Calendar Year, Tax Year:
What’s the difference?
As the year comes to a close, here’s a reminder about when to use Calendar Year and Tax Year information.
Calendar Year refers to salary earned during a calendar year. It’s used to determine retirement benefits, and the corresponding period dates identify when an employee earned the salary.
If a pay period begins in one year and ends in the next, all of the salary earned applies to the next year.
Examples: A pay period ending December 26, 2015, is earned in 2015. A pay period from December 27, 2015, to January 19, 2016, is earned in 2016.
Tax Year refers to salary paid during a calendar year. Because savings plan participants are subject to tax year requirements, which include maximum deferral limits,
the year the employee physically receives the money is important for when you report 401(k) and 457 contributions.
Examples: A pay period ending December 26, 2015, has a tax year of 2015 only if the paycheck is given to the employee on or before December 31, 2015.
A pay period ending December 27, 2015, has a tax year of 2016 if the paycheck is given to the employee any time between January 1, 2016, and December 31, 2016.
If you create your files on our website, update the Tax Year field for December and January transmissions accordingly to avoid delays.
If you use other software, update the programs that create the tax year on the file format’s header record (HDR11) or contact the software vendor for help.
401(k) and 457 Plan Contribution Limits
The 2016 contribution limits for the 401(k) and 457 plans is $18,000 with an additional age 50 catch-up provision of $6,000.
So for those employees age 50 or older the limit is $24,000 into each plan (401(k) and 457) for a combined total of $48,000.
For those under the age of 50 the combined limit would be $36,000 ($18,000 for each plan).
Roth and Traditional IRA Contribution Limits
The 2016 contribution limit for both the traditional and Roth IRA is $5,500, with an additional age 50 catch-up provision of $1,000.
Also, remember the IRA limit is combined so employees are limited to a total of $5,500/$6,500 for all of the IRAs that they own.
New Tier 2 Publications
Employees new to URS as of July 1, 2011 must choose between the Tier 2 Hybrid Retirement System and Tier 2 Defined Contribution Plan.
The publications below can help them choose. Printed copies are also available. E-mail firstname.lastname@example.org.
Quick Breakdown of the Two Plans
Tier 2 Highlights Brochures
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