Form W2 Box 13 Retirement Plan Checkbox Decision Chart
Form W2, also known as the Wage and Tax Statement, is a document that every employer must provide to their employees at the end of each year. This form contains important information about an employee's earnings and taxes withheld, and it is used to calculate the employee's tax liability for the year. One of the most important boxes on Form W2 is Box 13, which contains information about the employee's retirement plan.
Understanding Box 13 on Form W2
Box 13 on Form W2 is labeled "Retirement plan." This box indicates whether the employee participated in a retirement plan during the year and, if so, what type of plan it was. There are three checkboxes in Box 13:
- Box 13a: If this box is checked, it means that the employee participated in a retirement plan that is qualified under Section 401(k), 403(b), or 408(k)(6) of the Internal Revenue Code. These plans are commonly known as traditional 401(k) plans or 403(b) plans.
- Box 13b: If this box is checked, it means that the employee participated in a retirement plan that is not qualified under Section 401(k), 403(b), or 408(k)(6) of the Internal Revenue Code. These plans are commonly known as non-qualified plans.
- Box 13c: If this box is checked, it means that the employee did not participate in any retirement plan during the year.
It's important to note that if an employee participated in more than one retirement plan during the year, the employer should check Box 13a and leave Box 13b and 13c blank.
Why Box 13 is Important
Box 13 on Form W2 is important for several reasons. First, it helps the Internal Revenue Service (IRS) determine whether an employee is eligible to make contributions to an Individual Retirement Account (IRA) for the year. If an employee participated in a traditional 401(k) or 403(b) plan, they may not be eligible to make deductible contributions to an IRA, depending on their income level.
Second, Box 13 helps the IRS determine whether an employee is eligible to claim the Retirement Savings Contributions Credit, which is also known as the Saver's Credit. This credit is available to eligible individuals who contribute to a retirement plan, and it can be worth up to $1,000 for single filers and $2,000 for joint filers.
Finally, Box 13 is important for employers because it helps them determine whether they are complying with certain reporting and disclosure requirements under the Employee Retirement Income Security Act (ERISA). ERISA is a federal law that sets standards for retirement plans, and it requires employers to provide certain information to participants in these plans.
Retirement Plan Checkbox Decision Chart
The Retirement Plan Checkbox Decision Chart is a helpful tool that employers can use to determine which box to check in Box 13 on Form W2. This chart takes into account several factors, including the type of retirement plan, the employee's participation in the plan, and the employee's income level.
For example, if an employee participated in a traditional 401(k) plan and their income was below certain levels, the employer would check Box 13a. If the employee participated in a non-qualified plan, the employer would check Box 13b. And if the employee did not participate in any retirement plan, the employer would check Box 13c.
Conclusion
Box 13 on Form W2 is an important part of the document, as it provides information about an employee's participation in a retirement plan. Employers must carefully consider which box to check in Box 13, as it can have significant tax and reporting implications. By using the Retirement Plan Checkbox Decision Chart, employers can ensure that they are complying with all relevant laws and regulations.