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Www. Www.taxact.com taxact. Www.taxact.com com 5. Www.taxact.com   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Www.taxact.com You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Www.taxact.com By selecting the method that is best for you, you will have quick and easy access to tax help. Www.taxact.com Free help with your tax return. Www.taxact.com   You can get free help preparing your return nationwide from IRS-certified volunteers. Www.taxact.com The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Www.taxact.com The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Www.taxact.com Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Www.taxact.com In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Www.taxact.com To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Www.taxact.com gov, download the IRS2Go app, or call 1-800-906-9887. Www.taxact.com   As part of the TCE program, AARP offers the Tax-Aide counseling program. Www.taxact.com To find the nearest AARP Tax-Aide site, visit AARP's website at www. Www.taxact.com aarp. Www.taxact.com org/money/taxaide or call 1-888-227-7669. Www.taxact.com For more information on these programs, go to IRS. Www.taxact.com gov and enter “VITA” in the search box. Www.taxact.com Internet. Www.taxact.com    IRS. Www.taxact.com gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Www.taxact.com Download the free IRS2Go app from the iTunes app store or from Google Play. Www.taxact.com Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Www.taxact.com Check the status of your 2013 refund with the Where's My Refund? application on IRS. Www.taxact.com gov or download the IRS2Go app and select the Refund Status option. Www.taxact.com The IRS issues more than 9 out of 10 refunds in less than 21 days. Www.taxact.com Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Www.taxact.com You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Www.taxact.com The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Www.taxact.com Use the Interactive Tax Assistant (ITA) to research your tax questions. Www.taxact.com No need to wait on the phone or stand in line. Www.taxact.com The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Www.taxact.com When you reach the response screen, you can print the entire interview and the final response for your records. Www.taxact.com New subject areas are added on a regular basis. Www.taxact.com  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Www.taxact.com gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Www.taxact.com You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Www.taxact.com The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Www.taxact.com When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Www.taxact.com Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Www.taxact.com You can also ask the IRS to mail a return or an account transcript to you. Www.taxact.com Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Www.taxact.com gov or by calling 1-800-908-9946. Www.taxact.com Tax return and tax account transcripts are generally available for the current year and the past three years. Www.taxact.com Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Www.taxact.com Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Www.taxact.com If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Www.taxact.com Check the status of your amended return using Where's My Amended Return? Go to IRS. Www.taxact.com gov and enter Where's My Amended Return? in the search box. Www.taxact.com You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Www.taxact.com It can take up to 3 weeks from the date you mailed it to show up in our system. Www.taxact.com Make a payment using one of several safe and convenient electronic payment options available on IRS. Www.taxact.com gov. Www.taxact.com Select the Payment tab on the front page of IRS. Www.taxact.com gov for more information. Www.taxact.com Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Www.taxact.com Figure your income tax withholding with the IRS Withholding Calculator on IRS. Www.taxact.com gov. Www.taxact.com Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Www.taxact.com Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Www.taxact.com gov. Www.taxact.com Request an Electronic Filing PIN by going to IRS. Www.taxact.com gov and entering Electronic Filing PIN in the search box. Www.taxact.com Download forms, instructions and publications, including accessible versions for people with disabilities. Www.taxact.com Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Www.taxact.com gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Www.taxact.com An employee can answer questions about your tax account or help you set up a payment plan. Www.taxact.com Before you visit, check the Office Locator on IRS. Www.taxact.com gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Www.taxact.com If you have a special need, such as a disability, you can request an appointment. Www.taxact.com Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Www.taxact.com Apply for an Employer Identification Number (EIN). Www.taxact.com Go to IRS. Www.taxact.com gov and enter Apply for an EIN in the search box. Www.taxact.com Read the Internal Revenue Code, regulations, or other official guidance. Www.taxact.com Read Internal Revenue Bulletins. Www.taxact.com Sign up to receive local and national tax news and more by email. Www.taxact.com Just click on “subscriptions” above the search box on IRS. Www.taxact.com gov and choose from a variety of options. Www.taxact.com Phone. Www.taxact.com    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Www.taxact.com Download the free IRS2Go app from the iTunes app store or from Google Play. Www.taxact.com Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Www.taxact.com gov, or download the IRS2Go app. Www.taxact.com Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Www.taxact.com The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Www.taxact.com Most VITA and TCE sites offer free electronic filing. Www.taxact.com Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Www.taxact.com Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Www.taxact.com Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Www.taxact.com If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Www.taxact.com The IRS issues more than 9 out of 10 refunds in less than 21 days. Www.taxact.com Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Www.taxact.com Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Www.taxact.com The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Www.taxact.com Note, the above information is for our automated hotline. Www.taxact.com Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Www.taxact.com Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Www.taxact.com You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Www.taxact.com It can take up to 3 weeks from the date you mailed it to show up in our system. Www.taxact.com Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Www.taxact.com You should receive your order within 10 business days. Www.taxact.com Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Www.taxact.com If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Www.taxact.com Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Www.taxact.com The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Www.taxact.com These individuals can also contact the IRS through relay services such as the Federal Relay Service. Www.taxact.com Mail. Www.taxact.com   You can send your order for forms, instructions, and publications to the address below. Www.taxact.com You should receive a response within 10 business days after your request is received. Www.taxact.com Internal Revenue Service 1201 N. Www.taxact.com Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Www.taxact.com The Taxpayer Advocate Service (TAS) is your voice at the IRS. Www.taxact.com Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Www.taxact.com   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Www.taxact.com We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Www.taxact.com You face (or your business is facing) an immediate threat of adverse action. Www.taxact.com You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Www.taxact.com   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Www.taxact.com Here's why we can help: TAS is an independent organization within the IRS. Www.taxact.com Our advocates know how to work with the IRS. Www.taxact.com Our services are free and tailored to meet your needs. Www.taxact.com We have offices in every state, the District of Columbia, and Puerto Rico. Www.taxact.com   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Www.taxact.com irs. Www.taxact.com gov/Advocate, or call us toll-free at 1-877-777-4778. Www.taxact.com   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Www.taxact.com If you know of one of these broad issues, please report it to us through our Systemic Advisory Management System at www. Www.taxact.com irs. Www.taxact.com gov/Advocate/Systemic-Advocacy-Management-System-SAMS. Www.taxact.com Low Income Taxpayer Clinics. Www.taxact.com    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Www.taxact.com Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Www.taxact.com Visit www. Www.taxact.com irs. Www.taxact.com gov/Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Www.taxact.com Prev  Up  Next   Home   More Online Publications
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Federal Legislative Branch

The legislative branch is the law making branch of government made up of the Senate, the House of Representatives, and agencies that support Congress.

U.S. Congress

Legislative Process Overview

Learn how the US Congress works to create laws.

Show Video Transcript

Article I of the U.S. Constitution grants all legislative powers to a bicameral Congress: a House of Representatives and a Senate that are the result of a “Great Compromise” seeking to balance the effects of popular majorities with the interests of the states. Our system currently provides for a two-year term of office for House members from the 435 population-based districts. In the Senate, voters of each state elect two Senators, who serve 6-year terms that overlap (such that only one-third of the chamber is up for election in any given election cycle).

The two chambers are fundamentally equal in their legislative roles and functions. Only the House can originate revenue legislation, and only the Senate confirms presidential nominations and approves treaties, but the enactment of law always requires both chambers to separately agree to the same bill in the same form before presenting it to the President.

Because each chamber has the constitutional authority to make its own rules, the House and Senate have developed some very different ways of processing legislation, perhaps partially flowing from their constitutional differences. In general, House rules and practices allow a numerical majority to process legislation relatively quickly. Senate rules and procedures, on the other hand, favor deliberation over quick action, as they provide significant procedural leverage to individual Senators.

Congressional action is typically planned and coordinated by party leaders in each chamber, who have been chosen by members of their own caucus or conference – that is, the group of members in a chamber who share a party affiliation. Majority party leaders in the House have important powers and prerogatives to effectively set the policy agenda and decide which proposals will receive floor consideration. In the Senate, the leader of the majority party is generally expected to propose items for consideration, but formal tools that allow a numerical majority to take action are few. Instead, majority party leadership typically must negotiate with minority party leaders (and often all Senators) to effectively conduct Senate floor action.

In both chambers, much of the policy expertise resides in the standing committees – panels of members from both parties that typically take the lead in developing and assessing legislation. Members typically serve on a small number of committees, often for many years, allowing them to become highly knowledgeable in certain policy areas. All committees are chaired by a member of the majority party, though chairs often work closely with the committee’s ranking member, the most senior member of the minority party on the committee. In almost all cases, the ratio of majority party to minority party members on a committee roughly reflects the overall partisan ratio in the congressional chamber.

Committee members and staff focus much of their time on drafting and considering legislative proposals, but committees engage in other activities, as well. Once law is enacted, Congress has the prerogative and responsibility to provide oversight of policy implementation, and its committees take the lead in this effort. Both chambers provide their committees with significant powers and latitude for oversight and investigations into questions of public policy and its effects.

While the engine of legislative ideas and action is Congress itself, the President has influence in the legislative process, as well. The President recommends an annual budget for federal agencies and often suggests legislation. Perhaps more significantly, the power to veto legislation can affect the content of bills passed by Congress. Since it is quite unusual for law to be enacted over a presidential veto, Congress typically must accommodate the president’s position on proposed policies.

The process by which a bill becomes law is rarely predictable and can vary significantly from bill to bill. In fact, for many bills, the process will not follow the sequence of congressional stages that are often understood to make up the legislative process. The presentations on specific topics that follow present a more detailed look at each of the common stages through which a bill may move, but keep in mind that complications and variations abound in practice.

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Www. Www.taxact.com taxact. Www.taxact.com com 3. Www.taxact.com   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. Www.taxact.com Traditional IRA mistakenly moved to SIMPLE IRA. Www.taxact.com When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). Www.taxact.com It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. Www.taxact.com Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). Www.taxact.com This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. Www.taxact.com See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. Www.taxact.com If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. Www.taxact.com See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. Www.taxact.com What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Www.taxact.com See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. Www.taxact.com A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. Www.taxact.com These contributions are called salary reduction contributions. Www.taxact.com All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. Www.taxact.com The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Www.taxact.com Contributions are made on behalf of eligible employees. Www.taxact.com (See Eligible Employees below. Www.taxact.com ) Contributions are also subject to various limits. Www.taxact.com (See How Much Can Be Contributed on Your Behalf , later. Www.taxact.com ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. Www.taxact.com See How Are Contributions Made , later. Www.taxact.com You may be able to claim a credit for contributions to your SIMPLE plan. Www.taxact.com For more information, see chapter 4. Www.taxact.com Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. Www.taxact.com Self-employed individual. Www.taxact.com   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. Www.taxact.com Excludable employees. Www.taxact.com   Your employer can exclude the following employees from participating in the SIMPLE plan. Www.taxact.com Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). Www.taxact.com Employees who are nonresident aliens and received no earned income from sources within the United States. Www.taxact.com Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. Www.taxact.com Compensation. Www.taxact.com   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. Www.taxact.com Wages, tips, and other pay from your employer that is subject to income tax withholding. Www.taxact.com Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. Www.taxact.com Self-employed individual compensation. Www.taxact.com   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. Www.taxact.com   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. Www.taxact.com How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. Www.taxact.com They are made on your behalf by your employer. Www.taxact.com Your employer must also make either matching contributions or nonelective contributions. Www.taxact.com Salary reduction contributions. Www.taxact.com   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). Www.taxact.com You can choose to cancel the election at any time during the year. Www.taxact.com   Salary reduction contributions are also referred to as “elective deferrals. Www.taxact.com ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. Www.taxact.com Matching contributions. Www.taxact.com   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. Www.taxact.com See How Much Can Be Contributed on Your Behalf below. Www.taxact.com These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. Www.taxact.com These contributions are referred to as matching contributions. Www.taxact.com   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. Www.taxact.com Nonelective contributions. Www.taxact.com   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. Www.taxact.com These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. Www.taxact.com   One of the requirements your employer must satisfy is notifying the employees that the election was made. Www.taxact.com For other requirements that your employer must satisfy, see chapter 3 of Publication 560. Www.taxact.com How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. Www.taxact.com Salary reduction contributions limit. Www.taxact.com   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. Www.taxact.com The limitation remains at $12,000 for 2014. Www.taxact.com If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. Www.taxact.com You, not your employer, are responsible for monitoring compliance with these limits. Www.taxact.com Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. Www.taxact.com The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. Www.taxact.com $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. Www.taxact.com The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. Www.taxact.com The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. Www.taxact.com Matching employer contributions limit. Www.taxact.com   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. Www.taxact.com These matching contributions cannot be more than 3% of your compensation for the calendar year. Www.taxact.com See Matching contributions less than 3% below. Www.taxact.com Example 1. Www.taxact.com In 2013, Joshua was a participant in his employer's SIMPLE plan. Www.taxact.com His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). Www.taxact.com Instead of taking it all in cash, Joshua elected to have 12. Www.taxact.com 5% of his weekly pay ($100) contributed to his SIMPLE IRA. Www.taxact.com For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. Www.taxact.com Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. Www.taxact.com Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). Www.taxact.com Example 2. Www.taxact.com Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. Www.taxact.com 94% of his weekly pay contributed to his SIMPLE IRA. Www.taxact.com In this example, Joshua's salary reduction contributions for the year (2. Www.taxact.com 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). Www.taxact.com Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. Www.taxact.com In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. Www.taxact.com Matching contributions less than 3%. Www.taxact.com   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. Www.taxact.com   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. Www.taxact.com If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. Www.taxact.com Nonelective employer contributions limit. Www.taxact.com   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. Www.taxact.com For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. Www.taxact.com   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. Www.taxact.com Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. Www.taxact.com This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. Www.taxact.com Example 3. Www.taxact.com Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. Www.taxact.com Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. Www.taxact.com In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). Www.taxact.com Traditional IRA mistakenly moved to SIMPLE IRA. Www.taxact.com   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Www.taxact.com For more information, see Recharacterizations in chapter 1. Www.taxact.com Recharacterizing employer contributions. Www.taxact.com   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. Www.taxact.com SEPs are discussed in chapter 2 of Publication 560. Www.taxact.com SIMPLE plans are discussed in this chapter. Www.taxact.com Converting from a SIMPLE IRA. Www.taxact.com   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . Www.taxact.com    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. Www.taxact.com When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. Www.taxact.com These rules are discussed in chapter 1. Www.taxact.com Your employer cannot restrict you from taking distributions from a SIMPLE IRA. Www.taxact.com Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. Www.taxact.com If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. Www.taxact.com See Additional Tax on Early Distributions, later. Www.taxact.com Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. Www.taxact.com Two-year rule. Www.taxact.com   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. Www.taxact.com The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. Www.taxact.com   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). Www.taxact.com Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. Www.taxact.com If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. Www.taxact.com If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. 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