced or chooses to have it reduced by a different percentage. E-file state return only These contributions are elective deferrals. E-file state return only An automatic enrollment feature will encourage employees' saving for retirement and will help your plan pass nondiscrimination testing (if applicable). E-file state return only For more information, see Publication 4674, Automatic Enrollment 401(k) Plans for Small Businesses. E-file state return only Eligible automatic contribution arrangement. E-file state return only   Under an eligible automatic contribution arrangement (EACA), a participant is treated as having elected to have the employer make contributions in an amount equal to a uniform percentage of compensation. E-file state return only This automatic election will remain in place until the participant specifically elects not to have such deferral percentage made (or elects a different percentage). E-file state return only There is no required deferral percentage. E-file state return only Withdrawals. E-file state return only   Under an EACA, you may allow participants to withdraw their automatic contributions to the plan if certain conditions are met. E-file state return only The participant must elect the withdrawal no later than 90 days after the date of the first elective contributions under the EACA. E-file state return only The participant must withdraw the entire amount of EACA default contributions, including any earnings thereon. E-file state return only   If the plan allows withdrawals under the EACA, the amount of the withdrawal other than the amount of any designated Roth contributions must be included in the employee's gross income for the tax year in which the distribution is made. E-file state return only The additional 10% tax on early distributions will not apply to the distribution. E-file state return only Notice requirement. E-file state return only   Under an EACA, employees must be given written notice of the terms of the EACA within a reasonable period of time before each plan year. E-file state return only The notice must be written in a manner calculated to be understood by the average employee and be sufficiently accurate and comprehensive in order to apprise the employee of his or her rights and obligations under the EACA. E-file state return only The notice must include an explanation of the employee's right to elect not to have elective contributions made on his or her behalf, or to elect a different percentage, and the employee must be given a reasonable period of time after receipt of the notice before the first elective contribution is made. E-file state return only The notice also must explain how contributions will be invested in the absence of an investment election by the employee. E-file state return only Qualified automatic contribution arrangement. E-file state return only    A qualified automatic contribution arrangement (QACA) is a type of safe harbor plan. E-file state return only It contains an automatic enrollment feature, and mandatory employer contributions are required. E-file state return only If your plan includes a QACA, it will not be subject to the ADP test (discussed later) nor the top-heavy requirements (discussed earlier). E-file state return only Additionally, your plan will not be subject to the actual contribution percentage (ACP) test if certain additional requirements are met. E-file state return only Under a QACA, each employee who is eligible to participate in the plan will be treated as having elected to make elective deferral contributions equal to a certain default percentage of compensation. E-file state return only In order to not have default elective deferrals made, an employee must make an affirmative election specifying a deferral percentage (including zero, if desired). E-file state return only If an employee does not make an affirmative election, the default deferral percentage must meet the following conditions. E-file state return only It must be applied uniformly. E-file state return only It must not exceed 10%. E-file state return only It must be at least 3% in the first plan year it applies to an employee and through the end of the following year. E-file state return only It must increase to at least 4% in the following plan year. E-file state return only It must increase to at least 5% in the following plan year. E-file state return only It must increase to at least 6% in subsequent plan years. E-file state return only Matching or nonelective contributions. E-file state return only   Under the terms of the QACA, you must make either matching or nonelective contributions according to the following terms. E-file state return only Matching contributions. E-file state return only You must make matching contributions on behalf of each non-highly compensated employee in the following amounts. E-file state return only An amount equal to 100% of elective deferrals, up to 1% of compensation. E-file state return only An amount equal to 50% of elective deferrals, from 1% up to 6% of compensation. E-file state return only Other formulas may be used as long as they are at least as favorable to non-highly compensated employees. E-file state return only The rate of matching contributions for highly compensated employees, including yourself, must not exceed the rates for non-highly compensated employees. E-file state return only Nonelective contributions. E-file state return only You must make nonelective contributions on behalf of every non-highly compensated employee eligible to participate in the plan, regardless of whether they elected to participate, in an amount equal to at least 3% of their compensation. E-file state return only Vesting requirements. E-file state return only   All accrued benefits attributed to matching or nonelective contributions under the QACA must be 100% vested for all employees who complete 2 years of service. E-file state return only These contributions are subject to special withdrawal restrictions, discussed later. E-file state return only Notice requirements. E-file state return only   Each employee eligible to participate in the QACA must receive written notice of their rights and obligations under the QACA, within a reasonable period before each plan year. E-file state return only The notice must be written in a manner calculated to be understood by the average employee, and it must be accurate and comprehensive. E-file state return only The notice must explain their right to elect not to have elective contributions made on their behalf, or to have contributions made at a different percentage than the default percentage. E-file state return only Additionally, the notice must explain how contributions will be invested in the absence of any investment election by the employee. E-file state return only The employee must have a reasonable period of time after receiving the notice to make such contribution and investment elections prior to the first contributions under the QACA. E-file state return only Treatment of Excess Deferrals If the total of an employee's deferrals is more than the limit for 2013, the employee can have the difference (called an excess deferral) paid out of any of the plans that permit these distributions. E-file state return only He or she must notify the plan by April 15, 2014 (or an earlier date specified in the plan), of the amount to be paid from each plan. E-file state return only The plan must then pay the employee that amount, plus earnings on the amount through the end of 2013, by April 15, 2014. E-file state return only Excess withdrawn by April 15. E-file state return only   If the employee takes out the excess deferral by April 15, 2014, it is not reported again by including it in the employee's gross income for 2014. E-file state return only However, any income earned in 2013 on the excess deferral taken out is taxable in the tax year in which it is taken out. E-file state return only The distribution is not subject to the additional 10% tax on early distributions. E-file state return only   If the employee takes out part of the excess deferral and the income on it, the distribution is treated as made proportionately from the excess deferral and the income. E-file state return only   Even if the employee takes out the excess deferral by April 15, the amount will be considered for purposes of nondiscrimination testing requirements of the plan, unless the distributed amount is for a non-highly compensated employee who participates in only one employer's 401(k) plan or plans. E-file state return only Excess not withdrawn by April 15. E-file state return only   If the employee does not take out the excess deferral by April 15, 2014, the excess, though taxable in 2013, is not included in the employee's cost basis in figuring the taxable amount of any eventual distributions under the plan. E-file state return only In effect, an excess deferral left in the plan is taxed twice, once when contributed and again when distributed. E-file state return only Also, if the employee's excess deferral is allowed to stay in the plan and the employee participates in no other employer's plan, the plan can be disqualified. E-file state return only Reporting corrective distributions on Form 1099-R. E-file state return only   Report corrective distributions of excess deferrals (including any earnings) on Form 1099-R. E-file state return only For specific information about reporting corrective distributions, see the Instructions for Forms 1099-R and 5498. E-file state return only Tax on excess contributions of highly compensated employees. E-file state return only   The law provides tests to detect discrimination in a plan. E-file state return only If tests, such as the actual deferral percentage test (ADP test) (see section 401(k)(3)) and the actual contribution percentage test (ACP test) (see section 401(m)(2)), show that contributions for highly compensated employees are more than the test limits for these contributions, the employer may have to pay a 10% excise tax. E-file state return only Report the tax on Form 5330. E-file state return only The ADP test does not apply to a safe harbor 401(k) plan (discussed next) nor to a QACA. E-file state return only Also, the ACP test does not apply to these plans if certain additional requirements are met. E-file state return only   The tax for the year is 10% of the excess contributions for the plan year ending in your tax year. E-file state return only Excess contributions are elective deferrals, employee contributions, or employer matching or nonelective contributions that are more than the amount permitted under the ADP test or the ACP test. E-file state return only   See Regulations sections 1. E-file state return only 401(k)-2 and 1. E-file state return only 401(m)-2 for further guidance relating to the nondiscrimination rules under sections 401(k) and 401(m). E-file state return only    If the plan fails the ADP or ACP testing, and the failure is not corrected by the end of the next plan year, the plan can be disqualified. E-file state return only Safe harbor 401(k) plan. E-file state return only If you meet the requirements for a safe harbor 401(k) plan, you do not have to satisfy the ADP test, nor the ACP test, if certain additional requirements are met. E-file state return only For your plan to be a safe harbor plan, you must meet the following conditions. E-file state return only Matching or nonelective contributions. E-file state return only You must make matching or nonelective contributions according to one of the following formulas. E-file state return only Matching contributions. E-file state return only You must make matching contributions according to the following rules. E-file state return only You must contribute an amount equal to 100% of each non-highly compensated employee's elective deferrals, up to 3% of compensation. E-file state return only You must contribute an amount equal to 50% of each non-highly compensated employee's elective deferrals, from 3% up to 5% of compensation. E-file state return only The rate of matching contributions for highly compensated employees, including yourself, must not exceed the rates for non-highly compensated employees. E-file state return only Nonelective contributions. E-file state return only You must make nonelective contributions, without regard to whether the employee made elective deferrals, on behalf of all non-highly compensated employees eligible to participate in the plan, equal to at least 3% of the employee's compensation. E-file state return only These mandatory matching and nonelective contributions must be immediately 100% vested and are subject to special withdrawal restrictions. E-file state return only Notice requirement. E-file state return only You must give eligible employees written notice of their rights and obligations with regard to contributions under the plan, within a reasonable period before the plan year. E-file state return only The other requirements for a 401(k) plan, including withdrawal and vesting rules, must also be met for your plan to qualify as a safe harbor 401(k) plan. E-file state return only Qualified Roth Contribution Program Under this program an eligible employee can designate all or a portion of his or her elective deferrals as after-tax Roth contributions. E-file state return only Elective deferrals designated as Roth contributions must be maintained in a separate Roth account. E-file state return only However, unlike other elective deferrals, designated Roth contributions are not excluded from employees' gross income, but qualified distributions from a Roth account are excluded from employees' gross income. E-file state return only Elective Deferrals Under a qualified Roth contribution program, the amount of elective deferrals that an employee may designate as a Roth contribution is limited to the maximum amount of elective deferrals excludable from gross income for the year (for 2013 and 2014, $17,500 if under age 50 and $23,000 if age 50 or over) less the total amount of the employee's elective deferrals not designated as Roth contributions. E-file state return only Designated Roth deferrals are treated the same as pre-tax elective deferrals for most purposes, including: The annual individual elective deferral limit (total of all designated Roth contributions and traditional, pre-tax elective deferrals) of $17,500 for 2013 and 2014, with an additional $5,500 if age 50 or over for 2013 and 2014, Determining the maximum employee and employer annual contributions of the lesser of 100% of compensation or $51,000 for 2013 ($52,000 for 2014), Nondiscrimination testing, Required distributions, and Elective deferrals not taken into account for purposes of deduction limits. E-file state return only Qualified Distributions A qualified distribution is a distribution that is made after the employee's nonexclusion period and: On or after the employee attains age   59½, On account of the employee's being disabled, or On or after the employee's death. E-file state return only An employee's nonexclusion period for a plan is the 5-tax-year period beginning with the earlier of the following tax years. E-file state return only The first tax year in which the employee made a contribution to his or her Roth account in the plan, or If a rollover contribution was made to the employee's designated Roth account from a designated Roth account previously established for the employee under another plan, then the first tax year the employee made a designated Roth contribution to the previously established account. E-file state return only Rollover. E-file state return only   Beginning September 28, 2010, a rollover from another account can be made to a designated Roth account in the same plan. E-file state return only For additional information on these in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. E-file state return only R. E-file state return only B. E-file state return only 872, available at www. E-file state return only irs. E-file state return only gov/irb/2010-51_IRB/ar11. E-file state return only html, and Notice 2013-74. E-file state return only A distribution from a designated Roth account can only be rolled over to another designated Roth account or a Roth IRA. E-file state return only Rollover amounts do not apply toward the annual deferral limit. E-file state return only Reporting Requirements You must report a contribution to a Roth account on Form W-2 and a distribution from a Roth account on Form 1099-R. E-file state return only See the Form W-2 and 1099-R instructions for detailed information. E-file state return only Distributions Amounts paid to plan participants from a qualified plan are called distributions. E-file state return only Distributions may be nonperiodic, such as lump-sum distributions, or periodic, such as annuity payments. E-file state return only Also, certain loans may be treated as distributions. E-file state return only See Loans Treated as Distributions in Publication 575. E-file state return only Required Distributions A qualified plan must provide that each participant will either: Receive his or her entire interest (benefits) in the plan by the required beginning date (defined later), or Begin receiving regular periodic distributions by the required beginning date in annual amounts calculated to distribute the participant's entire interest (benefits) over his or her life expectancy or over the joint life expectancy of the participant and the designated beneficiary (or over a shorter period). E-file state return only These distribution rules apply individually to each qualified plan. E-file state return only You cannot satisfy the requirement for one plan by taking a distribution from another. E-file state return only The plan must provide that these rules override any inconsistent distribution options previously offered. E-file state return only Minimum distribution. E-file state return only   If the account balance of a qualified plan participant is to be distributed (other than as an annuity), the plan administrator must figure the minimum amount required to be distributed each distribution calendar year. E-file state return only This minimum is figured by dividing the account balance by the applicable life expectancy. E-file state return only The plan administrator can use the life expectancy tables in Appendix C of Publication 590 for this purpose. E-file state return only For more information on figuring the minimum distribution, see Tax on Excess Accumulation in Publication 575. E-file state return only Required beginning date. E-file state return only   Generally, each participant must receive his or her entire benefits in the plan or begin to receive periodic distributions of benefits from the plan by the required beginning date. E-file state return only   A participant must begin to receive distributions from his or her qualified retirement plan by April 1 of the first year after the later of the following years. E-file state return only Calendar year in which he or she reaches age 70½. E-file state return only Calendar year in which he or she retires from employment with the employer maintaining the plan. E-file state return only However, the plan may require the participant to begin receiving distributions by April 1 of the year after the participant reaches age 70½ even if the participant has not retired. E-file state return only   If the participant is a 5% owner of the employer maintaining the plan, the participant must begin receiving distributions by April 1 of the first year after the calendar year in which the participant reached age 70½. E-file state return only For more information, see Tax on Excess Accumulation in Publication 575. E-file state return only Distributions after the starting year. E-file state return only   The distribution required to be made by April 1 is treated as a distribution for the starting year. E-file state return only (The starting year is the year in which the participant meets (1) or (2) above, whichever applies. E-file state return only ) After the starting year, the participant must receive the required distribution for each year by December 31 of that year. E-file state return only If no distribution is made in the starting year, required distributions for 2 years must be made in the next year (one by April 1 and one by December 31). E-file state return only Distributions after participant's death. E-file state return only   See Publication 575 for the special rules covering distributions made after the death of a participant. E-file state return only Distributions From 401(k) Plans Generally, distributions cannot be made until one of the following occurs. E-file state return only The employee retires, dies, becomes disabled, or otherwise severs employment. E-file state return only The plan ends and no other defined contribution plan is established or continued. E-file state return only In the case of a 401(k) plan that is part of a profit-sharing plan, the employee reaches age 59½ or suffers financial hardship. E-file state return only For the rules on hardship distributions, including the limits on them, see Regulations section 1. E-file state return only 401(k)-1(d). E-file state return only The employee becomes eligible for a qualified reservist distribution (defined next). E-file state return only Certain distributions listed above may be subject to the tax on early distributions discussed later. E-file state return only Qualified reservist distributions. E-file state return only   A qualified reservist distribution is a distribution from an IRA or an elective deferral account made after September 11, 2001, to a military reservist or a member of the National Guard who has been called to active duty for at least 180 days or for an indefinite period. E-file state return only All or part of a qualified reservist distribution can be recontributed to an IRA. E-file state return only The additional 10% tax on early distributions does not apply to a qualified reservist distribution. E-file state return only Tax Treatment of Distributions Distributions from a qualified plan minus a prorated part of any cost basis are subject to income tax in the year they are distributed. E-file state return only Since most recipients have no cost basis, a distribution is generally fully taxable. E-file state return only An exception is a distribution that is properly rolled over as discussed under Rollover, next. E-file state return only The tax treatment of distributions depends on whether they are made periodically over several years or life (periodic distributions) or are nonperiodic distributions. E-file state return only See Taxation of Periodic Payments and Taxation of Nonperiodic Payments in Publication 575 for a detailed description of how distributions are taxed, including the 10-year tax option or capital gain treatment of a lump-sum distribution. E-file state return only Note. E-file state return only A recipient of a distribution from a designated Roth account will have a cost basis since designated Roth contributions are made on an after-tax basis. E-file state return only Also, a distribution from a designated Roth account is entirely tax-free if certain conditions are met. E-file state return only See Qualified distributions under Qualified Roth Contribution Program, earlier. E-file state return only Rollover. E-file state return only   The recipient of an eligible rollover distribution from a qualified plan can defer the tax on it by rolling it over into a traditional IRA or another eligible retirement plan. E-file state return only However, it may be subject to withholding as discussed under Withholding requirement, later. E-file state return only A rollover can also be made to a Roth IRA, in which case, any previously untaxed amounts are includible in gross income unless the rollover is from a designated Roth account. E-file state return only Eligible rollover distribution. E-file state return only   This is a distribution of all or any part of an employee's balance in a qualified retirement plan that is not any of the following. E-file state return only A required minimum distribution. E-file state return only See Required Distributions , earlier. E-file state return only Any of a series of substantially equal payments made at least once a year over any of the following periods. E-file state return only The employee's life or life expectancy. E-file state return only The joint lives or life expectancies of the employee and beneficiary. E-file state return only A period of 10 years or longer. E-file state return only A hardship distribution. E-file state return only The portion of a distribution that represents the return of an employee's nondeductible contributions to the plan. E-file state return only See Employee Contributions , earlier, and Rollover of nontaxable amounts, next. E-file state return only Loans treated as distributions. E-file state return only Dividends on employer securities. E-file state return only The cost of any life insurance coverage provided under a qualified retirement plan. E-file state return only Similar items designated by the IRS in published guidance. E-file state return only See, for example, the Instructions for Forms 1099-R and 5498. E-file state return only Rollover of nontaxable amounts. E-file state return only   You may be able to roll over the nontaxable part of a distribution to another qualified retirement plan or a section 403(b) plan, or to an IRA. E-file state return only If the rollover is to a qualified retirement plan or a section 403(b) plan that separately accounts for the taxable and nontaxable parts of the rollover, the transfer must be made through a direct (trustee-to-trustee) rollover. E-file state return only If the rollover is to an IRA, the transfer can be made by any rollover method. E-file state return only Note. E-file state return only A distribution from a designated Roth account can be rolled over to another designated Roth account or to a Roth IRA. E-file state return only If the rollover is to a Roth IRA, it can be rolled over by any rollover method, but if the rollover is to another designated Roth account, it must be rolled over directly (trustee-to-trustee). E-file state return only More information. E-file state return only   For more information about rollovers, see Rollovers in Pubs. E-file state return only 575 and 590. E-file state return only Withholding requirement. E-file state return only   If, during a year, a qualified plan pays to a participant one or more eligible rollover distributions (defined earlier) that are reasonably expected to total $200 or more, the payor must withhold 20% of the taxable portion of each distribution for federal income tax. E-file state return only Exceptions. E-file state return only   If, instead of having the distribution paid to him or her, the participant chooses to have the plan pay it directly to an IRA or another eligible retirement plan (a direct rollover), no withholding is required. E-file state return only   If the distribution is not an eligible rollover distribution, defined earlier, the 20% withholding requirement does not apply. E-file state return only Other withholding rules apply to distributions that are not eligible rollover distributions, such as long-term periodic distributions and required distributions (periodic or nonperiodic). E-file state return only However, the participant can choose not to have tax withheld from these distributions. E-file state return only If the participant does not make this choice, the following withholding rules apply. E-file state return only For periodic distributions, withholding is based on their treatment as wages. E-file state return only For nonperiodic distributions, 10% of the taxable part is withheld. E-file state return only Estimated tax payments. E-file state return only   If no income tax is withheld or not enough tax is withheld, the recipient of a distribution may have to make estimated tax payments. E-file state return only For more information, see Withholding Tax and Estimated Tax in Publication 575. E-file state return only Section 402(f) Notice. E-file state return only   If a distribution is an eligible rollover distribution, as defined earlier, you must provide a written notice to the recipient that explains the following rules regarding such distributions. E-file state return only That the distribution may be directly transferred to an eligible retirement plan and information about which distributions are eligible for this direct transfer. E-file state return only That tax will be withheld from the distribution if it is not directly transferred to an eligible retirement plan. E-file state return only That the distribution will not be subject to tax if transferred to an eligible retirement plan within 60 days after the date the recipient receives the distribution. E-file state return only Certain other rules that may be applicable. E-file state return only   Notice 2009-68, 2009-39 I. E-file state return only R. E-file state return only B. E-file state return only 423, available at www. E-file state return only irs. E-file state return only gov/irb/2009-39_IRB/ar14. E-file state return only html, contains two updated safe harbor section 402(f) notices that plan administrators may provide recipients of eligible rollover distributions. E-file state return only If the plan allows in-plan Roth rollovers, the 402(f) notice must be amended to reflect this. E-file state return only Notice 2010-84 contains guidance on how to modify a 402(f) notice for in-plan Roth rollovers. E-file state return only Timing of notice. E-file state return only   The notice generally must be provided no less than 30 days and no more than 180 days before the date of a distribution. E-file state return only Method of notice. E-file state return only   The written notice must be provided individually to each distributee of an eligible rollover distribution. E-file state return only Posting of the notice is not sufficient. E-file state return only However, the written requirement may be satisfied through the use of electronic media if certain additional conditions are met. E-file state return only See Regulations section 1. E-file state return only 401(a)-21. E-file state return only Tax on failure to give notice. E-file state return only   Failure to give a 402(f) notice will result in a tax of $100 for each failure, with a total not exceeding $50,000 per calendar year. E-file state return only The tax will not be imposed if it is shown that such failure is due to reasonable cause and not to willful neglect. E-file state return only Tax on Early Distributions If a distribution is made to an employee under the plan before he or she reaches age 59½, the employee may have to pay a 10% additional tax on the distribution. E-file state return only This tax applies to the amount received that the employee must include in income. E-file state return only Exceptions. E-file state return only   The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances. E-file state return only Made to a beneficiary (or to the estate of the employee) on or after the death of the employee. E-file state return only Made due to the employee having a qualifying disability. E-file state return only Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the employee or the joint lives or life expectancies of the employee and his or her designated beneficiary. E-file state return only (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period. E-file state return only ) Made to an employee after separation from service if the separation occurred during o