As I mentioned before, employers deposit what is called a "safe harbor" into their employees' retirement accounts. These contributions are calculated by us and deposited by the employer. But what happens when our dear employer doesn't pay the amount that we told him to? Well, we get to fill out what's called an IRS Government Form 5530.
If an employer deposits too much into an employee's account, that means that they didn't pay taxes on all the money that they should have. The IRS has strict regulations on the amount of money employers can deposit, because they don't want to be cheated out of tax revenues.
Sometimes it's a big amount that the employer was off by, but oftentimes it's a relatively small number. Even if they overpay by 20 cents, we have to file the 5530 form so they pay taxes on the 20 cents. This form takes a few hours to fill out, and, as all IRS forms are, is a pain in the neck. You can see for yourself how much jargon is in these forms and how much you have to type into these reports here: https://www.irs.gov/pub/irs-pdf/f5330.pdf
Wow! How often / how many of these forms do you fill out?
ReplyDelete