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Irs Gov Freefile

Irs Extention FormHow To File 1040ez Online For Free2011 1040How To Amend Tax Return Online1040x 20112010 Tax Filing SoftwareFiling 2011 TaxesHow To Amend A Tax Return With TurbotaxWww Aarp Org TaxaideTurbotax Military DiscountAmended ReturnH & R BlockH&r Block At HomeAmend Tax Forms1040ez Tax Table1040 S2011 Tax Filing DeadlineWhere To Get State Tax FormsCan I Amend My 2010 Tax Return1040ez Forms 2012Taxact FreeAmend Federal TaxesH&r Block Free Online Tax ReturnHow Do I Do My 2010 TaxesFill 1040xIrs2006 TaxesTax Form 1040a2011 1040Go 2007 TaxesH&r Block Free Edition2011 Tax Act OnlineHow To File An Amendment For TaxesCan You File A 1040x OnlineEz 1040 FormIrs File 2011 TaxesIrs Tax Forms 2011Free E File 2013 TaxesHow To Do 1040xHow To Amend Previous Tax Returns

Irs Gov Freefile

Irs gov freefile Index A Assistance (see Help) C Casualty and theft losses, Casualty and Theft Losses Clean-up costs, Demolition and Clean-up Costs Copy of tax return, request for, Request for copy of tax return. Irs gov freefile Credits: Employee retention, Employee Retention Credit D Demolition costs, Demolition and Clean-up Costs Depreciation: Qualified recovery assistance property, Qualified recovery assistance property. Irs gov freefile Special allowance, Special Depreciation Allowance Disaster area: May 4, 2007 storms and tornadoes, Kansas Disaster Area Distributions: Home purchase or construction, Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Qualified recovery assistance, Qualified recovery assistance distribution. Irs gov freefile Repayment of, Repayment of Qualified Recovery Assistance Distributions Taxation of, Taxation of Qualified Recovery Assistance Distributions E Eligible retirement plan, Eligible retirement plan. Irs gov freefile Employee retention credit, Employee Retention Credit F Free tax services, How To Get Tax Help H Help: How to get, How To Get Tax Help Phone number, How To Get Tax Help Special IRS assistance, How To Get Tax Help Website, How To Get Tax Help I Involuntary conversion (see Replacement period for nonrecognition of gain) IRAs and other retirement plans, IRAs and Other Retirement Plans K Kansas disaster area, Kansas Disaster Area M More information (see Tax help) N Net operating losses, Net Operating Losses P Publications (see Tax help) Q Qualified recovery assistance distribution, Qualified recovery assistance distribution. Irs gov freefile Qualified recovery assistance loss, Qualified recovery assistance loss. Irs gov freefile R Replacement period for nonrecognition of gain, Replacement Period for Nonrecognition of Gain Retirement plan, eligible, Eligible retirement plan. Irs gov freefile Retirement plans, IRAs and Other Retirement Plans S Section 179 deduction, Increased Section 179 Deduction Storms and tornadoes, Storms and Tornadoes T Tax help, How To Get Tax Help (see Help) Tax return: Request for copy, Request for copy of tax return. Irs gov freefile Request for transcript, Request for transcript of tax return. Irs gov freefile Taxpayer Advocate, Contacting your Taxpayer Advocate. Irs gov freefile Theft losses, Casualty and Theft Losses Transcript of tax return, request for, Request for transcript of tax return. Irs gov freefile TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Understanding Your CP211E Notice

We denied your request to extend the time to file your Exempt Organization Return because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, didn't meet one or more of the requirements.


Your request didn’t meet one or more of the requirements:

  • Postmark your request by the previously established due date.
  • Have your request signed by an authorized person.
  • Deposit estimated tax due by the previously established due date.
  • Show reasonable cause for requiring another extension.
  • Establish reasons that prevented you from filing by the extended due date.

Your previous due date still applies.


What you need to do

  • File your required Exempt Organization Return immediately to limit any late filing penalties. If your Exempt Organization Return is filed after the due date of the return (including any extensions), the return is considered late and subject to late filing penalties.
  • We encourage you to use electronic filing – the fastest and easiest way to file.

You may want to

  • Visit www.irs.gov/Charities-&-Non-Profits to learn about approved e-File providers, what types of returns can be filed electronically, and whether you are required to file electronically.

Answers to Common Questions

Q. Where can I go for more information about tax-exempt organizations?

A. For more information on Employee Benefit Plans, see Tax Information for Charities & Other Non-Profits.

Q. Can I get help over the phone?

A. If you have questions and/or need help, you can call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.


Tips for next year

Be sure to sign and mail your Form 8868 with a reason you need an additional 3-month extension on or before the due date of your first extension.

Page Last Reviewed or Updated: 24-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Irs Gov Freefile

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