Lance's Corner

IRS Issues Employer W-2 Form Guidance

Aug 29, 2024

Per the notice below, the United States Internal Revenue Service (IRS) has issued guidance for employers on W-2 forms.

SECURE 2.0 Act impacts how businesses complete Forms W-2

The Internal Revenue Service reminds businesses that starting in tax year 2023 changes under the SECURE 2.0 Act may affect the amounts they need to report on their Forms W-2.  The SECURE 2.0 Act allows for additional features in various employer retirement plans to encourage use of these plans.  The provisions potentially affecting Forms W-2 (including Forms W-2AS, W-2GU and W-2VI) are:

  • De minimis financial incentives (Section 113 of the SECURE 2.0 Act),
  • Roth Savings Incentive Match Plan for Employees (SIMPLE) and Roth Simplified Employee Pension (SEP) Individual Retirement Arrangements (IRAs) (Section 601 of the SECURE 2.0 Act), and
  • Optional treatment of employer nonelective or matching contributions as Roth contributions (Section 604 of the SECURE 2.0 Act).

De minimis financial incentives

The SECURE 2.0 Act made changes designed to encourage employees to contribute to their employers’ 401(k) or 403(b) plans.  These changes allow employers to offer small financial incentives to employees who choose to participate in these retirement savings arrangements.  If an employer offers such an incentive, it's considered part of the employee's income and is subject to regular tax withholding unless there's a specific exemption.  For more information, refer to Questions and Answers D-1 through D-6 in Notice 2024-2, published in the Internal Revenue Bulletin.

Roth SIMPLE and Roth SEP IRAs

Under section 601 of the SECURE 2.0 Act, an employer that maintains a SEP or SIMPLE IRA plan can offer participating employees the option to designate a Roth IRA as the IRA to which contributions under the arrangement or plan are made.  For more information, refer to Questions and Answers K-1 through K-8 in Notice 2024-2, published in the Internal Revenue Bulletin.  Salary reduction contributions to a Roth SEP or Roth SIMPLE IRA are subject to federal income tax withholding, the Federal Insurance Contributions Act (FICA) taxes and the Federal Unemployment Tax Act (FUTA) taxes.  These contributions should be included in boxes 1, 3 and 5 (or box 14 for railroad retirement taxes) of Form W-2.  They’ll also be reported in box 12 with code F (for a SEP) or code S (for a SIMPLE IRA).  Employer matching and nonelective contributions to a Roth SEP or Roth SIMPLE IRA are not subject to withholding for federal income tax, FICA taxes or FUTA taxes.  These contributions must be reported on Form 1099-R for the year in which the contributions are made to the employee’s Roth IRA.  The total amounts are listed in boxes 1 and 2a of Form 1099-R with code 2 or 7 in box 7, and the IRA/SEP/SIMPLE checkbox is checked.

Designated Roth nonelective contributions and designated Roth matching contributions

Under section 604 of the SECURE 2.0 Act, plans can allow employees to designate certain matching and nonelective contributions made after Dec. 29, 2022, as Roth contributions.  These contributions are not subject to withholding for federal income tax.  In addition, these contributions generally are not subject to withholding for Social Security or Medicare tax.  However, for designated Roth nonelective contributions (including contributions that would be treated as matching contributions if the plan were a qualified plan) that are made to a governmental section 457(b) plan, refer to Question and Answer Q&A L‑7 in Notice 2024‑2, published in the Internal Revenue Bulletin.  Unlike regular Roth contributions, designated Roth nonelective and matching contributions must be reported on Form 1099-R for the year in which they're allocated to an individual's account.  They’re reported in boxes 1 and 2a of Form 1099-R, and code “G” is used in box 7.  For more information, refer to Questions and Answers L-1 through L-11 in Notice 2024-2.

Form W-2 or Form 1099-R reporting

As described above, the reporting requirements that apply to contributions made to a Roth IRA under a SEP arrangement or SIMPLE IRA plan, or to a designated Roth account under an applicable retirement plan, depend on the type of contribution made.  The table below summarizes these reporting requirements.  For more information, refer to the 2024 General Instructions for Forms W-2 and W-3 and the 2024 Instructions for Forms 1099-R and 5498.

  Roth IRA under a SEP Arrangement or SIMPLE IRA Plan Designated Roth account under an applicable retirement plan
Form W-2 Reporting Include salary reduction contributions in boxes 1, 3, and 5 (or box 14 if railroad retirement taxes apply) of Form W-2.  Report them in box 12 using code F (for a SEP) or code S (for a SIMPLE IRA). Include designated Roth contributions (made in lieu of elective deferrals) in boxes 1, 3, and 5 (or box 14 if railroad retirement taxes apply) of Form W-2.  Report them in box 12 using code AA (for a section 401(k) plan), BB (for a section 403(b) plan), or EE (for a governmental section 457(b) plan).
Form 1099-R Reporting Report matching or nonelective contributions in boxes 1 and 2a of Form 1099-R for the year in which the contributions are made to the Roth IRA, using code 2 or 7 in box 7, and the IRA/SEP/SIMPLE checkbox in box 7 checked. Report designated Roth matching contributions or designated Roth nonelective contributions in boxes 1 and 2a of Form 1099-R for the year in which the contributions are allocated to the individual’s account, using code G in box 7.

Reminder

Businesses can now complete and print various copies (excluding Copy A) of Forms W-2 (including Forms W-2AS, W-2GU and W-2VI) on IRS.gov for recipients.  Any information entered on one copy (excluding Copy A) will automatically appear on the others.  Copy A cannot be completed online to print and file with the Social Security Administration.  If a business filed 2023 Forms W-2 without following these new guidelines, they may need to file Form W-2c to correct any errors.  Refer to the General Instructions for Forms W-2 and W-3 for details on when and how to file Form W-2c.

USDOL Issues Comprehensive Employer Guidance on Long COVID

The United States Department of Labor (USDOL) has issued a comprehensive set of resources that can be accessed below for employers on dealing with Long COVID.

Supporting Employees with Long COVID: A Guide for Employers

The “Supporting Employees with Long COVID” guide from the USDOL-funded Employer Assistance and Resource Network on Disability Inclusion (EARN) and Job Accommodation Network (JAN) addresses the basics of Long COVID, including its intersection with mental health, and common workplace supports for different symptoms.  It also explores employers’ responsibilities to provide reasonable accommodations and answers frequently asked questions about Long COVID and employment, including inquiries related to telework and leave.

Download the guide

Accommodation and Compliance: Long COVID

The Long COVID Accommodation and Compliance webpage from the USDOL-funded Job Accommodation Network (JAN) helps employers and employees understand strategies for supporting workers with Long COVID.  Topics include Long COVID in the context of disability under the Americans with Disabilities Act (ADA), specific accommodation ideas based on limitations or work-related functions, common situations and solutions, and questions to consider when identifying effective accommodations for employees with Long COVID.  Find this and other Long COVID resources from JAN, below:

Long COVID, Disability and Underserved Communities: Recommendations for Employers

The research-to-practice brief “Long COVID, Disability and Underserved Communities” synthesizes an extensive review of documents, literature and data sources, conducted by the USDOL-funded Employer Assistance and Resource Network on Disability Inclusion (EARN) on the impact of Long COVID on employment, with a focus on demographic differences.  It also outlines recommended actions organizations can take to create a supportive and inclusive workplace culture for people with Long COVID, especially those with disabilities who belong to other historically underserved groups.

Read the brief

Long COVID and Disability Accommodations in the Workplace

The policy brief “Long COVID and Disability Accommodations in the Workplace” explores Long COVID’s impact on the workforce and provides examples of policy actions different states are taking to help affected people remain at work or return when ready.  It was developed by the National Conference of State Legislatures (NCSL) as part of its involvement in USDOL’s State Exchange on Employment and Disability (SEED) initiative.

Download the policy brief

Understanding and Addressing the Workplace Challenges Related to Long COVID

The report “Understanding and Addressing the Workplace Challenges Related to Long COVID” summarizes key themes and takeaways from an ePolicyWorks national online dialogue through which members of the public were invited to share their experiences and insights regarding workplace challenges posed by Long COVID.  The dialogue took place during summer 2022 and was hosted by USDOL and its agencies in collaboration with the Centers for Disease Control and Prevention and the U.S. Surgeon General.

Download the report

Working with Long COVID

The USDOL-published “Working with Long COVID” fact sheet shares strategies for supporting workers with Long COVID, including accommodations for common symptoms and resources for further guidance and assistance with specific situations.

Download the fact sheet

COVID-19: Long-Term Symptoms

This USDOL motion graphic informs workers with Long COVID that they may be entitled to temporary or long-term supports to help them stay on the job or return to work when ready, and shares where they can find related assistance.

Watch the motion graphic

A Personal Story of Long COVID and Disability Disclosure

In the podcast “A Personal Story of Long COVID and Disability Disclosure,” Pam Bingham, senior program manager for Intuit’s Diversity, Equity and Inclusion in Tech team, shares her personal experience of navigating Long COVID symptoms at work.  The segment was produced by the USDOL-funded Partnership on Employment and Accessible Technology (PEAT) as part of its ongoing “Future of Work” podcast series.

Listen to the podcast

HHS OIG Issues Annual Report on State MFCUs

Per the notice below, the Office of the Inspector General (OIG) of the United States Department of Health and Human Services (HHS) has issued its annual report on the performance of state Medicaid Fraud Control Units (MFCUs).

Medicaid Fraud Control Units Fiscal Year 2023 Annual Report (OEI-09-24-00200) 

Medicaid Fraud Control Units (MFCUs) investigate and prosecute Medicaid provider fraud and patient abuse or neglect. OIG is the Federal agency that oversees and annually approves federal funding for MFCUs through a recertification process. This new report analyzed the statistical data on annual case outcomes—such as convictions, civil settlements and judgments, and recoveries—that the 53 MFCUs submitted for Fiscal Year 2023.  New York data is as follows:

Outcomes

  • Investigations1 - 556
  • Indicted/Charged - 9
  • Convictions - 8
  • Civil Settlements/Judgments - 28
  • Recoveries2 - $73,204,518

Resources

  • MFCU Expenditures3 - $55,964,293
  • Staff on Board4 - 257

1Investigations are defined as the total number of open investigations at the end of the fiscal year.

2Recoveries are defined as the amount of money that defendants are required to pay as a result of a settlement, judgment, or prefiling settlement in criminal and civil cases and may not reflect actual collections.  Recoveries may involve cases that include participation by other Federal and State agencies.

3MFCU and Medicaid Expenditures include both State and Federal expenditures.

4Staff on Board is defined as the total number of staff employed by the Unit at the end of the fiscal year.

Read the Full Report

View the Statistical Chart

Engage with the Interactive Map

GAO Issues Report on Medicaid Managed Care Service Denials and Appeal Outcomes

The United States Government Accountability Office (GAO) has issued a report on federal use of state data on Medicaid managed care service denials and appeal outcomes.  GAO found that federal oversight is limited because it doesn't require states to report on Medicaid managed care service denials or appeal outcomes and there has not been much progress on plans to analyze and make the data publicly available.  To read the GAO report on federal use of state data on Medicaid managed care service denials and appeal outcomes, use the first link below.  To read GAO highlights of the report on federal use of state data on Medicaid managed care service denials and appeal outcomes, use the second link below.
https://www.gao.gov/assets/d24106627.pdf  (GAO report on federal use of state data on Medicaid managed care service denials and appeal outcomes)
https://www.gao.gov/assets/d24106627_high.pdf  (GAO highlights on federal use of state data on Medicaid managed care service denials and appeal outcomes)

CMS Issues Latest Medicare Regulatory Activities Update

The Centers for Medicare and Medicaid Services (CMS) has issued its latest update on its regulatory activities in the Medicare program.  While dentistry is only minimally connected to the Medicare program, Medicare drives the majority of health care policies and insurance reimbursement policies throughout the country.  Therefore, it always pays to keep a close eye on what CMS is doing in Medicare.  To read the latest CMS update on its regulatory activities in Medicare, use the link below.
https://www.cms.gov/training-education/medicare-learning-network/newsletter/2024-03-14-mlnc