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Retirement account/tax filing/I feel stupid


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What's with the ads?

#1 Carrie12345

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Posted 13 January 2018 - 05:53 AM

Dh has a new (2017) profit sharing 401k.  It isn't fully vested, and we didn't touch the portion that is.  I know we don't have to pay taxes on it right now, but does it need to be reported in our filing this year?

 

We weren't given any real documentation on it at the time except for a computer screen shot, so I don't know what to expect them to send, if anything, with tax documents.  It's a tiny company, and their human resources/payroll department is... not the best.  Because our health insurance costs are directly tied to our income, it's kind of important that I know what to expect!


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#2 Lanny

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Posted 13 January 2018 - 07:31 AM

I Googled on FreeTaxUSA (the company I file my U.S. returns with now) and this URL should be of interest to you:

 

https://www.freetaxu...ome&faq_id=1487

 

I suggest that you do that on 1 or 2 other  tax preparation web sties, for the "peace of mind". TaxAct, etc.

 

The link I put above here     states that you do not report Income from these

 

NOTE: I think it would be nice if they did provide some information to your DH about how the 401K is doing. The Stock Market has gone up substantially during the past year. Hopefully his 401K is doing well...


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#3 Prairie~Phlox

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Posted 13 January 2018 - 07:39 AM

Remember they have until Jan 31st to supply documents, so they may still??

#4 Beth S

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Posted 13 January 2018 - 07:40 AM

I'm not a tax expert (& I didn't check Lanny's link), but usually this information is included on the employee's W-2, that is received by Jan 31. 

 

ETA = W-2. :)


Edited by Beth S, 13 January 2018 - 11:00 AM.

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#5 Selkie

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Posted 13 January 2018 - 08:02 AM

Yes, you will need that info for your taxes. The employer should be providing employees with information about 401K distributions - they have until Jan. 31 to do so.


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#6 Carrie12345

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Posted 13 January 2018 - 08:16 AM

Okay, so I was able to dig a little deeper after finding the right words, and it's starting to make sense to me.  I'm used to seeing contributions from salary reflected on pay stubs.  Since it's not from salary, I guess it doesn't get documented in the same way.



#7 ThisIsTheDay

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Posted 13 January 2018 - 08:33 AM

Dh has a new (2017) profit sharing 401k.  It isn't fully vested, and we didn't touch the portion that is.  I know we don't have to pay taxes on it right now, but does it need to be reported in our filing this year?

 

We weren't given any real documentation on it at the time except for a computer screen shot, so I don't know what to expect them to send, if anything, with tax documents.  It's a tiny company, and their human resources/payroll department is... not the best.  Because our health insurance costs are directly tied to our income, it's kind of important that I know what to expect!

 

IF you purchase your insurance through the Marketplace, and

IF your 401(k) is a typical employer provided 401(k),

 

then the answer is no, your 401(k) contributions are not counted as income.

 

You can expect everything you need to be on your W-2, as a PP stated.

 

For this purpose, your "income" is actually your "Modified Adjusted Gross Income," called MAGI. For various reasons, it can be helpful to know what is included in MAGI, and how you can change it to best benefit your situation. (For example, if you want to lower your MAGI, you might increase your own 401(k) contribution.)

 

 

Edited: I wrote W-4, which should have been W-2!


Edited by ThisIsTheDay, 13 January 2018 - 01:29 PM.


#8 plansrme

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Posted 13 January 2018 - 12:09 PM

I am an employee benefits attorney in my spare time, so I can handle his:

No, you do not report anything about employer contributions to a profit sharing plan on your 1040 (or anything else) unless/until receive a distribution.  If your husband makes 401(k) contributions, those will show up on his W-2 (they still do not go onto the 1040, though), but employer contributions or matching contributions, if there are any, do not show up anywhere other than on a statement you will probably receive from the plan.  The plan may not, however, automatically send quarterly or annual statements any more; a lot of plans do not.  Instead, they post them online, and you have to go get it when you want a statement.  Also, if this is your husband's first year with this employer, keep in mind that the employer may not make profit sharing contributions every year; and when it does, it may not make them until pretty far into the next year, so it could be a while before a 2017 contribution shows up on a statement.  Also, the plan could have up to a one-year waiting period for profit sharing contributions, which really could mean it will be two years before he sees a contribution.  


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#9 SparklyUnicorn

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Posted 13 January 2018 - 02:48 PM

I've never reported the info.  Where on the tax form would it even go?  Other than maybe on the W-2 stuff.

 

 



#10 Carrie12345

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Posted 13 January 2018 - 03:01 PM

I've never reported the info.  Where on the tax form would it even go?  Other than maybe on the W-2 stuff.

 

I haven't done my own taxes in I don't know how many years, except for 2013 or 2014ish when we didn't make any contributions. I really don't pay much attention while we're getting them done, either, except to answer my own personal info (which doesn't include any income.)



#11 Carrie12345

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Posted 13 January 2018 - 03:04 PM

I am an employee benefits attorney in my spare time, so I can handle his:

No, you do not report anything about employer contributions to a profit sharing plan on your 1040 (or anything else) unless/until receive a distribution.  If your husband makes 401(k) contributions, those will show up on his W-2 (they still do not go onto the 1040, though), but employer contributions or matching contributions, if there are any, do not show up anywhere other than on a statement you will probably receive from the plan.  The plan may not, however, automatically send quarterly or annual statements any more; a lot of plans do not.  Instead, they post them online, and you have to go get it when you want a statement.  Also, if this is your husband's first year with this employer, keep in mind that the employer may not make profit sharing contributions every year; and when it does, it may not make them until pretty far into the next year, so it could be a while before a 2017 contribution shows up on a statement.  Also, the plan could have up to a one-year waiting period for profit sharing contributions, which really could mean it will be two years before he sees a contribution.  

 

Thank you!

 

It was opened and deposited this fall.  It's not his first year there, but it's the first time they've done profit sharing this way instead of a check.  



#12 Selkie

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Posted 13 January 2018 - 03:57 PM

I missed that it was only an employer contribution. In the companies that dh and I own, employees make their own retirement contributions in addition to our employer contribution, and those have to be reported on the W2.