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Level 1

Anyway around block 13 of W-2 form being marked "retirement plan"?

Employer offers retirement plan but employee does not participate. Block 13 of W-2 form indicates "retirement plan". The employee is being denied the deduction for IRA since combined income with spouse is over $119,000 and the employer offers a retirement plan. Anyway around this?

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Level 7

Anyway around block 13 of W-2 form being marked "retirement plan"?

It appears as though the employer may have made a mistake on the W2, you should seek a correction so that your IRA contributions can be deducted and so that the IRS has the correct information.  Review the information below before contacting the employer.

Form W-2, Box 13
The “Retirement plan” indicator in Box 13 shows whether an employee is an "active participant" in your company’s plan. If this box is checked, it lets the recipient know that depending on their filing status and modified adjusted gross income, they may not be entitled to a full deduction for their traditional IRA contributions. You should check the retirement plan box if an employee was an “active participant” for any part of the year in: 

    a qualified pension, profit-sharing, or stock-bonus plan under Internal Revenue Code Section 401(a) (including a 401(k) plan).
    an annuity plan under IRC Section 403(a).
    an annuity contract or custodial account under IRC Section 403(b).
    a simplified employee pension (SEP) under IRC Section 408(k).
    a SIMPLE retirement account under IRC Section 408(p).
    a trust described in IRC Section 501(c)(18).
    a plan for federal, state, or local government employees or by an agency or instrumentality thereof (other than a 457(b) plan).

Active participant
Generally, an employee is an active participant if covered by a:

  • defined contribution plan (for example, a 401(k) plan) for any tax year and is credited with any contributions or forfeitures, or
  • defined benefit plan for any tax year that the employee is eligible to participate (this may be the only issue).
3 Replies
Level 7

Anyway around block 13 of W-2 form being marked "retirement plan"?

It appears as though the employer may have made a mistake on the W2, you should seek a correction so that your IRA contributions can be deducted and so that the IRS has the correct information.  Review the information below before contacting the employer.

Form W-2, Box 13
The “Retirement plan” indicator in Box 13 shows whether an employee is an "active participant" in your company’s plan. If this box is checked, it lets the recipient know that depending on their filing status and modified adjusted gross income, they may not be entitled to a full deduction for their traditional IRA contributions. You should check the retirement plan box if an employee was an “active participant” for any part of the year in: 

    a qualified pension, profit-sharing, or stock-bonus plan under Internal Revenue Code Section 401(a) (including a 401(k) plan).
    an annuity plan under IRC Section 403(a).
    an annuity contract or custodial account under IRC Section 403(b).
    a simplified employee pension (SEP) under IRC Section 408(k).
    a SIMPLE retirement account under IRC Section 408(p).
    a trust described in IRC Section 501(c)(18).
    a plan for federal, state, or local government employees or by an agency or instrumentality thereof (other than a 457(b) plan).

Active participant
Generally, an employee is an active participant if covered by a:

  • defined contribution plan (for example, a 401(k) plan) for any tax year and is credited with any contributions or forfeitures, or
  • defined benefit plan for any tax year that the employee is eligible to participate (this may be the only issue).
Level 1

Anyway around block 13 of W-2 form being marked "retirement plan"?

Very good information and I thank you for it. I am a little confused about the section you highlighted and (I assume) the section you commented on. It seems to say the fact the person "could" have participated that block 13 is correct. Then there is the first section stating "active participant" which confuses me but would indicate block 13 is incorrect. Would love some clarification if possible or am I going to be better off calling the IRS and getting a ruling?
Level 7

Anyway around block 13 of W-2 form being marked "retirement plan"?

@tavery  Under Active participant -Only the employer can tell you if it's a "defined benefit plan" which, based on the instructions, is considered active regardless of participation.