Form 941 & Simple IRA

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I was at an EA mtg last week and was discussing with 2 other EAs how form 941 was filled out for an employer which has a simple IRA set up for an employee. IRS Instructions for form 941, Part1, #2. Wages, Tips, and other compensation. “Enter amounts on line 2 that would also be included in box 1 of your employees’ W-2”.

I have been excluding employer S/S tax on the 941 and was told that was wrong. That I should have included employer simple IRA contribution with employee’s contribution and pay S/S tax on entire amount. I was under the understanding that the employer does not pay S/S tax on his portion of the contribution. I refer to TMI page 13-17 right column, bottom paragraph: “. . . However, the employee’s elective deferrals (not the employer’s match) are subject to FICA and should be included in Social Security and Medicare wages on the W-2 (also subject to FUTA).” Client received an IRS notice back in 2001 for this and I sent a ltr to IRS stating above info and never heard from them again.
Am I doing this correct?
Thanks for the help.
Larry

[Bees Knees]

However, the employee’s elective deferrals (not the employer’s match) are subject to FICA and should be included in Social Security and Medicare wages on the W-2 (also subject to FUTA).”

The reference to "not the employer's match" is referring to the employer's 2% or 3% matching contribution to the SIMPLE IRA, as it is used in that sentence as a contrast to the employee's elective deferrals.

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Bees Knees

Wish you had been at the meeting in St. Cloud.
Thanks for fast reply. But is the employer's 3% contributin to the Simple IRA subject to FICA/Medicare? or is it exempt?
Larry

[Bees Knees]

That is what that statement means. That the employer's 3% matching contribution is not subject to FICA or FUTA. Only the elective deferral is subject to FICA and FUTA, including the employer's portion of FICA.

It's basically the same rule as 401(k) contributions. You will notice the W-2 includes the employee's elective deferral in Social Security and Medicare wages, but you won't see the employer's match anywhere on the W-2.

Anything exciting that I missed in St. Cloud?

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Bees Knees

I need lots of reassurance. Thanks again.

The speaker in St. Cloud, David Mellem and his wife were fabulous. Especially David. I have never heard him talk before so it was an experience. He has a photographic memory and knew so much!! It was a pleasure to sit and listen. The time just whipped by when he was talking. Reminded me of jainen on this board (his knowledge).
God kind of missed me when he was handing out you know what.
Thanks again and I look forward to seeing you in Roseville.
Larry