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Date: November 18, 2016

Bulletin Number: 1528

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Subject Retirement Plan Checkbox on Form W-2 (Wage and Tax Statement) for Calendar Year 2016

Purpose To explain why the Retirement Plan check box in Box 13 of Form W-2 must be checked for most employees and left unchecked for others.

Affected Employees Employees receiving a 2016 Form W-2.

Effective Date(s) Immediately.

Background Internal Revenue Service (IRS) Instructions for Form W-2 require that the Retirement Plan check box in Box 13 be checked for every employee who is either:
  • Covered* by an employer provided retirement plan

or

  • An active participant for any part of 2016 in an annuity account described in IRC Section 403(b) – applicable only to employees of SUNY, CUNY and the NYS Education Department.

*IRS Publication 590A - Individual Retirement Arrangements (IRAs) clarifies that if an employer provides a retirement plan, any individual that is eligible to join the plan is considered covered by the plan even if the individual elects not to join or does not contribute to the plan.

Nearly all State of New York government positions provide eligibility for retirement system membership.  Therefore, most State of New York employees are considered covered and will have the Retirement Plan check box checked on their 2016 Form W-2.

Exceptions to Checking the Retirement Plan Check Box Certain employees and positions are not covered by a retirement plan and should not have the Retirement Plan check box checked.

According to IRS Active Participant Rules (Notice 87-16, 1987-1 C.B. 446), employees receiving retirement benefits from a previous employer’s plan are not considered covered by that plan.  Therefore, most rehired retirees (commonly known as Section 211 and 212 employees) receiving benefits from a retirement system of the State of New York as a result of previous state, city or municipal employment, should not have their Form  W-2 Retirement Plan check box in Box 13 checked.

Impact of Retirement Plan Eligibility to Traditional Individual Retirement Arrangements (IRA’s) Employees should be aware that they are not prevented from making contributions to a Traditional Individual Retirement Arrangement as a result of the Retirement Plan check box being checked.

As explained in Publication 590-A, limits on the amount that can be deducted do not affect the amount that can be contributed.  The IRS utilizes the Retirement Plan check box in Box 13 to determine what amount, if any, the employee is eligible to take as an IRA deduction on their individual tax return based on their income and filing status.

OSC Actions OSC will automatically check the Retirement Plan check box in Box 13 for all employees as a default.

OSC will identify employees who have retired from the State of New York subsequent to the conversion to PayServ and prior to January 1, 2016 and uncheck the Retirement Plan check box in Box 13 for these employees.

Agency Actions OSC is unable to identify:
  1. Pre-PayServ retirees of the State of New York

or

  1. Employees who retired from a local level government employer in New York State prior to January 1, 2016.

As a result, OSC must rely on agencies to identify employees that meet either of these conditions.

After these employees have been identified, agencies must send an email, with a spreadsheet, to the Tax and Compliance mailbox containing the DeptID, employee name, and the complete NYS EMPLID number of all employees OSC should uncheck the Retirement Plan check box for no later than December 9, 2016.

SUNY, CUNY and NYS Education Department agencies must carefully review the payroll records of rehired retirees to confirm that the employee did not make 403(b) contributions during 2016 to any of the following 403(b) plans before requesting OSC to uncheck the Retirement Plan check box.

403 – Supplemental Retirement Annuity CUNY
404 – Supplemental Retirement Annuity Program
408 – SUNY TDA Fidelity
413 – NBE Tax Deferred Annuity
414 – NYT Tax Deferred Annuity
415 – SUNY Tax Deferred Annuity
417 – HRC TDA
419 – CUNY TDA Copeland
432 – ED TDA Copeland

New:  OSC will be running a program to automatically uncheck the Retirement checkbox based on the employee names provided by Agencies.  Agencies who add a new row in an Employee’s tax record after January 9, 2017 up to and including January 13, 2017, must review the Federal Tax Data page and confirm the accuracy of the Retirement Plan checkbox.  Agencies that have added a new row must use an effective date no earlier than January 1, 2017.  Using an effective date before January 1, 2017 will reverse the actions of the program.

Questions Questions regarding this bulletin may be emailed to the Tax and Compliance mailbox.