Excess deferral
Definition Salary deferral contributions, contributions are limited to the lesser of the IRC § 402(g) limit or 100% of compensation. Salary deferral contributions in excess
February 28, 2009
It is not necessary to establish a separate IRA for nondeductible contributions, as all of the individual’s traditional, SEP and SIMPLE IRAs are treated as one IRA for purpose of determining the taxable amount of any distribution from either of those IRAs. For instance, assume he has three IRAs, one with $2,000 nondeductible contribution, another with $4,000 deductible contributions, and the third with $4,000 SEP IRA contribution. If he takes a distribution of $2,000, the distribution will be prorated to include 1/5 nontaxable amount and 4/5 taxable amount, regardless of which of the traditional, SEP or SIMPLE IRA the distribution is taken from.
The individual must file IRS Form 8606 to keep track of the nontaxable (nondeductible) amounts. Form 8606 must also be filed for any year that the IRA owner takes a distribution from any of his traditional, SEP or SIMPLE IRA, so as to determine the taxable and nontaxable portion of the distribution.
Definition Salary deferral contributions, contributions are limited to the lesser of the IRC § 402(g) limit or 100% of compensation. Salary deferral contributions in excess
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
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
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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