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Level 1

2018 W2 Box 13 checked even though I was no longer employed as of 1/1/2018. Is this correct?

Was terminated from the company 11/30/2017 but received severance package 1/8/2018.  With that payment, I received 2018 W2, with box 13 checked, making me ineligible to deduct traditional IRA contribution.  Company says their records show I have an active 401K (from prior years).  IRS is not clear either on what is an "active participant".

The “Retirement plan” indicator in Box 13 shows whether an employee is an active participant in your company’s 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.

Don’t check the retirement plan box if your company only has non-qualified or 457(b) plans.

I was no longer an employee in 2018 - how can I be an active participant by virtue of prior years' balance in the 401K?

Thanks

1 Reply
Level 20

2018 W2 Box 13 checked even though I was no longer employed as of 1/1/2018. Is this correct?

Yes, it's possible that this is correct.  The marking of box 13 depends on the plan's fiscal-year end date, so if additions were made to the plan for your benefit in 2017 but for the plan tax year ending in 2018, you are considered covered for 2018.  Plan end dates are the last day of some month, so in your case, if additions were made in November 2017 and the plan has an end date of anything other than November 30 or December 31, your November 2017 additions were made for the plan year ending in 2018 (on the last day of some month January through October) and make you covered for 2018.