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401K/HSA contribution across the end of the year

401K contributions (deferred salary) gets deducted from my paychecks. The last pay period was December 15- December 29 2023, but the paycheck date is January 7 2024. Does the amount deducted in this paycheck / payperiod go towards 2023 401K contribution, or 2024? Same question for HSA contribution (but I suspect a different answer).

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3 Replies
RobertB4444
Employee Tax Expert

401K/HSA contribution across the end of the year

In this instance it depends on your employer.  If the amounts are included on your 2023 W2 (because your employer uses the accrual system) then they are reported on your 2023 return even though you didn't actually receive the money or have the contributions made to your account(s) until January 7 of 2024.

 

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401K/HSA contribution across the end of the year

Hm. My employer attributed 401K to 2023 but HSA to 2024, although they came from the same payperiod/paycheck. Looks like an error. But which way?

Is there a way to tell for sure which way is correct? Is there a law, regulation, IRS ruling, or detailed explanation I could read about this? The employer is the state of WA, so it is very likely it is on the accrual basis.

 

RobertB4444
Employee Tax Expert

401K/HSA contribution across the end of the year

I mean the rules for the accrual basis is the only thing that you would be reading.  The date that the transaction is put on the books.  So in your case the employer didn't book the HSA until after January first and the 401k on the date that the payroll was issued.  Which makes sense.  The HSA contributions are probably sent on the first of the month and the 401k is probably distributed with the payroll.

 

Here are the rules for the accrual basis according to the IRS.

 

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