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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16547
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I will set up a 401K plan for employees as of Sept.1, 2013

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I will set up a 401K plan for employees as of Sept.1, 2013 (Our company is small sized and has about 15 employees). 1) If the 401k plan begins as of Sept.1, 2013, what is the maximum amount employees can contribute for 2013? Does the contribution amounts need to be prorated ? 2) we now consider 50% match up to the first 6% of compensation for 2013. Can we change the first 6% of compensation into 16% of compensation for 2014? thanks

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

The contribution amounts do not need to be prorated. You can contribute the max amount for 2013 even though your plan didn't start until September.

MyVirtualCPA :

And for your second question, yes you can change 6% to 16% in 2014

MyVirtualCPA :

Is there anything else you need assistance with today?

Customer:

thank you! few more question..we have in-house employee in charge of payroll. 1) Do we need outside 401k administrator? 2) How can we update payroll for 401k plan? thanks

MyVirtualCPA :

Yes, you will need a 401(k) administrator and I would not know how to update your payroll system. You would have to speak with whoever set your payroll system up.

MyVirtualCPA :

Is there anything else that you need today?

Customer:

thank you !

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