Notable W-2 and 1099 Reporting Changes Post SECURE 2.0

The SECURE Act 2.0 made several changes that will impact W and 1099 reporting for 2024. Some of the provisions that are likely to impact W reporting include those involving (1) de minimis financial incentives for retirement participation, (2) Roth contributions for SIMPLE and SEP plans and (3) the optional treatment of employer matches as Roth contributions. As a reminder, when an employer offers a de minimis financial incentive for retirement savings participation, it is considered taxable income absent another exception. Employers can now also allow employees participating in SIMPLE or SEP plans to have their salary reduction contributions deposited into a Roth account (these contributions are considered taxable income and included in boxes 1,3, and 5 of the employee's W, as well as box 12 with code F (SEPs) or code S (SIMPLE IRAs)). Employer contributions to Roth SIMPLEs and SEPs are not subject to federal tax withholding, FICA or FUTA, and should be reported on Form 1099-R for the year they are allocated to the participant's account. Similarly, when an employee designates their matching or nonelective contributions as Roth contributions, they are not subject to federal tax withholding, FICA or FUTA, but must be reported on Form 1099-R in boxes 1 and 2a, using code G in box 7. For more information on the rules governing SEP IRAs, visit Tax Facts Online. : Q 3701. Note: Q is updated.