Tax Treatment of Refunds Changing for 2008
Beginning with the 2008 plan year, ADP and ACP refunds attributable to the 2008 plan year are taxable in the year of distribution. Therefore, for the 2008 plan year, refunds distributed between January 1, 2009 and March 15, 2009 are taxable in 2009, the year distributed (as opposed to the year contributed). Also beginning with the 2008 plan year, gap period earnings (earnings from the last day of the plan year to the date of distribution) are no longer required on ADP and ACP refunds and for refunds of Excess Deferrals.
StaffScapes provides and manages a 401k retirement plan for its PEO clients with Transamerica 401k services. Employers can participate in the traditional 401k plan as well as the new ROTH 401k plan.