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State Income Tax Efile

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State Income Tax Efile

State income tax efile Index A Assistance (see Tax help) C Cancellation of indebtedness, Exclusion of Certain Cancellations of Indebtedness by Reason of the Severe Storms, Tornadoes, or Flooding Casualty and theft losses, Casualty and Theft Losses Charitable contributions, Temporary Suspension of Limits on Charitable Contributions Child tax credit, Earned Income Credit and Child Tax Credit Clean-up costs, Demolition and Clean-up Costs Copy of tax return, request for, Request for copy of tax return. State income tax efile Credits: Child tax, Earned Income Credit and Child Tax Credit Earned income, Earned Income Credit and Child Tax Credit Education, Education Credits Employee retention, Employee Retention Credit Employer housing, Employer Housing Credit and Exclusion Rehabilitation tax, Increase in Rehabilitation Tax Credit D Demolition costs, Demolition and Clean-up Costs Distributions: Home purchase or construction, Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Qualified disaster recovery assistance, Qualified disaster recovery assistance distribution. State income tax efile Repayment of, Repayment of Qualified Disaster Recovery Assistance Distributions Taxation of, Taxation of Qualified Disaster Recovery Assistance Distributions E Earned income credit, Earned Income Credit and Child Tax Credit Education credits, Education Credits Eligible retirement plan, Eligible retirement plan. State income tax efile Employee retention credit, Employee Retention Credit Employer housing credit, Employer Housing Credit and Exclusion Exemption, additional for housing, Additional Exemption for Housing Individuals Displaced by the Severe Storms, Tornadoes, or Flooding F Federal mortgage subsidy, recapture of, Recapture of Federal Mortgage Subsidy Free tax services, How To Get Tax Help H Help (see Tax help) Hope credit (see Education credits) I Involuntary conversion (see Replacement period for nonrecognition of gain) IRAs and other retirement plans, IRAs and Other Retirement Plans L Lifetime learning credit (see Education credits) M Mileage reimbursements, charitable volunteers, Mileage Reimbursements to Charitable Volunteers More information (see Tax help) N Net operating losses, Net Operating Losses P Publications (see Tax help) Q Qualified disaster recovery assistance distribution, Qualified disaster recovery assistance distribution. State income tax efile Qualified disaster recovery assistance loss, Qualified disaster recovery assistance loss. State income tax efile R Rehabilitation tax credit, Increase in Rehabilitation Tax Credit Relocation, temporary, Tax Relief for Temporary Relocation Replacement period for nonrecognition of gain, Replacement Period for Nonrecognition of Gain Retirement plan, eligible, Eligible retirement plan. State income tax efile Retirement plans, IRAs and Other Retirement Plans S Standard mileage rate, charitable use, Standard Mileage Rate for Charitable Use of Vehicles T Tax help, How To Get Tax Help Tax return: Request for copy, Request for copy of tax return. State income tax efile Request for transcript, Request for transcript of tax return. State income tax efile Taxpayer Advocate, Contacting your Taxpayer Advocate. State income tax efile Temporary relocation, Tax Relief for Temporary Relocation Theft losses, Casualty and Theft Losses Transcript of tax return, request for, Request for transcript of tax return. State income tax efile TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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New IRS Video Helps Same-Sex Couples; Joins Extensive IRS Library Of Online Tax Tips

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IRS YouTube Video:

Tax Information About Same-Sex Marriage: English / Spanish / ASL

IR-2014-22, March 6, 2014

WASHINGTON — The Internal Revenue Service released a new YouTube video designed to provide useful tax tips to married same-sex couples.

The video is the latest addition to an online  library featuring short IRS instructional videos covering  more than 100 topics ranging from tips for victims of identity theft to taking advantage of the new simplified home office deduction. These videos have been viewed more than seven million times.

The new video, less than two minutes long, is available in English, Spanish and American Sign Language and can be accessed via IRS.gov. It joins an array of online products, including answers to frequently-asked questions, designed to help same-sex couples file their federal income tax returns.

Following last summer’s Supreme Court decision invalidating a key provision of the Defense of Marriage Act, the IRS ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, are now treated as married for federal tax purposes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.

Visit IRS.gov to access these and other helpful tax resources.

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Page Last Reviewed or Updated: 07-Mar-2014

The State Income Tax Efile

State income tax efile 4. State income tax efile   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. State income tax efile Loan secured by benefits. State income tax efile Waiver of survivor benefits. State income tax efile Waiver of 30-day waiting period before annuity starting date. State income tax efile Involuntary cash-out of benefits not more than dollar limit. State income tax efile Exception for certain loans. State income tax efile Exception for QDRO. State income tax efile SIMPLE and safe harbor 401(k) plan exception. State income tax efile Setting Up a Qualified PlanAdopting a Written Plan Investing Plan Assets Minimum Funding RequirementDue dates. State income tax efile Installment percentage. State income tax efile Extended period for making contributions. State income tax efile 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. State income tax efile Caution: Form 5500-EZ not required. State income tax efile Form 5500. State income tax efile Electronic filing of Forms 5500 and 5500-SF. State income tax efile 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. State income tax efile dol. State income tax efile gov/ebsa/pdf/2013-5500. State income tax efile pdf www. State income tax efile dol. State income tax efile gov/ebsa/pdf/2013-5500-SF. State income tax efile pdf W-2 Wage and Tax Statement Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. State income tax efile 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. State income tax efile 1040 U. State income tax efile S. State income tax efile 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. State income tax efile 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. State income tax efile 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. State income tax efile R. State income tax efile 10 plans. State income tax efile A sole proprietor or a partnership can set up one of these plans. State income tax efile A common-law employee or a partner cannot set up one of these plans. State income tax efile The plans described here can also be set up and maintained by employers that are corporations. State income tax efile All the rules discussed here apply to corporations except where specifically limited to the self-employed. State income tax efile The plan must be for the exclusive benefit of employees or their beneficiaries. State income tax efile These qualified plans can include coverage for a self-employed individual. State income tax efile As an employer, you can usually deduct, subject to limits, contributions you make to a qualified plan, including those made for your own retirement. State income tax efile The contributions (and earnings and gains on them) are generally tax free until distributed by the plan. State income tax efile Kinds of Plans There are two basic kinds of qualified plans—defined contribution plans and defined benefit plans—and different rules apply to each. State income tax efile 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. State income tax efile Defined Contribution Plan A defined contribution plan provides an individual account for each participant in the plan. State income tax efile It provides benefits to a participant largely based on the amount contributed to that participant's account. State income tax efile Benefits are also affected by any income, expenses, gains, losses, and forfeitures of other accounts that may be allocated to an account. State income tax efile A defined contribution plan can be either a profit-sharing plan or a money purchase pension plan. State income tax efile Profit-sharing plan. State income tax efile   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). State income tax efile 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. State income tax efile An employer may even make no contribution to the plan for a given year. State income tax efile   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. State income tax efile   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). State income tax efile Money purchase pension plan. State income tax efile   Contributions to a money purchase pension plan are fixed and are not based on your business profits. State income tax efile 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. State income tax efile This applies even though the compensation of a self-employed individual as a participant is based on earned income derived from business profits. State income tax efile Defined Benefit Plan A defined benefit plan is any plan that is not a defined contribution plan. State income tax efile Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. State income tax efile Actuarial assumptions and computations are required to figure these contributions. State income tax efile Generally, you will need continuing professional help to have a defined benefit plan. State income tax efile Qualification Rules To qualify for the tax benefits available to qualified plans, a plan must meet certain requirements (qualification rules) of the tax law. State income tax efile 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. State income tax efile The following is a brief overview of important qualification rules that generally have not yet been discussed. State income tax efile It is not intended to be all-inclusive. State income tax efile See Setting Up a Qualified Plan , later. State income tax efile Generally, the following qualification rules also apply to a SIMPLE 401(k) retirement plan. State income tax efile 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. State income tax efile Plan assets must not be diverted. State income tax efile   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. State income tax efile As a general rule, the assets cannot be diverted to the employer. State income tax efile Minimum coverage requirement must be met. State income tax efile   To be a qualified plan, a defined benefit plan must benefit at least the lesser of the following. State income tax efile 50 employees, or The greater of: 40% of all employees, or Two employees. State income tax efile If there is only one employee, the plan must benefit that employee. State income tax efile Contributions or benefits must not discriminate. State income tax efile   Under the plan, contributions or benefits to be provided must not discriminate in favor of highly compensated employees. State income tax efile Contributions and benefits must not be more than certain limits. State income tax efile   Your plan must not provide for contributions or benefits that are more than certain limits. State income tax efile 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. State income tax efile These limits are discussed later in this chapter under Contributions. State income tax efile Minimum vesting standard must be met. State income tax efile   Your plan must satisfy certain requirements regarding when benefits vest. State income tax efile A benefit is vested (you have a fixed right to it) when it becomes nonforfeitable. State income tax efile A benefit is nonforfeitable if it cannot be lost upon the happening, or failure to happen, of any event. State income tax efile Special rules apply to forfeited benefit amounts. State income tax efile 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. State income tax efile   Forfeitures under a defined benefit plan cannot be used to increase the benefits any employee would otherwise receive under the plan. State income tax efile Forfeitures must be used instead to reduce employer contributions. State income tax efile Participation. State income tax efile   In general, an employee must be allowed to participate in your plan if he or she meets both the following requirements. State income tax efile Has reached age 21. State income tax efile 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). State income tax efile A plan cannot exclude an employee because he or she has reached a specified age. State income tax efile Leased employee. State income tax efile   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. State income tax efile These rules include those in all the following areas. State income tax efile Nondiscrimination in coverage, contributions, and benefits. State income tax efile Minimum age and service requirements. State income tax efile Vesting. State income tax efile Limits on contributions and benefits. State income tax efile Top-heavy plan requirements. State income tax efile Contributions or benefits provided by the leasing organization for services performed for you are treated as provided by you. State income tax efile Benefit payment must begin when required. State income tax efile   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. State income tax efile The plan year in which the participant reaches the earlier of age 65 or the normal retirement age specified in the plan. State income tax efile The plan year in which the 10th anniversary of the year in which the participant began participating in the plan occurs. State income tax efile The plan year in which the participant separates from service. State income tax efile Early retirement. State income tax efile   Your plan can provide for payment of retirement benefits before the normal retirement age. State income tax efile 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. State income tax efile Satisfies the service requirement for the early retirement benefit. State income tax efile Separates from service with a nonforfeitable right to an accrued benefit. State income tax efile The benefit, which may be actuarially reduced, is payable when the early retirement age requirement is met. State income tax efile Required minimum distributions. State income tax efile   Special rules require minimum annual distributions from qualified plans, generally beginning after age  70½. State income tax efile See Required Distributions , under Distributions, later. State income tax efile Survivor benefits. State income tax efile   Defined benefit and money purchase pension plans must provide automatic survivor benefits in both the following forms. State income tax efile A qualified joint and survivor annuity for a vested participant who does not die before the annuity starting date. State income tax efile A qualified pre-retirement survivor annuity for a vested participant who dies before the annuity starting date and who has a surviving spouse. State income tax efile   The automatic survivor benefit also applies to any participant under a profit-sharing plan unless all the following conditions are met. State income tax efile The participant does not choose benefits in the form of a life annuity. State income tax efile 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. State income tax efile The plan is not a direct or indirect transferee of a plan that must provide automatic survivor benefits. State income tax efile Loan secured by benefits. State income tax efile   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. State income tax efile Waiver of survivor benefits. State income tax efile   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. State income tax efile The plan also must allow the participant to withdraw the waiver. State income tax efile The spouse's consent must be witnessed by a plan representative or notary public. State income tax efile Waiver of 30-day waiting period before annuity starting date. State income tax efile    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. State income tax efile   The waiver is allowed only if the distribution begins more than 7 days after the written explanation is provided. State income tax efile Involuntary cash-out of benefits not more than dollar limit. State income tax efile   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. State income tax efile   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. State income tax efile 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. State income tax efile   Benefits attributable to rollover contributions and earnings on them can be ignored in determining the present value of these benefits. State income tax efile   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. State income tax efile A section 402(f) notice must be sent prior to an involuntary cash-out of an eligible rollover distribution. State income tax efile See Section 402(f) Notice under Distributions, later, for more details. State income tax efile Consolidation, merger, or transfer of assets or liabilities. State income tax efile   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. State income tax efile (if the plan had then terminated). State income tax efile Benefits must not be assigned or alienated. State income tax efile   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. State income tax efile Exception for certain loans. State income tax efile   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. State income tax efile A disqualified person is defined later in this chapter under Prohibited Transactions. State income tax efile Exception for QDRO. State income tax efile   Compliance with a QDRO (qualified domestic relations order) does not result in a prohibited assignment or alienation of benefits. State income tax efile   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. State income tax efile 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. State income tax efile No benefit reduction for social security increases. State income tax efile   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. State income tax efile This rule also applies to plans supplementing the benefits provided by other federal or state laws. State income tax efile Elective deferrals must be limited. State income tax efile   If your plan provides for elective deferrals, it must limit those deferrals to the amount in effect for that particular year. State income tax efile See Limit on Elective Deferrals later in this chapter. State income tax efile Top-heavy plan requirements. State income tax efile   A top-heavy plan is one that mainly favors partners, sole proprietors, and other key employees. State income tax efile   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. State income tax efile Additional requirements apply to a top-heavy plan primarily to provide minimum benefits or contributions for non-key employees covered by the plan. State income tax efile   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. State income tax efile These qualification requirements for top-heavy plans are explained in section 416 and its regulations. State income tax efile SIMPLE and safe harbor 401(k) plan exception. State income tax efile   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. State income tax efile QACAs (discussed later) also are not subject to top-heavy requirements. State income tax efile Setting Up a Qualified Plan There are two basic steps in setting up a qualified plan. State income tax efile First you adopt a written plan. State income tax efile Then you invest the plan assets. State income tax efile You, the employer, are responsible for setting up and maintaining the plan. State income tax efile If you are self-employed, it is not necessary to have employees besides yourself to sponsor and set up a qualified plan. State income tax efile If you have employees, see Participation, under Qualification Rules, earlier. State income tax efile Set-up deadline. State income tax efile   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). State income tax efile Credit for startup costs. State income tax efile   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. State income tax efile For more information, see Credit for startup costs under Reminders, earlier. State income tax efile Adopting a Written Plan You must adopt a written plan. State income tax efile The plan can be an IRS-approved master or prototype plan offered by a sponsoring organization. State income tax efile Or it can be an individually designed plan. State income tax efile Written plan requirement. State income tax efile   To qualify, the plan you set up must be in writing and must be communicated to your employees. State income tax efile The plan's provisions must be stated in the plan. State income tax efile It is not sufficient for the plan to merely refer to a requirement of the Internal Revenue Code. State income tax efile Master or prototype plans. State income tax efile   Most qualified plans follow a standard form of plan (a master or prototype plan) approved by the IRS. State income tax efile Master and prototype plans are plans made available by plan providers for adoption by employers (including self-employed individuals). State income tax efile 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. State income tax efile Under a prototype plan, a separate trust or custodial account is established for each employer. State income tax efile Plan providers. State income tax efile   The following organizations generally can provide IRS-approved master or prototype plans. State income tax efile Banks (including some savings and loan associations and federally insured credit unions). State income tax efile Trade or professional organizations. State income tax efile Insurance companies. State income tax efile Mutual funds. State income tax efile Individually designed plan. State income tax efile   If you prefer, you can set up an individually designed plan to meet specific needs. State income tax efile Although advance IRS approval is not required, you can apply for approval by paying a fee and requesting a determination letter. State income tax efile You may need professional help for this. State income tax efile See Rev. State income tax efile Proc. State income tax efile 2014-6, 2014-1 I. State income tax efile R. State income tax efile B. State income tax efile 198, available at www. State income tax efile irs. State income tax efile gov/irb/2014-1_IRB/ar10. State income tax efile html, as annually updated, that may help you decide whether to apply for approval. State income tax efile Internal Revenue Bulletins are available on the IRS website at IRS. State income tax efile gov They are also available at most IRS offices and at certain libraries. State income tax efile User fee. State income tax efile   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. State income tax efile At least one of them must be a non-highly compensated employee participating in the plan. State income tax efile The fee does not apply to requests made by the later of the following dates. State income tax efile The end of the 5th plan year the plan is in effect. State income tax efile The end of any remedial amendment period for the plan that begins within the first 5 plan years. State income tax efile The request cannot be made by the sponsor of a prototype or similar plan the sponsor intends to market to participating employers. State income tax efile   For more information about whether the user fee applies, see Rev. State income tax efile Proc. State income tax efile 2014-8, 2014-1 I. State income tax efile R. State income tax efile B. State income tax efile 242, available at www. State income tax efile irs. State income tax efile gov/irb/2014-1_IRB/ar12. State income tax efile html, as may be annually updated; Notice 2003-49, 2003-32 I. State income tax efile R. State income tax efile B. State income tax efile 294, available at www. State income tax efile irs. State income tax efile gov/irb/2003-32_IRB/ar13. State income tax efile html; and Notice 2011-86, 2011-45 I. State income tax efile R. State income tax efile B. State income tax efile 698, available at www. State income tax efile irs. State income tax efile gov/irb/2011-45_IRB/ar11. State income tax efile html. State income tax efile Investing Plan Assets In setting up a qualified plan, you arrange how the plan's funds will be used to build its assets. State income tax efile You can establish a trust or custodial account to invest the funds. State income tax efile You, the trust, or the custodial account can buy an annuity contract from an insurance company. State income tax efile Life insurance can be included only if it is incidental to the retirement benefits. State income tax efile You set up a trust by a legal instrument (written document). State income tax efile You may need professional help to do this. State income tax efile 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. State income tax efile 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. State income tax efile If anyone other than a trustee holds them, however, the contracts or certificates must state they are not transferable. State income tax efile Other plan requirements. State income tax efile   For information on other important plan requirements, see Qualification Rules , earlier in this chapter. State income tax efile 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. State income tax efile 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. State income tax efile For information on this funding requirement, see section 412 and its regulations. State income tax efile Quarterly installments of required contributions. State income tax efile   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. State income tax efile If you do not pay the full installments timely, you may have to pay interest on any underpayment for the period of the underpayment. State income tax efile Due dates. State income tax efile   The due dates for the installments are 15 days after the end of each quarter. State income tax efile For a calendar-year plan, the installments are due April 15, July 15, October 15, and January 15 (of the following year). State income tax efile Installment percentage. State income tax efile   Each quarterly installment must be 25% of the required annual payment. State income tax efile Extended period for making contributions. State income tax efile   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. State income tax efile Contributions A qualified plan is generally funded by your contributions. State income tax efile However, employees participating in the plan may be permitted to make contributions, and you may be permitted to make contributions on your own behalf. State income tax efile See Employee Contributions and Elective Deferrals later. State income tax efile Contributions deadline. State income tax efile   You can make deductible contributions for a tax year up to the due date of your return (plus extensions) for that year. State income tax efile Self-employed individual. State income tax efile   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. State income tax efile Your net earnings must be from your personal services, not from your investments. State income tax efile 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. State income tax efile Employer Contributions There are certain limits on the contributions and other annual additions you can make each year for plan participants. State income tax efile There are also limits on the amount you can deduct. State income tax efile See Deduction Limits , later. State income tax efile Limits on Contributions and Benefits Your plan must provide that contributions or benefits cannot exceed certain limits. State income tax efile The limits differ depending on whether your plan is a defined contribution plan or a defined benefit plan. State income tax efile Defined benefit plan. State income tax efile   For 2013, the annual benefit for a participant under a defined benefit plan cannot exceed the lesser of the following amounts. State income tax efile 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. State income tax efile $205,000 ($210,000 for 2014). State income tax efile Defined contribution plan. State income tax efile   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. State income tax efile 100% of the participant's compensation. State income tax efile $51,000 ($52,000 for 2014). State income tax efile   Catch-up contributions (discussed later under Limit on Elective Deferrals) are not subject to the above limit. State income tax efile Employee Contributions Participants may be permitted to make nondeductible contributions to a plan in addition to your contributions. State income tax efile Even though these employee contributions are not deductible, the earnings on them are tax free until distributed in later years. State income tax efile 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. State income tax efile See Regulations sections 1. State income tax efile 401(k)-2 and 1. State income tax efile 401(m)-2 for further guidance relating to the nondiscrimination rules under sections 401(k) and 401(m). State income tax efile When Contributions Are Considered Made You generally apply your plan contributions to the year in which you make them. State income tax efile But you can apply them to the previous year if all the following requirements are met. State income tax efile You make them by the due date of your tax return for the previous year (plus extensions). State income tax efile The plan was established by the end of the previous year. State income tax efile The plan treats the contributions as though it had received them on the last day of the previous year. State income tax efile You do either of the following. State income tax efile You specify in writing to the plan administrator or trustee that the contributions apply to the previous year. State income tax efile You deduct the contributions on your tax return for the previous year. State income tax efile A partnership shows contributions for partners on Form 1065. State income tax efile Employer's promissory note. State income tax efile   Your promissory note made out to the plan is not a payment that qualifies for the deduction. State income tax efile Also, issuing this note is a prohibited transaction subject to tax. State income tax efile See Prohibited Transactions , later. State income tax efile Employer Deduction You can usually deduct, subject to limits, contributions you make to a qualified plan, including those made for your own retirement. State income tax efile The contributions (and earnings and gains on them) are generally tax free until distributed by the plan. State income tax efile Deduction Limits The deduction limit for your contributions to a qualified plan depends on the kind of plan you have. State income tax efile Defined contribution plans. State income tax efile   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. State income tax efile If you are self-employed, you must reduce this limit in figuring the deduction for contributions you make for your own account. State income tax efile See Deduction Limit for Self-Employed Individuals , later. State income tax efile   When figuring the deduction limit, the following rules apply. State income tax efile Elective deferrals (discussed later) are not subject to the limit. State income tax efile Compensation includes elective deferrals. State income tax efile The maximum compensation that can be taken into account for each employee in 2013 is $255,000 ($260,000 for 2014). State income tax efile Defined benefit plans. State income tax efile   The deduction for contributions to a defined benefit plan is based on actuarial assumptions and computations. State income tax efile Consequently, an actuary must figure your deduction limit. State income tax efile    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. State income tax efile Table 4–1. State income tax efile 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. State income tax efile 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. State income tax efile Compensation is your net earnings from self-employment, defined in chapter 1. State income tax efile This definition takes into account both the following items. State income tax efile The deduction for the deductible part of your self-employment tax. State income tax efile The deduction for contributions on your behalf to the plan. State income tax efile The deduction for your own contributions and your net earnings depend on each other. State income tax efile For this reason, you determine the deduction for your own contributions indirectly by reducing the contribution rate called for in your plan. State income tax efile To do this, use either the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed in chapter 5. State income tax efile Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. State income tax efile Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. State income tax efile 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. State income tax efile Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. State income tax efile (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you get from the partnership. State income tax efile ) 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. State income tax efile Your combined deduction in a later year is limited to 25% of the participating employees' compensation for that year. State income tax efile For purposes of this limit, a SEP is treated as a profit-sharing (defined contribution) plan. State income tax efile However, this percentage limit must be reduced to figure your maximum deduction for contributions you make for yourself. State income tax efile See Deduction Limit for Self-Employed Individuals, earlier. State income tax efile The amount you carry over and deduct may be subject to the excise tax discussed next. State income tax efile Table 4-1, earlier, illustrates the carryover of excess contributions to a profit-sharing plan. State income tax efile 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. State income tax efile In general, a 10% excise tax applies to nondeductible contributions made to qualified pension and profit-sharing plans and to SEPs. State income tax efile Special rule for self-employed individuals. State income tax efile   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. State income tax efile 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. State income tax efile See Minimum Funding Requirement , earlier. State income tax efile Reporting the tax. State income tax efile   You must report the tax on your nondeductible contributions on Form 5330. State income tax efile Form 5330 includes a computation of the tax. State income tax efile See the separate instructions for completing the form. State income tax efile 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. State income tax efile A plan with this type of arrangement is popularly known as a “401(k) plan. State income tax efile ” (As a self-employed individual participating in the plan, you can contribute part of your before-tax net earnings from the business. State income tax efile ) This contribution is called an “elective deferral” because participants choose (elect) to defer receipt of the money. State income tax efile In general, a qualified plan can include a cash or deferred arrangement only if the qualified plan is one of the following plans. State income tax efile A profit-sharing plan. State income tax efile A money purchase pension plan in existence on June 27, 1974, that included a salary reduction arrangement on that date. State income tax efile Partnership. State income tax efile   A partnership can have a 401(k) plan. State income tax efile Restriction on conditions of participation. State income tax efile   The plan cannot require, as a condition of participation, that an employee complete more than 1 year of service. State income tax efile Matching contributions. State income tax efile   If your plan permits, you can make matching contributions for an employee who makes an elective deferral to your 401(k) plan. State income tax efile 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. State income tax efile Matching contributions are generally subject to the ACP test discussed earlier under Employee Contributions. State income tax efile Nonelective contributions. State income tax efile   You can also make contributions (other than matching contributions) for your participating employees without giving them the choice to take cash instead. State income tax efile These are called nonelective contributions. State income tax efile Employee compensation limit. State income tax efile   No more than $255,000 of the employee's compensation can be taken into account when figuring contributions other than elective deferrals in 2013. State income tax efile This limit is $260,000 in 2014. State income tax efile SIMPLE 401(k) plan. State income tax efile   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. State income tax efile A SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy plan requirements discussed earlier under Qualification Rules. State income tax efile For details about SIMPLE 401(k) plans, see SIMPLE 401(k) Plan in chapter 3. State income tax efile Distributions. State income tax efile   Certain rules apply to distributions from 401(k) plans. State income tax efile See Distributions From 401(k) Plans , later. State income tax efile Limit on Elective Deferrals There is a limit on the amount an employee can defer each year under these plans. State income tax efile This limit applies without regard to community property laws. State income tax efile Your plan must provide that your employees cannot defer more than the limit that applies for a particular year. State income tax efile For 2013 and 2014, the basic limit on elective deferrals is $17,500. State income tax efile This limit applies to all salary reduction contributions and elective deferrals. State income tax efile If, in conjunction with other plans, the deferral limit is exceeded, the difference is included in the employee's gross income. State income tax efile Catch-up contributions. State income tax efile   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. State income tax efile The catch-up contribution limit for 2013 and 2014 is $5,500. State income tax efile 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). State income tax efile However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. State income tax efile The catch-up contribution limit. State income tax efile The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. State income tax efile Treatment of contributions. State income tax efile   Your contributions to your own 401(k) plan are generally deductible by you for the year they are contributed to the plan. State income tax efile Matching or nonelective contributions made to the plan are also deductible by you in the year of contribution. State income tax efile Your employees' elective deferrals other than designated Roth contributions are tax free until distributed from the plan. State income tax efile Elective deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. State income tax efile Forfeiture. State income tax efile   Employees have a nonforfeitable right at all times to their accrued benefit attributable to elective deferrals. State income tax efile Reporting on Form W-2. State income tax efile   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. State income tax efile You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. State income tax efile You must also include them in box 12. State income tax efile Mark the “Retirement plan” checkbox in box 13. State income tax efile For more information, see the Form W-2 instructions. State income tax efile Automatic Enrollment Your 401(k) plan can have an automatic enrollment feature. State income tax efile 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. State income tax efile These contributions are elective deferrals. State income tax efile An automatic enrollment feature will encourage employees' saving for retirement and will help your plan pass nondiscrimination testing (if applicable). State income tax efile For more information, see Publication 4674, Automatic Enrollment 401(k) Plans for Small Businesses. State income tax efile Eligible automatic contribution arrangement. State income tax efile   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. State income tax efile This automatic election will remain in place until the participant specifically elects not to have such deferral percentage made (or elects a different percentage). State income tax efile There is no required deferral percentage. State income tax efile Withdrawals. State income tax efile   Under an EACA, you may allow participants to withdraw their automatic contributions to the plan if certain conditions are met. State income tax efile The participant must elect the withdrawal no later than 90 days after the date of the first elective contributions under the EACA. State income tax efile The participant must withdraw the entire amount of EACA default contributions, including any earnings thereon. State income tax efile   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. State income tax efile The additional 10% tax on early distributions will not apply to the distribution. State income tax efile Notice requirement. State income tax efile   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. State income tax efile 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. State income tax efile 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. State income tax efile The notice also must explain how contributions will be invested in the absence of an investment election by the employee. State income tax efile Qualified automatic contribution arrangement. State income tax efile    A qualified automatic contribution arrangement (QACA) is a type of safe harbor plan. State income tax efile It contains an automatic enrollment feature, and mandatory employer contributions are required. State income tax efile If your plan includes a QACA, it will not be subject to the ADP test (discussed later) nor the top-heavy requirements (discussed earlier). State income tax efile Additionally, your plan will not be subject to the actual contribution percentage (ACP) test if certain additional requirements are met. State income tax efile 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. State income tax efile In order to not have default elective deferrals made, an employee must make an affirmative election specifying a deferral percentage (including zero, if desired). State income tax efile If an employee does not make an affirmative election, the default deferral percentage must meet the following conditions. State income tax efile It must be applied uniformly. State income tax efile It must not exceed 10%. State income tax efile It must be at least 3% in the first plan year it applies to an employee and through the end of the following year. State income tax efile It must increase to at least 4% in the following plan year. State income tax efile It must increase to at least 5% in the following plan year. State income tax efile It must increase to at least 6% in subsequent plan years. State income tax efile Matching or nonelective contributions. State income tax efile   Under the terms of the QACA, you must make either matching or nonelective contributions according to the following terms. State income tax efile Matching contributions. State income tax efile You must make matching contributions on behalf of each non-highly compensated employee in the following amounts. State income tax efile An amount equal to 100% of elective deferrals, up to 1% of compensation. State income tax efile An amount equal to 50% of elective deferrals, from 1% up to 6% of compensation. State income tax efile Other formulas may be used as long as they are at least as favorable to non-highly compensated employees. State income tax efile The rate of matching contributions for highly compensated employees, including yourself, must not exceed the rates for non-highly compensated employees. State income tax efile Nonelective contributions. State income tax efile 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. State income tax efile Vesting requirements. State income tax efile   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. State income tax efile These contributions are subject to special withdrawal restrictions, discussed later. State income tax efile Notice requirements. State income tax efile   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. State income tax efile The notice must be written in a manner calculated to be understood by the average employee, and it must be accurate and comprehensive. State income tax efile 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. State income tax efile Additionally, the notice must explain how contributions will be invested in the absence of any investment election by the employee. State income tax efile 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. State income tax efile 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. State income tax efile 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. State income tax efile The plan must then pay the employee that amount, plus earnings on the amount through the end of 2013, by April 15, 2014. State income tax efile Excess withdrawn by April 15. State income tax efile   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. State income tax efile However, any income earned in 2013 on the excess deferral taken out is taxable in the tax year in which it is taken out. State income tax efile The distribution is not subject to the additional 10% tax on early distributions. State income tax efile   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. State income tax efile   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. State income tax efile Excess not withdrawn by April 15. State income tax efile   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. State income tax efile In effect, an excess deferral left in the plan is taxed twice, once when contributed and again when distributed. State income tax efile 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. State income tax efile Reporting corrective distributions on Form 1099-R. State income tax efile   Report corrective distributions of excess deferrals (including any earnings) on Form 1099-R. State income tax efile For specific information about reporting corrective distributions, see the Instructions for Forms 1099-R and 5498. State income tax efile Tax on excess contributions of highly compensated employees. State income tax efile   The law provides tests to detect discrimination in a plan. State income tax efile 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. State income tax efile Report the tax on Form 5330. State income tax efile The ADP test does not apply to a safe harbor 401(k) plan (discussed next) nor to a QACA. State income tax efile Also, the ACP test does not apply to these plans if certain additional requirements are met. State income tax efile   The tax for the year is 10% of the excess contributions for the plan year ending in your tax year. State income tax efile 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. State income tax efile   See Regulations sections 1. State income tax efile 401(k)-2 and 1. State income tax efile 401(m)-2 for further guidance relating to the nondiscrimination rules under sections 401(k) and 401(m). State income tax efile    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. State income tax efile Safe harbor 401(k) plan. State income tax efile 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. State income tax efile For your plan to be a safe harbor plan, you must meet the following conditions. State income tax efile Matching or nonelective contributions. State income tax efile You must make matching or nonelective contributions according to one of the following formulas. State income tax efile Matching contributions. State income tax efile You must make matching contributions according to the following rules. State income tax efile You must contribute an amount equal to 100% of each non-highly compensated employee's elective deferrals, up to 3% of compensation. State income tax efile You must contribute an amount equal to 50% of each non-highly compensated employee's elective deferrals, from 3% up to 5% of compensation. State income tax efile The rate of matching contributions for highly compensated employees, including yourself, must not exceed the rates for non-highly compensated employees. State income tax efile Nonelective contributions. State income tax efile 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. State income tax efile These mandatory matching and nonelective contributions must be immediately 100% vested and are subject to special withdrawal restrictions. State income tax efile Notice requirement. State income tax efile 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. State income tax efile 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. State income tax efile 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. State income tax efile Elective deferrals designated as Roth contributions must be maintained in a separate Roth account. State income tax efile 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. State income tax efile 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. State income tax efile 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. State income tax efile 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. State income tax efile An employee's nonexclusion period for a plan is the 5-tax-year period beginning with the earlier of the following tax years. State income tax efile 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. State income tax efile Rollover. State income tax efile   Beginning September 28, 2010, a rollover from another account can be made to a designated Roth account in the same plan. State income tax efile For additional information on these in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. State income tax efile R. State income tax efile B. State income tax efile 872, available at www. State income tax efile irs. State income tax efile gov/irb/2010-51_IRB/ar11. State income tax efile html, and Notice 2013-74. State income tax efile A distribution from a designated Roth account can only be rolled over to another designated Roth account or a Roth IRA. State income tax efile Rollover amounts do not apply toward the annual deferral limit. State income tax efile 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. State income tax efile See the Form W-2 and 1099-R instructions for detailed information. State income tax efile Distributions Amounts paid to plan participants from a qualified plan are called distributions. State income tax efile Distributions may be nonperiodic, such as lump-sum distributions, or periodic, such as annuity payments. State income tax efile Also, certain loans may be treated as distributions. State income tax efile See Loans Treated as Distributions in Publication 575. State income tax efile 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). State income tax efile These distribution rules apply individually to each qualified plan. State income tax efile You cannot satisfy the requirement for one plan by taking a distribution from another. State income tax efile The plan must provide that these rules override any inconsistent distribution options previously offered. State income tax efile Minimum distribution. State income tax efile   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. State income tax efile This minimum is figured by dividing the account balance by the applicable life expectancy. State income tax efile The plan administrator can use the life expectancy tables in Appendix C of Publication 590 for this purpose. State income tax efile For more information on figuring the minimum distribution, see Tax on Excess Accumulation in Publication 575. State income tax efile Required beginning date. State income tax efile   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. State income tax efile   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. State income tax efile Calendar year in which he or she reaches age 70½. State income tax efile Calendar year in which he or she retires from employment with the employer maintaining the plan. State income tax efile 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. State income tax efile   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. State income tax efile For more information, see Tax on Excess Accumulation in Publication 575. State income tax efile Distributions after the starting year. State income tax efile   The distribution required to be made by April 1 is treated as a distribution for the starting year. State income tax efile (The starting year is the year in which the participant meets (1) or (2) above, whichever applies. State income tax efile ) After the starting year, the participant must receive the required distribution for each year by December 31 of that year. State income tax efile 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). State income tax efile Distributions after participant's death. State income tax efile   See Publication 575 for the special rules covering distributions made after the death of a participant. State income tax efile Distributions From 401(k) Plans Generally, distributions cannot be made until one of the following occurs. State income tax efile The employee retires, dies, becomes disabled, or otherwise severs employment. State income tax efile The plan ends and no other defined contribution plan is established or continued. State income tax efile 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. State income tax efile For the rules on hardship distributions, including the limits on them, see Regulations section 1. State income tax efile 401(k)-1(d). State income tax efile The employee becomes eligible for a qualified reservist distribution (defined next). State income tax efile Certain distributions listed above may be subject to the tax on early distributions discussed later. State income tax efile Qualified reservist distributions. State income tax efile   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. State income tax efile All or part of a qualified reservist distribution can be recontributed to an IRA. State income tax efile The additional 10% tax on early distributions does not apply to a qualified reservist distribution. State income tax efile 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. State income tax efile Since most recipients have no cost basis, a distribution is generally fully taxable. State income tax efile An exception is a distribution that is properly rolled over as discussed under Rollover, next. State income tax efile The tax treatment of distributions depends on whether they are made periodically over several years or life (periodic distributions) or are nonperiodic distributions. State income tax efile 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. State income tax efile Note. State income tax efile 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. State income tax efile Also, a distribution from a designated Roth account is entirely tax-free if certain conditions are met. State income tax efile See Qualified distributions under Qualified Roth Contribution Program, earlier. State income tax efile Rollover. State income tax efile   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. State income tax efile However, it may be subject to withholding as discussed under Withholding requirement, later. State income tax efile 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. State income tax efile Eligible rollover distribution. State income tax efile   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. State income tax efile A required minimum distribution. State income tax efile See Required Distributions , earlier. State income tax efile Any of a series of substantially equal payments made at least once a year over any of the following periods. State income tax efile The employee's life or life expectancy. State income tax efile The joint lives or life expectancies of the employee and beneficiary. State income tax efile A period of 10 years or longer. State income tax efile A hardship distribution. State income tax efile The portion of a distribution that represents the return of an employee's nondeductible contributions to the plan. State income tax efile See Employee Contributions , earlier, and Rollover of nontaxable amounts, next. State income tax efile Loans treated as distributions. State income tax efile Dividends on employer securities. State income tax efile The cost of any life insurance coverage provided under a qualified retirement plan. State income tax efile Similar items designated by the IRS in published guidance. State income tax efile See, for example, the Instructions for Forms 1099-R and 5498. State income tax efile Rollover of nontaxable amounts. State income tax efile   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. State income tax efile 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. State income tax efile If the rollover is to an IRA, the transfer can be made by any rollover method. State income tax efile Note. State income tax efile A distribution from a designated Roth account can be rolled over to another designated Roth account or to a Roth IRA. State income tax efile 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). State income tax efile More information. State income tax efile   For more information about rollovers, see Rollovers in Pubs. State income tax efile 575 and 590. State income tax efile Withholding requirement. State income tax efile   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. State income tax efile Exceptions. State income tax efile   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. State income tax efile   If the distribution is not an eligible rollover distribution, defined earlier, the 20% withholding requirement does not apply. State income tax efile Other withholding rules apply to distributions that are not eligible rollover distributions, such as long-term periodic distributions and required distributions (periodic or nonperiodic). State income tax efile However, the participant can choose not to have tax withheld from these distributions. State income tax efile If the participant does not make this choice, the following withholding rules apply. State income tax efile For periodic distributions, withholding is based on their treatment as wages. State income tax efile For nonperiodic distributions, 10% of the taxable part is withheld. State income tax efile Estimated tax payments. State income tax efile   If no income tax is withheld or not enough tax is withheld, the recipient of a distribution may have to make estimated tax payments. State income tax efile For more information, see Withholding Tax and Estimated Tax in Publication 575. State income tax efile Section 402(f) Notice. State income tax efile   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. State income tax efile That the distribution may be directly transferred to an eligible retirement plan and information about which distributions are eligible for this direct transfer. State income tax efile That tax will be withheld from the distribution if it is not directly transferred to an eligible retirement plan. State income tax efile 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. State income tax efile Certain other rules that may be applicable. State income tax efile   Notice 2009-68, 2009-39 I. State income tax efile R. State income tax efile B. State income tax efile 423, available at www. State income tax efile irs. State income tax efile gov/irb/2009-39_IRB/ar14. State income tax efile html, contains two updated safe harbor section 402(f) notices that plan administrators may provide recipients of eligible rollover distributions. State income tax efile If the plan allows in-plan Roth rollovers, the 402(f) notice must be amended to reflect this. State income tax efile Notice 2010-84 contains guidance on how to modify a 402(f) notice for in-plan Roth rollovers. State income tax efile Timing of notice. State income tax efile   The notice generally must be provided no less than 30 days and no more than 180 days before the date of a distribution. State income tax efile Method of notice. State income tax efile   The written notice must be provided individually to each distributee of an eligible rollover distribution. State income tax efile Posting of the notice is not sufficient. State income tax efile However, the written requirement may be satisfied through the use of electronic media if certain additional conditions are met. State income tax efile See Regulations section 1. State income tax efile 401(a)-21. State income tax efile Tax on failure to give notice. State income tax efile   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. State income tax efile The tax will not be imposed if it is shown that such failure is due to reasonable cause and not to willful neglect. State income tax efile 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. State income tax efile This tax applies to the amount received that the employee must include in income. State income tax efile Exceptions. State income tax efile   The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances. State income tax efile Made to a beneficiary (or to the estate of the employee) on or after the death of the employee. State income tax efile Made due to the employee having a qualifying disability. State income tax efile 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. State income tax efile (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. State income tax efile ) Made to an employee after separation from service if the separation occurred during o