Tax Talk on Defined Contribution Plans
In this issue of Tax Talk, we update you on important upcoming compliance deadlines for defined contribution plans and provide a few useful reminders for plan participants as we embark on the new year.
Upcoming Compliance Deadlines
|February 14||Deadline for participant-directed defined contribution plans to provide participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses charged to individual plan accounts during the last quarter of 2022 (due 45 days after the end of the quarter).|
|February 28||Filing of form 1099-R for 2022 distributions are due to the IRS if not filed electronically.|
|March 15||Employer contributions due to the retirement plan’s trust for S-corporations and partnerships with December 31 fiscal year-ends, in order to take deductions with no corporate tax extension. |
Forms 1042 and 1042-S due to the IRS to report income tax withheld from distributions made to nonresident aliens and retirement plan distributions made to nonresident aliens.
Deadline for distributing ADP/ACP refunds without incurring a 10% excise tax on the employer (due 2½ months following the plan year-end).
Deadline to apply to the IRS for a waiver of the minimum funding standard for defined benefit and money purchase pension plans (due no later than the 15th day of the third month after the close of the plan year for which the waiver is requested).
|March 31||Electronic filings of Form 1099-R for 2022 distributions are due to the IRS.|
About two-thirds (63%) of workers report they are currently saving for retirement. Having an employer-sponsored retirement savings plan is a key factor in whether Americans save for retirement. Only 16% of those without access to an employer-sponsored plan said they have any retirement savings.Source: Social Security Administration
It’s a new year! Remind participants to:
Update Their Beneficiaries
When it comes to beneficiary designations, many participants may “set it and forget it,” assuming plan custodians and administrators are responsible for beneficiary information and updates. Others mistakenly believe that they are taken care of by having a will or estate plan. Costly mistakes and potential heartache for loved ones can be avoided with this simple but important reminder.
Increase Their Contribution Rate
Increasing this percentage at the beginning of each year, with the goal of ultimately saving at least 15% of their salary annually, is a worthwhile strategy for participants to adopt on their road to a comfortable retirement. The contribution limit for 401(k), 403(b) and 457 plans increased in 2023. Participants can now contribute up to $22,500 which is a $2,000 increase from last year’s $20,500 limit. If the participant is age 50 or older, the 2023 maximum limit is $30,000, which includes the $7,500 catch up contribution allowance for 2023.
We Welcome Your Questions
If you have any concerns or inquiries on meeting any of these deadlines, don’t hesitate to reach out to your trusted ABG Southwest relationship manager. Contact us.