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2010 Tax Return Online

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2010 Tax Return Online

2010 tax return online 8. 2010 tax return online   Distributions and Rollovers Table of Contents DistributionsMinimum Required Distributions No Special 10-Year Tax Option Transfer of Interest in 403(b) ContractAfter-tax contributions. 2010 tax return online Permissive service credit. 2010 tax return online Tax-Free RolloversHardship exception to rollover rules. 2010 tax return online Eligible retirement plans. 2010 tax return online Nonqualifying distributions. 2010 tax return online Second rollover. 2010 tax return online Gift Tax Distributions Permissible distributions. 2010 tax return online   Generally, a distribution cannot be made from a 403(b) account until the employee: Reaches age 59½, Has a severance from employment, Dies, Becomes disabled, In the case of elective deferrals, encounters financial hardship, or Has a qualified reservist distribution. 2010 tax return online In most cases, the payments you receive or that are made available to you under your 403(b) account are taxable in full as ordinary income. 2010 tax return online In general, the same tax rules apply to distributions from 403(b) plans that apply to distributions from other retirement plans. 2010 tax return online These rules are explained in Publication 575. 2010 tax return online Publication 575 also discusses the additional tax on early distributions from retirement plans. 2010 tax return online Retired public safety officers. 2010 tax return online   If you are an eligible retired public safety officer, distributions of up to $3,000, made directly from your 403(b) plan to pay accident, health, or long-term care insurance, are not included in your taxable income. 2010 tax return online The premiums can be for you, your spouse, or your dependents. 2010 tax return online   A public safety officer is a law enforcement officer, fire fighter, chaplain, or member of a rescue squad or ambulance crew. 2010 tax return online   For additional information, see Publication 575. 2010 tax return online Distribution for active reservist. 2010 tax return online   The 10% penalty for early withdrawals will not apply to a qualified reservist distribution attributable to elective deferrals from a 403(b) plan. 2010 tax return online A qualified reservist distribution is a distribution that is made: To an individual who is a reservist or national guardsman and who was ordered or called to active duty for a period in excess of 179 days or for an indefinite period; and During the period beginning on the date of the order or call to duty and ending at the close of the active duty period. 2010 tax return online Minimum Required Distributions You must receive all, or at least a certain minimum, of your interest accruing after 1986 in the 403(b) plan by April 1 of the calendar year following the later of the calendar year in which you become age 70½, or the calendar year in which you retire. 2010 tax return online Check with your employer, plan administrator, or provider to find out whether this rule also applies to pre-1987 accruals. 2010 tax return online If not, a minimum amount of these accruals must begin to be distributed by the later of the end of the calendar year in which you reach age 75 or April 1 of the calendar year following retirement. 2010 tax return online For each year thereafter, the minimum distribution must be made by the last day of the year. 2010 tax return online If you do not receive the required minimum distribution, you are subject to a nondeductible 50% excise tax on the difference between the required minimum distribution and the amount actually distributed. 2010 tax return online No Special 10-Year Tax Option A distribution from a 403(b) plan does not qualify as a lump-sum distribution. 2010 tax return online This means you cannot use the special 10-year tax option to calculate the taxable portion of a 403(b) distribution. 2010 tax return online For more information, see Publication 575. 2010 tax return online Transfer of Interest in 403(b) Contract Contract exchanges. 2010 tax return online   If you transfer all or part of your interest from a 403(b) contract to another 403(b) contract (held in the same plan), the transfer is tax free, and is referred to as a contract exchange. 2010 tax return online This was previously known as a 90-24 transfer. 2010 tax return online A contract exchange is similar to a 90-24 transfer with one major difference. 2010 tax return online Previously, you were able to accomplish the transfer without your employer’s involvement. 2010 tax return online After September 24, 2007, all such transfers are accomplished through a contract exchange requiring your employer’s involvement. 2010 tax return online In addition, the plan must provide for the exchange and the transferred interest must be subject to the same or stricter distribution restrictions. 2010 tax return online Finally, your accumulated benefit after the exchange must be equal to what it was before the exchange. 2010 tax return online   Transfers that do not satisfy this rule are plan distributions and are generally taxable as ordinary income. 2010 tax return online Plan-to-plan transfers. 2010 tax return online   You may also transfer part or all of your interest from a 403(b) plan to another 403(b) plan if you are an employee of (or were formerly employed by) the employer of the plan to which you would like to transfer. 2010 tax return online Both the initial plan and the receiving plan must provide for transfers. 2010 tax return online Your accumulated benefit after the transfer must be at least equal to what it was before the transfer. 2010 tax return online The new plan’s restrictions on distributions must be the same or stricter than those of the original plan. 2010 tax return online Tax-free transfers for certain cash distributions. 2010 tax return online   A tax-free transfer may also apply to a cash distribution of your 403(b) account from an insurance company that is subject to a rehabilitation, conservatorship, insolvency, or similar state proceeding. 2010 tax return online To receive tax-free treatment, you must do all of the following: Withdraw all the cash to which you are entitled in full settlement of your contract rights or, if less, the maximum permitted by the state. 2010 tax return online Reinvest the cash distribution in a single policy or contract issued by another insurance company or in a single custodial account subject to the same or stricter distribution restrictions as the original contract not later than 60 days after you receive the cash distribution. 2010 tax return online Assign all future distribution rights to the new contract or account for investment in that contract or account if you received an amount that is less than what you are entitled to because of state restrictions. 2010 tax return online   In addition to the preceding requirements, you must provide the new insurer with a written statement containing all of the following information: The gross amount of cash distributed under the old contract. 2010 tax return online The amount of cash reinvested in the new contract. 2010 tax return online Your investment in the old contract on the date you receive your first cash distribution. 2010 tax return online   Also, you must attach the following items to your timely filed income tax return in the year you receive the first distribution of cash. 2010 tax return online A copy of the statement you gave the new insurer. 2010 tax return online A statement that includes: The words ELECTION UNDER REV. 2010 tax return online PROC. 2010 tax return online 92-44, The name of the company that issued the new contract, and The new policy number. 2010 tax return online Direct trustee-to-trustee transfer. 2010 tax return online   If you make a direct trustee-to-trustee transfer, from your governmental 403(b) account to a defined benefit governmental plan, it may not be includible in gross income. 2010 tax return online   The transfer amount is not includible in gross income if it is made to: Purchase permissive service credits, or Repay contributions and earnings that were previously refunded under a forfeiture of service credit under the plan, or under another plan maintained by a state or local government employer within the same state. 2010 tax return online After-tax contributions. 2010 tax return online   For distributions beginning after December 31, 2006, after-tax contributions can be rolled over between a 403(b) plan and a defined benefit plan, IRA, or a defined contribution plan. 2010 tax return online If the rollover is to or from a 403(b) plan, it must occur through a direct trustee-to-trustee transfer. 2010 tax return online Permissive service credit. 2010 tax return online   A permissive service credit is credit for a period of service recognized by a defined benefit governmental plan only if you voluntarily contribute to the plan an amount that does not exceed the amount necessary to fund the benefit attributable to the period of service and the amount contributed is in addition to the regular employee contribution, if any, under the plan. 2010 tax return online   A permissive service credit may also include service credit for up to 5 years where there is no performance of service, or service credited to provide an increased benefit for service credit which a participant is receiving under the plan. 2010 tax return online   Check with your plan administrator as to the type and extent of service that may be purchased by this transfer. 2010 tax return online Tax-Free Rollovers You can generally roll over tax free all or any part of a distribution from a 403(b) plan to a traditional IRA or a non-Roth eligible retirement plan, except for any nonqualifying distributions, described later. 2010 tax return online You may also roll over any part of a distribution from a 403(b) plan by converting it through a direct rollover, described below, to a Roth IRA. 2010 tax return online Conversion amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. 2010 tax return online See Publication 590 for more information about conversion into a Roth IRA. 2010 tax return online Note. 2010 tax return online A participant is required to roll over distribution amounts received within 60 days in order for the amount to be treated as nontaxable. 2010 tax return online Distribution amounts that are rolled over within the 60 days are not subject to the 10% early distribution penalty. 2010 tax return online Rollovers to and from 403(b) plans. 2010 tax return online   You can generally roll over tax free all or any part of a distribution from an eligible retirement plan to a 403(b) plan. 2010 tax return online Beginning January 1, 2008, distributions from tax-qualified retirement plans and tax-sheltered annuities can be converted by making a direct rollover into a Roth IRA subject to the restrictions that currently apply to rollovers from a traditional IRA into a Roth IRA. 2010 tax return online Converted amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. 2010 tax return online See Publication 590 for more information on conversion into a Roth IRA. 2010 tax return online   If a distribution includes both pre-tax contributions and after-tax contributions, the portion of the distribution that is rolled over is treated as consisting first of pre-tax amounts (contributions and earnings that would be includible in income if no rollover occurred). 2010 tax return online This means that if you roll over an amount that is at least as much as the pre-tax portion of the distribution, you do not have to include any of the distribution in income. 2010 tax return online   For more information on rollovers and eligible retirement plans, see Publication 575. 2010 tax return online If you roll over money or other property from a 403(b) plan to an eligible retirement plan, see Publication 575 for information about possible effects on later distributions from the eligible retirement plan. 2010 tax return online Hardship exception to rollover rules. 2010 tax return online   The IRS may waive the 60-day rollover period if the failure to waive such requirement would be against equity or good conscience, including cases of casualty, disaster, or other events beyond the reasonable control of an individual. 2010 tax return online   To obtain a hardship exception, you must apply to the IRS for a waiver of the 60-day rollover requirement. 2010 tax return online You apply for the waiver by following the general instructions used in requesting a letter ruling. 2010 tax return online These instructions are stated in Revenue Procedure 2013-4, 2013-1 I. 2010 tax return online R. 2010 tax return online B. 2010 tax return online 126 available at www. 2010 tax return online irs. 2010 tax return online gov/irb/2013-01_IRB/ar09. 2010 tax return online html, or see the latest annual update. 2010 tax return online You must also pay a user fee with the application. 2010 tax return online The user fee for a rollover that is less than $50,000 is $500. 2010 tax return online For rollovers that are $50,000 or more, see Revenue Procedure 2013-8, 2013-1 I. 2010 tax return online R. 2010 tax return online B. 2010 tax return online 237 available at www. 2010 tax return online irs. 2010 tax return online gov/irb/2013-01_IRB/ar13. 2010 tax return online html, or see the latest annual update. 2010 tax return online   In determining whether to grant a waiver, the IRS will consider all relevant facts and circumstances, including: Whether errors were made by the financial institution; Whether you were unable to complete the rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error; Whether you used the amount distributed (for example, in the case of payment by check, whether you cashed the check); and How much time has passed since the date of distribution. 2010 tax return online   For additional information on rollovers, see Publication 590. 2010 tax return online Eligible retirement plans. 2010 tax return online   The following are considered eligible retirement plans. 2010 tax return online Individual retirement arrangements. 2010 tax return online Roth IRA. 2010 tax return online 403(b) plans. 2010 tax return online Government eligible 457 plans. 2010 tax return online Qualified retirement plans. 2010 tax return online  If the distribution is from a designated Roth account, then the only eligible retirement plan is another designated Roth account or a Roth IRA. 2010 tax return online Nonqualifying distributions. 2010 tax return online   You cannot roll over tax free: Minimum required distributions (generally required to begin at age 70½), Substantially equal payments over your life or life expectancy, Substantially equal payments over the joint lives or life expectancies of your beneficiary and you, Substantially equal payments for a period of 10 years or more, Hardship distributions, or Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or excess annual additions and any allocable gains. 2010 tax return online Rollover of nontaxable amounts. 2010 tax return online    You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another eligible retirement plan, traditional IRA, or Roth IRA. 2010 tax return online The transfer must be made either through a direct rollover to an eligible plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional IRA or Roth IRA. 2010 tax return online   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. 2010 tax return online Direct rollovers of 403(b) plan distributions. 2010 tax return online   You have the option of having your 403(b) plan make the rollover directly to a traditional IRA, Roth IRA, or new plan. 2010 tax return online Before you receive a distribution, your plan will give you information on this. 2010 tax return online It is generally to your advantage to choose this option because your plan will not withhold tax on the distribution if you choose it. 2010 tax return online Distribution received by you. 2010 tax return online   If you receive a distribution that qualifies to be rolled over, you can roll over all or any part of the distribution. 2010 tax return online Generally, you will receive only 80% of the distribution because 20% must be withheld. 2010 tax return online If you roll over only the 80% you receive, you must pay tax on the 20% you did not roll over. 2010 tax return online You can replace the 20% that was withheld with other money within the 60-day period to make a 100% rollover. 2010 tax return online Voluntary deductible contributions. 2010 tax return online   For tax years 1982 through 1986, employees could make deductible contributions to a 403(b) plan under the individual retirement arrangement (IRA) rules instead of deducting contributions to a traditional IRA. 2010 tax return online   If you made voluntary deductible contributions to a 403(b) plan under these traditional IRA rules, the distribution of all or part of the accumulated deductible contributions may be rolled over if it otherwise qualifies as a distribution you can roll over. 2010 tax return online Accumulated deductible contributions are the deductible contributions: Plus Income allocable to the contributions, Gain allocable to the contributions, and Minus Expenses and losses allocable to the contributions, and Distributions from the contributions, income, or gain. 2010 tax return online Excess employer contributions. 2010 tax return online   The portion of a distribution from a 403(b) plan transferred to a traditional IRA that was previously included in income as excess employer contributions (discussed earlier) is not an eligible rollover distribution. 2010 tax return online   Its transfer does not affect the rollover treatment of the eligible portion of the transferred amounts. 2010 tax return online However, the ineligible portion is subject to the traditional IRA contribution limits and may create an excess IRA contribution subject to a 6% excise tax (see chapter 1 of Publication 590). 2010 tax return online Qualified domestic relations order. 2010 tax return online   You may be able to roll over tax free all or any part of an eligible rollover distribution from a 403(b) plan that you receive under a qualified domestic relations order (QDRO). 2010 tax return online If you receive the interest in the 403(b) plan as an employee's spouse or former spouse under a QDRO, all of the rollover rules apply to you as if you were the employee. 2010 tax return online You can roll over your interest in the plan to a traditional IRA or another 403(b) plan. 2010 tax return online For more information on the treatment of an interest received under a QDRO, see Publication 575. 2010 tax return online Spouses of deceased employees. 2010 tax return online   If you are the spouse of a deceased employee, you can roll over the qualifying distribution attributable to the employee. 2010 tax return online You can make the rollover to any eligible retirement plan. 2010 tax return online   After you roll money and other property over from a 403(b) plan to an eligible retirement plan, and you take a distribution from that plan, you will not be eligible to receive the capital gain treatment or the special averaging treatment for the distribution. 2010 tax return online Second rollover. 2010 tax return online   If you roll over a qualifying distribution to a traditional IRA, you can, if certain conditions are satisfied, later roll the distribution into another 403(b) plan. 2010 tax return online For more information, see IRA as a holding account (conduit IRA) for rollovers to other eligible plans in chapter 1 of Publication 590. 2010 tax return online Nonspouse beneficiary. 2010 tax return online   A nonspouse beneficiary may make a direct rollover of a distribution from a 403(b) plan of a deceased participant if the rollover is a direct transfer to an inherited IRA established to receive the distribution. 2010 tax return online If the rollover is a direct trustee-to-trustee transfer to an IRA established to receive the distribution: The transfer will be treated as an eligible rollover distribution. 2010 tax return online The IRA will be considered an inherited account. 2010 tax return online The required minimum distribution rules that apply in instances where the participant dies before the entire interest is distributed will apply to the transferred IRA. 2010 tax return online    For more information on IRAs, see Publication 590. 2010 tax return online Frozen deposits. 2010 tax return online   The 60-day period usually allowed for completing a rollover is extended for any time that the amount distributed is a frozen deposit in a financial institution. 2010 tax return online The 60-day period cannot end earlier than 10 days after the deposit ceases to be a frozen deposit. 2010 tax return online   A frozen deposit is any deposit that on any day during the 60-day period cannot be withdrawn because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because one or more banks in the state are (or are about to be) bankrupt or insolvent. 2010 tax return online Gift Tax If, by choosing or not choosing an election, or option, you provide an annuity for your beneficiary at or after your death, you may have made a taxable gift equal to the value of the annuity. 2010 tax return online Joint and survivor annuity. 2010 tax return online   If the gift is an interest in a joint and survivor annuity where only you and your spouse have the right to receive payments, the gift will generally be treated as qualifying for the unlimited marital deduction. 2010 tax return online More information. 2010 tax return online   For information on the gift tax, see Publication 559, Survivors, Executors, and Administrators. 2010 tax return online Prev  Up  Next   Home   More Online Publications

.gov Reform Effort: Improving Federal Websites

On This Page

Digital Government Strategy

The White House released its Digital Government Strategy, entitled Digital Government: Building a 21st Century Platform to Better Serve the American People, on May 23, 2012. You can also download the Digital Government Strategy as a PDF.

The strategy is a plan for delivering better online service to the American people, with three main objectives:

  • Enable citizens and an increasingly mobile workforce to access high-quality digital government information and services anywhere, anytime, on any device.
  • Ensure that as the government adjusts to this new digital world, we seize the opportunity to procure and manage devices, applications, and data in smart, secure and affordable ways.
  • Unlock the power of government data to spur innovation across our Nation and improve the quality of services for the American people.

The Digital Government Strategy was created from a broad range of input across government: the Mobility Strategy and Web Reform Task Forces, the Office of Management and Budget, the General Services Administration, Federal CIOs, new media directors, and web managers. The Strategy also draws on research from the State of the Federal Web Report (PDF) and public input from the National Dialogue for Improving Federal Websites and the National Dialogue on the Federal Mobility Strategy.

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What is the .gov reform effort?

The .gov reform effort began in 2011 as part of President Obama's Campaign to Cut Waste, identifying unnecessary websites that can be consolidated into other websites to reduce costs and improve the quality of service to the American public.

The reform effort led to the development of a federal web strategy, which was merged with the federal mobility strategy to create the Digital Government Strategy. This broader initiative focuses not only on website consolidation, but also on innovating with less and delivering better quality content and information to the public across multiple platforms and devices.

What is the federal government doing to improve federal websites?

In the June 13, 2011, OMB Memorandum M-11-24, Implementing Executive Order 13571 on Streamlining Service Delivery and Improving Customer Service (PDF), agencies are directed to improve online services and eliminate wasteful spending. They must work to manage web resources more efficiently and assure that valuable content is readily accessible and available online. To date, the reform effort has:

  • Instituted a freeze on the approval of new .gov domain names and developed stronger criteria for getting a new domain.
  • Set up the .gov Reform Task Force to recommend updates to federal web guidelines and policies.
  • Posted and updated a list of all registered .gov domain names on Data.gov.
  • Asked agencies to identify sites that can be eliminated, consolidated, and/or streamlined.
  • Conducted an inventory of federal domains and sites, a survey of federal web governance policies and a national dialogue on improving federal web sites, and used the data to create the State of the Federal Web report.
  • Required agencies to develop Web Improvement Plans (included in the State of the Federal Web Report).
  • Worked with others across government to develop the Digital Government Strategy.

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Who's responsible for managing this effort?

The Office of Management and Budget (OMB), the General Services Administration (GSA), the Office of Science and Technology Policy (OSTP), the Chief Information Officers Council, and the Federal Web Managers Council are working with agencies to manage this effort. The .gov Task Force, whose members are listed below, is leading this effort.

Where can I see a list of federal websites?

The list of federal executive branch .gov domains was published July 12, 2011 on Data.gov. It does not include .gov domains/URLs in the federal legislative or judicial branches or from state, local, or tribal governments. It also does not include sub-domains that are below the root domain, such as ers.usda.gov or niaid.nih.gov.

Since each domain can have an unlimited number of potential websites and URLs under them, the total number of websites in the entire federal government is much larger than the number of domains listed on Data.gov. The inventory will allow us to more closely identify the total number of federal websites over time.

The list of domains will be regularly updated and published on Data.gov. Putting the list on Data.gov will have several benefits:

  • Provide increased access to, and transparency of, government data.
  • Foster accountability in how we manage our federal websites and encourage input from public and private sector experts, customers, developers, and other members of the public.
  • Make it easier for agencies to see the websites they own, that are owned by other agencies, and to increase opportunities for collaboration across government.

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Who is on the .gov Task Force and how were they selected?

The Federal Chief Information Officer selected the members of the .gov Task Force, representing a broad range of agencies and a mix of perspectives and skills.

Task force members:

  • Les Benito, Director, Public Web at Defense Media Activity
  • Gray Brooks, Associate CIO, Federal Communications Commission
  • Sheila Campbell, Director, Center for Excellence in Digital Government, Office of Citizen Services, General Services Administration
  • Sarah Crane, Director, USA.gov, Office of Citizen Services, General Services Administration
  • Cammie Croft, Senior Advisor, Director of New Media and Citizen Engagement, Department of Energy
  • Linda Cureton, Chief Information Officer, NASA
  • Terry Davis, IT Specialist, Department of Defense
  • Nick Fraser, Office of Information and Regulatory Affairs, Office of Management and Budget, Executive Office of the President
  • Miguel Gomez, Director, AIDS.gov, Health and Human Services
  • Jeffrey Levy, Director of Web Communications, Environmental Protection Agency, and Co-Chair, Federal Web Managers Council
  • Dan Munz, IT Specialist, Consumer Financial Protection Bureau
  • Adam Neufeld, Office of Management and Budget, Executive Office of the President
  • Todd Park, U.S. Chief Technology Officer
  • Macon Phillips, Director of Digital Strategy, The White House
  • Stacy Riggs, Office of Government-wide Policy, General Services Administration
  • Rand Ruggieri, EGov Program Manager, Department of Commerce
  • Janet Stevens, Chief Information Officer, Food Safety and Inspection Service, Department of Agriculture
  • Kodiak Starr, Creative Director of New Media, Executive Office of the President
  • Haley Van Dyck, Office of E-Gov and Information Technology, Office of Management and Budget, Executive Office of the President
  • Chris Vein, Deputy U.S. Chief Technology Officer for Government Innovation, Office of Science and Technology Policy, Executive Office of the President
  • Jim Wilson, Senior Editor, NASA.gov

We plan to consult with additional subject matter experts, customers, and others as needed, to provide expertise on such areas as user-centered design, search, information management policy, privacy and security issues, and overall Internet trends such as the growth of mobile and social media.

How was the public involved in improving federal websites?

During this initiative we've invited you to join the conversation about improving federal websites. Releasing the .gov dataset on Data.gov was the first step. We enabled commenting on the dataset, and considered your ideas and comments as we developed the domain inventory.

As we've seen in other efforts, making government data transparent can spark the creativity of many bright minds across the country. We hope the public will continue to explore, discuss, and remix this data, and maybe even use it to map the .gov domain in ways we haven't seen before.

From September 19–30, 2011, we hosted a "national dialogue"–an online conversation that brought together experts, innovators, and ordinary citizens who rely on federal information every day. We discussed how federal agencies can learn from, and contribute to, the best practices of the modern web. It was a discussion filled with ideas and energy.

If you have questions about the .gov Task Force, contact Alycia Piazza at alycia.piazza@gsa.gov.

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Content Lead: Natalie Davidson and Andrea Sigritz
Page Reviewed/Updated: October 22, 2013

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The 2010 Tax Return Online

2010 tax return online 2. 2010 tax return online   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. 2010 tax return online How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. 2010 tax return online Deferral percentage. 2010 tax return online Employee compensation. 2010 tax return online Compensation of self-employed individuals. 2010 tax return online Choice not to treat deferrals as compensation. 2010 tax return online Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. 2010 tax return online Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. 2010 tax return online S. 2010 tax return online Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. 2010 tax return online Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. 2010 tax return online A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. 2010 tax return online SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). 2010 tax return online A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). 2010 tax return online Eligible employee. 2010 tax return online   An eligible employee is an individual who meets all the following requirements. 2010 tax return online Has reached age 21. 2010 tax return online Has worked for you in at least 3 of the last 5 years. 2010 tax return online Has received at least $550 in compensation from you in 2013. 2010 tax return online This amount remains the same in 2014. 2010 tax return online    You can use less restrictive participation requirements than those listed, but not more restrictive ones. 2010 tax return online Excludable employees. 2010 tax return online   The following employees can be excluded from coverage under a SEP. 2010 tax return online Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. 2010 tax return online Nonresident alien employees who have received no U. 2010 tax return online S. 2010 tax return online source wages, salaries, or other personal services compensation from you. 2010 tax return online For more information about nonresident aliens, see Publication 519, U. 2010 tax return online S. 2010 tax return online Tax Guide for Aliens. 2010 tax return online Setting Up a SEP There are three basic steps in setting up a SEP. 2010 tax return online You must execute a formal written agreement to provide benefits to all eligible employees. 2010 tax return online You must give each eligible employee certain information about the SEP. 2010 tax return online A SEP-IRA must be set up by or for each eligible employee. 2010 tax return online Many financial institutions will help you set up a SEP. 2010 tax return online Formal written agreement. 2010 tax return online   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. 2010 tax return online You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. 2010 tax return online However, see When not to use Form 5305-SEP, below. 2010 tax return online   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. 2010 tax return online Keep the original form. 2010 tax return online Do not file it with the IRS. 2010 tax return online Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. 2010 tax return online See the Form 5305-SEP instructions for details. 2010 tax return online If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. 2010 tax return online When not to use Form 5305-SEP. 2010 tax return online   You cannot use Form 5305-SEP if any of the following apply. 2010 tax return online You currently maintain any other qualified retirement plan other than another SEP. 2010 tax return online You have any eligible employees for whom IRAs have not been set up. 2010 tax return online You use the services of leased employees, who are not your common-law employees (as described in chapter 1). 2010 tax return online You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. 2010 tax return online An affiliated service group described in section 414(m). 2010 tax return online A controlled group of corporations described in section 414(b). 2010 tax return online Trades or businesses under common control described in section 414(c). 2010 tax return online You do not pay the cost of the SEP contributions. 2010 tax return online Information you must give to employees. 2010 tax return online   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. 2010 tax return online An IRS model SEP is not considered adopted until you give each employee this information. 2010 tax return online Setting up the employee's SEP-IRA. 2010 tax return online   A SEP-IRA must be set up by or for each eligible employee. 2010 tax return online SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. 2010 tax return online You send SEP contributions to the financial institution where the SEP-IRA is maintained. 2010 tax return online Deadline for setting up a SEP. 2010 tax return online   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. 2010 tax return online Credit for startup costs. 2010 tax return online   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. 2010 tax return online For more information, see Credit for startup costs under Reminders, earlier. 2010 tax return online How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. 2010 tax return online If you are self-employed, you can contribute to your own SEP-IRA. 2010 tax return online Contributions must be in the form of money (cash, check, or money order). 2010 tax return online You cannot contribute property. 2010 tax return online However, participants may be able to transfer or roll over certain property from one retirement plan to another. 2010 tax return online See Publication 590 for more information about rollovers. 2010 tax return online You do not have to make contributions every year. 2010 tax return online But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). 2010 tax return online When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. 2010 tax return online Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. 2010 tax return online A SEP-IRA cannot be a Roth IRA. 2010 tax return online Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. 2010 tax return online Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. 2010 tax return online If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. 2010 tax return online Participants age 70½ or over must take required minimum distributions. 2010 tax return online Time limit for making contributions. 2010 tax return online   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. 2010 tax return online Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. 2010 tax return online Compensation generally does not include your contributions to the SEP. 2010 tax return online The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. 2010 tax return online Example. 2010 tax return online Your employee, Mary Plant, earned $21,000 for 2013. 2010 tax return online The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). 2010 tax return online Contributions for yourself. 2010 tax return online   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. 2010 tax return online However, special rules apply when figuring your maximum deductible contribution. 2010 tax return online See Deduction Limit for Self-Employed Individuals , later. 2010 tax return online Annual compensation limit. 2010 tax return online   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. 2010 tax return online However, $51,000 is the maximum contribution for an eligible employee. 2010 tax return online These limits are $260,000 and $52,000, respectively, in 2014. 2010 tax return online Example. 2010 tax return online Your employee, Susan Green, earned $210,000 for 2013. 2010 tax return online Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. 2010 tax return online More than one plan. 2010 tax return online   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. 2010 tax return online When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. 2010 tax return online Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. 2010 tax return online Tax treatment of excess contributions. 2010 tax return online   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. 2010 tax return online 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). 2010 tax return online $51,000. 2010 tax return online Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. 2010 tax return online For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. 2010 tax return online Reporting on Form W-2. 2010 tax return online   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). 2010 tax return online Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. 2010 tax return online If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. 2010 tax return online Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. 2010 tax return online Your contributions (including any excess contributions carryover). 2010 tax return online 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. 2010 tax return online In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. 2010 tax return online Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. 2010 tax return online When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. 2010 tax return online The deduction for the deductible part of your self-employment tax. 2010 tax return online The deduction for contributions to your own SEP-IRA. 2010 tax return online The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. 2010 tax return online For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. 2010 tax return online To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. 2010 tax return online Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. 2010 tax return online Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. 2010 tax return online However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. 2010 tax return online If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. 2010 tax return online Excise tax. 2010 tax return online   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. 2010 tax return online For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. 2010 tax return online When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. 2010 tax return online If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. 2010 tax return online If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. 2010 tax return online Example. 2010 tax return online You are a fiscal year taxpayer whose tax year ends June 30. 2010 tax return online You maintain a SEP on a calendar year basis. 2010 tax return online You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. 2010 tax return online Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. 2010 tax return online For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. 2010 tax return online S. 2010 tax return online Return of Partnership Income; and corporations deduct them on Form 1120, U. 2010 tax return online S. 2010 tax return online Corporation Income Tax Return, or Form 1120S, U. 2010 tax return online S. 2010 tax return online Income Tax Return for an S Corporation. 2010 tax return online Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. 2010 tax return online (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 2010 tax return online , you receive from the partnership. 2010 tax return online ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. 2010 tax return online Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. 2010 tax return online (See the Caution, next. 2010 tax return online ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. 2010 tax return online This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. 2010 tax return online You are not allowed to set up a SARSEP after 1996. 2010 tax return online However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. 2010 tax return online If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. 2010 tax return online Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. 2010 tax return online At least 50% of your employees eligible to participate choose to make elective deferrals. 2010 tax return online You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. 2010 tax return online The elective deferrals of your highly compensated employees meet the SARSEP ADP test. 2010 tax return online SARSEP ADP test. 2010 tax return online   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. 2010 tax return online A highly compensated employee is defined in chapter 1. 2010 tax return online Deferral percentage. 2010 tax return online   The deferral percentage for an employee for a year is figured as follows. 2010 tax return online   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. 2010 tax return online Employee compensation. 2010 tax return online   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. 2010 tax return online Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. 2010 tax return online See Compensation in chapter 1. 2010 tax return online Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. 2010 tax return online Compensation of self-employed individuals. 2010 tax return online   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. 2010 tax return online   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. 2010 tax return online Choice not to treat deferrals as compensation. 2010 tax return online   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. 2010 tax return online Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. 2010 tax return online 25% of the participant's compensation (limited to $255,000 of the participant's compensation). 2010 tax return online $17,500. 2010 tax return online The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. 2010 tax return online Cash or deferred arrangement (section 401(k) plan). 2010 tax return online Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). 2010 tax return online SIMPLE IRA plan. 2010 tax return online In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. 2010 tax return online Catch-up contributions. 2010 tax return online   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. 2010 tax return online The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. 2010 tax return online Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). 2010 tax return online However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. 2010 tax return online The catch-up contribution limit. 2010 tax return online The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. 2010 tax return online   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). 2010 tax return online Overall limit on SEP contributions. 2010 tax return online   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). 2010 tax return online The same rule applies to contributions you make to your own SEP-IRA. 2010 tax return online See Contribution Limits , earlier. 2010 tax return online Figuring the elective deferral. 2010 tax return online   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. 2010 tax return online Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. 2010 tax return online However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. 2010 tax return online Excess deferrals. 2010 tax return online   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. 2010 tax return online For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. 2010 tax return online The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. 2010 tax return online See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. 2010 tax return online Excess SEP contributions. 2010 tax return online   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. 2010 tax return online You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. 2010 tax return online If you do not notify them within this time period, you must pay a 10% tax on the excess. 2010 tax return online For an explanation of the notification requirements, see Rev. 2010 tax return online Proc. 2010 tax return online 91-44, 1991-2 C. 2010 tax return online B. 2010 tax return online 733. 2010 tax return online If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. 2010 tax return online Reporting on Form W-2. 2010 tax return online   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. 2010 tax return online You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. 2010 tax return online You must also include them in box 12. 2010 tax return online Mark the “Retirement plan” checkbox in box 13. 2010 tax return online For more information, see the Form W-2 instructions. 2010 tax return online Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. 2010 tax return online Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. 2010 tax return online Distributions are subject to IRA rules. 2010 tax return online Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. 2010 tax return online For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. 2010 tax return online Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. 2010 tax return online Making excess contributions. 2010 tax return online Making early withdrawals. 2010 tax return online Not making required withdrawals. 2010 tax return online For information about these taxes, see chapter 1 in Publication 590. 2010 tax return online Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. 2010 tax return online Prohibited transaction. 2010 tax return online   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. 2010 tax return online In that case, the SEP-IRA will no longer qualify as an IRA. 2010 tax return online For a list of prohibited transactions, see Prohibited Transactions in chapter 4. 2010 tax return online Effects on employee. 2010 tax return online   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. 2010 tax return online The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. 2010 tax return online Also, the employee may have to pay the additional tax for making early withdrawals. 2010 tax return online Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. 2010 tax return online See Setting Up a SEP , earlier. 2010 tax return online Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. 2010 tax return online You must also give them notice of any excess contributions. 2010 tax return online For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). 2010 tax return online Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. 2010 tax return online For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. 2010 tax return online Prev  Up  Next   Home   More Online Publications