IRS Reminds Businesses of SECURE 2.0 Impacts on Form W-2

The Internal Revenue Service is reminding businesses who sponsor a retirement plan that certain provisions of SECURE 2.0 that became effective in 2023 may impact their Form W-2 reporting requirements. As we have previously discussed, employers may provide de minimis financial incentives for contributing to a retirement plan, permit employees to treat SEP or SIMPLE IRA contributions as Roth, and designate employer contributions as Roth contributions. IRS Notice 2024-02 explains the reporting requirements for these contributions as follows:

  • A de minimis financial incentive is includable in an employee’s income and wages and is subject to withholding and Form W-2 reporting requirements.
  • Salary deferral Roth contributions to SEP and SIMPLE plans are subject to federal income tax withholding, the Federal Insurance Contributions Act (FICA), and the Federal Unemployment Tax Act (FUTA), and must be reported on Form W-2.
  • Employer contributions that are permitted to be designated as Roth under SECURE 2.0 are generally not included in wages and not reported on Form W-2.

For employers who do need to report these contributions on Form W-2, the IRS is reminding businesses who have not already done so to report applicable contributions on Form W-2, and if necessary, file Form W-2c to correct any errors for 2023.