DetailsFederal tax guidelines impose specific limits on benefit plans that result in deferred compensation. Deferred Comp Plan Codes define deferred compensation plans such as 401(k) and 403(b) and associated limit information as established by regulatory guidelines.
The limits for each deferred compensation plan are verified on the Deferred Comp Plan Codes on the Deferred Comp Plan Codes Table. Any modifications to the limits should be applied on the Deferred Comp Plan Codes Table. The maximum employer match also is defined on the deferred compensation plan code.
When a deferred compensation plan is selected on a Deduction Code, the limits from the Deferred Comp Plan Code transfer to all associated Employee Deduction Detail records, and payroll processing updates the adjusted limit per employee processed.
The W-2 Retirement Plan Box 13 is marked when the employee has an Employee Deduction Detail for a deduction (employee or employer) linked to a deferred compensation plan that has a selected W-2 Retirement Plan checkbox. This occurs regardless of whether the employee or employer contribute, and whether or not the deduction has zero amounts. Due to this, employees who don't contribute, but whose employer does, also have the Retirement Plan box marked on the W-2. Additionally, for those who are eligible, but neither the employee nor the employer contribute, a deduction with zero amounts can be assigned to the employee to cause the Retirement Plan checkbox to be marked on the W-2.
Refer to your corporate accountant if you are unsure as to what is an eligible retirement plan.