Monthly Archives: January 2012

In fact, 401(k) plans are becoming more popular, and fewer people stopped making contributions in 2011 than in the two previous years, according to the surveys. Only 2.2% stopped saving in the plans in 2011, compared to 3.4% in 2010 and 5% in 2009.

Click here to read the full article from Reuters.

From the folks at Vanguard:

“When it first became available to defined contribution plans in 2005, the Roth 401(k) was seen by many retirement experts as a vehicle that would mostly benefit highly compensated workers. While there are many reasons why the Roth 401(k) may be an attractive option for higher-income employees, what has surprised many about this innovative plan feature are the benefits it offers participants across the income spectrum, making it advantageous for a wide range of employees and plans.

“In contrast to traditional 401(k) plans in which participants make contributions on a pre-tax basis and don’t pay taxes until they make withdrawals in retirement, the Roth 401(k) allows participants to pay taxes on their retirement savings contributions up front and avoid future taxes on their plan savings in retirement. All withdrawals of Roth savings are free from federal income tax in retirement as long as the participant is at least 59½ years old and their account has been open for at least five years.  Participants in plans that offer the Roth feature can choose to make their contributions on a pre-tax basis, a Roth basis, or some combination of the two.”

Click here to read the full article, including a chart comparing pre-tax 401(k) contributions with Roth 401(k) contributions.

If you do, please consult the Rollover Chart from the IRS.  Also, consult with your tax advisor before completing a rollover.

Upcoming deadlines for calendar-year defined contribution retirement plans include the following key dates:

January 17

• Form 8955-SSA – annual registration statement identifying separated participants with deferred vested benefits
• Notice to terminated vested employees – provide a notice describing the amount of the account balance as of the date of termination to terminated vested employees

January 31

• Form W-2 – provide IRS with report on wages, deferrals, etc.
• Form 1099-R – provide IRS with distributions from pensions, annuities, retirement or profit sharing plans
• Form 945 – annual return of withheld federal income tax from 2011 distributions
• Form 5300 – application for determination for employee benefit plans; for plan sponsors with EIN ending in 1 or 6 (Cycle A)

Contact us for information on preparing the tax and audit documents necessary for your 401(k) or defined contribution retirement plan at 702-384-1120.

The folks at The Employee Benefits Report detailed out the Saver’s Tax Credit that may encourage people to contribute to their retirement plans. Individuals can take a tax credit up to $1,000 ($2,000 if filing jointly) for quailfied retirement plan contributions.

Click here to see who is eligible for the credit, and which contributions qualify.