Two Employers Last Year? - Correcting Excess Salary Deferrals
Was there a merger/spin-off at your company last year or a change in payroll vendors? Did you get a new job or hold multiple jobs during 2012?
It’s tax time and before the paperwork starts piling up, you need to review the amounts on all of your W-2s, specifically Box 12 (check the applicable letter code) which reflects your salary deferral contributions to your company’s retirement plan(s). One common mistake that occurs when employers have a merger, spinoff, or change in payroll vendors is having participants contribute beyond the IRS 402(g) limit. The 2012 IRS 402(g) contribution limit was $17,000. For those participants who were age 50 or older, an additional $5,500 may have been made as catch-up contributions for a total contribution of $22,500.
Add-up your salary deferral contributions! If you find that the total salary deferral contribution was too much, you have until April 15th to correct the error by taking the excess contributions with earnings out of the retirement plan by contacting your employer.
Keep in mind for the current 2013 year, the IRS 402(g) limit increased to $17,500 and the catch-up contribution limit remained the same at $5,500.