The SECURE 2.0 Act brings important updates to retirement plans, which can affect how employers report on Forms W-2. To help navigate these changes, the IRS has issued a fact sheet highlighting key provisions that may impact reporting.

The SECURE 2.0 Act — an extension of the Setting Every Community Up for Retirement Enhancement Act of 2019 — was designed to help more people prepare for retirement while balancing their current expenses. The updated law includes new 401(k) and 403(b) employer contribution options, adjustments to the required minimum distribution (RMD) age for IRAs, increased catch-up contribution limits and more.

SECURE 2.0 also allows for additional features in employer retirement plans—incentives to encourage employee enrollment. What some companies may not know, however, is that these provisions, when offered by a plan sponsor, may affect the amounts they need to report on their Forms W-2.

Realizing this, the IRS issued a fact sheet, which highlights provisions that may potentially affect these forms. Those provisions are:

  • De minimis financial incentives
    This section allows employers to use a little financial motivation to employees who choose to participate in their employers’ 401(k) or 403(b) plans, such as cash or gift cards. If an employer offers such an incentive, it’s considered part of employees’ income and is subject to regular tax withholding (unless exempted).
  • Roth SIMPLE and Roth SEP IRAs
    Salary reduction contributions to a Roth SEP or Roth SIMPLE IRA plan are subject to federal income tax withholding, as well as to FICA and FUTA taxes. These contributions should be included in boxes 1, 3 and 5 of Form W-2, as well as reported in box 12 with code F for a SEP and code S for a Simple IRA.
  • Designated Roth nonelective and matching contributions
    Both employer-matching and nonelective contributions to a Roth SEP or Roth SIMPLE IRA are not subject to withholding for federal income tax, FICA or FUTA taxes. These contributions must be reported on Form 1099-R in the year the contributions are made. List total amounts in boxes 1 and 2a of Form 1099-R with code 2 or 7 in box 7 and check the IRA/SEP/SIMPLE checkbox. [Refer to Q&A L-7 in Notice 2024-2 published in the Internal Revenue Bulletin.]

Know the copies

You can complete and print various copies — but not Copy A — of Forms W-2, W-2AS, W-2GU and W-2VI on IRS.gov for recipients. Any information entered will automatically appear on the others…except for Copy A, which cannot be completed online to print and file with the Social Security Administration.

If you filed 2023 Form W-2 without following these new guidelines, you may need to file Form W-2C to correct any errors. Refer to the General Instructions for Forms W-2 and W-3 for details on when and how to file Form W-2C.

As you can see, this can get complicated! But don’t worry! At Accu Data, we’re here to help make sure you take full advantage of SECURE 2.0 — and remain in compliance! Contact us today to learn more!