Employer mistake on Box 13 of W2?

[Bearded Man]

So my employer sent me a W2 with Box 13 (retirement plan) checked. Thing is, when I tried to sign up, they told me they were transitioning to the new companies 401K after we got bought out, and I can sign up for that in 2016. Looking at the IRS guidelines, that box should only be checked if I was eligible for a 401K AND actually contributed to it (or had a defined pension plan).

Since this box is checked, if I check the corresponding box on my return, I cannot use an IRA contribution to reduce my taxable income due to my income. Should I just leave it unchecked and file anyway, or contact them to send an updated W2 to the IRS? Basically, how likely is the discrepancy between what they sent me for box 13 and what I actually do with box 13 to result in an audit is basically what I'm wondering, and if it's better to err on the side of caution and have my employer correct the mistake?

[Bearded Man]

Well I emailed them to see.

[MDM]

Basically, how likely is the discrepancy between what they sent me for box 13 and what I actually do with box 13 to result in an audit is basically what I'm wondering, and if it's better to err on the side of caution and have my employer correct the mistake?

As it would be very easy to program a "trying to deduct an IRA when above the allowable income" audit flag, having the employer correct it seems worthwhile.

See page 28 of https://www.irs.gov/pub/irs-pdf/iw2w3.pdf for what your employer is supposed to do regarding the retirement plan checkbox.

[Bearded Man]

Basically, how likely is the discrepancy between what they sent me for box 13 and what I actually do with box 13 to result in an audit is basically what I'm wondering, and if it's better to err on the side of caution and have my employer correct the mistake?

As it would be very easy to program a "trying to deduct an IRA when above the allowable income" audit flag, having the employer correct it seems worthwhile.

See page 28 of https://www.irs.gov/pub/irs-pdf/iw2w3.pdf for what your employer is supposed to do regarding the retirement plan checkbox.

My sentiments exactly, not exactly difficult conditional logic to write. That document is great, thanks. I had sent them a link to another IRS page that shows that if I don't actually contribute funds, then I'm not covered by a retirement plan. We shall see what they say. I suspect that their initial silence (emailed them this AM) is because they are looking into it. Usually they are pretty quick to respond to questions.

[Bearded Man]

HR responded but they think the box should be checked. They don't seem to understand the very clear matrix on page 28...If you didn't actually make a contribution, the box is NOT supposed to be checked.

[shotgunwilly]

Go back to them, and tell them to call a CPA or attorney who actually knows what they are talking about.

[Tester]

File them a ticket (or whatever tracking system you use in your company).
Include the conversation you had with them and include just the line with your situation from the page 28 of the General Instructions document.
I don't think you should prepare to explain IRS things because your HR did a mistake.
Hmm, you could even include this in the TT: "I am sending you this so you are prepared when the IRS will ask me for clarification, as I will direct them to you for a response" :).

Defined contribution plan (for example, a 401(k) or
403(b) plan; a Roth 401(k) or 403(b) account; but not a
457 plan)

Employee contributed in past years but not during the
current tax year under report

No (even if the account value grows due to gains in the
investments)

[Bearded Man]

Yeah I wonder if they will google this thread during their research and see the negative remarks. Totally disappointed in my companies Payroll people.

[MDM]

Yeah I wonder if they will google this thread during their research and see the negative remarks. Totally disappointed in my companies Payroll people.

First double check your perspective.  Then if you are sure you have it right, escalate the issue.  Ask to speak with the person's boss.  Since retiring from Megacorp I've had two issues with payroll/benefits in which the initial company response was the exact opposite of the IRS regulation.  Eventually both were resolved, but only after someone up the line got involved.  I suspect (but don't know for sure) that telling the original contact in so many words "it appears you are in violation of IRS regulations because ___________.  You may want to review this with your supervisor.  If you can explain (citing IRS regulations and/or US Code) why you are not in violation, that would be great.  Otherwise...."

Good luck!

[Tjat]

If its like my company, the first line of defense for any question is for the recent college grad I'm talking to to consult a generic FAQ document and try to present it as fact to get me to go away. Pushing the question up the chain seems to be your best bet

[Bearded Man]

The HR distribution list was on the replies from the Payroll Manager. I sent the documentation, and followed up twice explaining the obvious and simple reasoning but no response.

I could escalate it but not sure if it will really help. Right now I try not to rock the boat too much by attracting attention so that I can keep building my assets and getting my MBA before changing jobs.

Also, I'm not sure it is that important. Boxes 12 a - d are provided for payroll to put codes into that signify what benefits you received. Mine doesn't show the required "D" to indicate 401K contributions in any of the boxes, just a C in one and a DD in another which are for other things, so it does show that I didn't actually contribute to a 401K by lack of the D. It would seem they would account for that conditional logic wise (if x and y, else if, etc.).

Even if they don't, my understanding is an audit starts as letter asking you about discrepancies. I have documentation including the emails with these buffoons and the letter they sent me telling me that I was not eligible to contribute to the 401K due to a freeze out because of a company buyout and would have to enroll in new company plan next year.