Catch-up Contribution
Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the
March 3, 2009
Answer
Yes. As provided under http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000404—-000-.html IRC. §404(h)(1)(C), if an employer contributes an amount in excess of the 25% (of “net earnings from self-employment”) deductible limit, the amount is deductible in succeeding tax years. The amount will also be subject to the 25% limit for those years. For this purpose, a SEP IRA is treated as a https://retirementdictionary.com/definitions/qualifiedretirementplan qualified plan –as provided under http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00004972—-000-.html IRC. §4972- and the excess amount is therefore subject to the 10% annual penalty tax on nondeductible excess contribution (Cite http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00004972—-000-.html IRC. §4972(d)(1)(A)(iii)).
The 10% penalty tax must be reported on https://retirementdictionary.com/definitions/5330-irs-form-5330 IRS Form 5330.
Note: The SEP IRA custodian will report the SEP contribution on IRS Form 5498 for the year they received the amount. The carry-forward occurs on the books and records- including tax return- of the employer. No adjustment is done by the SEP IRA custodian.
Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the
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Definition The compensation cap is the maximum amount of compensation that may be taken into consideration when determining contributions to employer sponsored retirement plans, such
by Denise Appleby The IRS issued private letter ruling (PLR) 201437023, allowing an IRA custodian to treat IRA contributions as received ‘timely’, if instructions are submitted
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