Specify Contributions

[Kathleen Reynolds]

#3242

Enter Contributions to the Qualified Plan

Use the Specify Contributions feature to illustrate money accumulating in the plan prior to required distributions. A warning is issued if contributions are scheduled during years in which pre-59½ distributions are required.

There are two ways of entering data on this screen:

On the upper panel:

• Enter the Annual Amount of each contribution.
• In the Growth Rate box, enter the annual percent increase of each contribution.
• Enter the First Year each contribution will be made.
• Enter the Last Year each contribution will be made.

 

Or, use the lower portion to:

• Assume Maximum Contributions Within Limits: Check this box to have the program enter yearly contributions that are projected to be the maximum allowed by the contribution limits. Contributions will be rounded down using the IRS rounding methods, and will begin immediately or in the year after any pre-59½ distributions are required and will end at the earliest of the Last Contribution Year specified, the year of the plan owner’s death. For contributions prior to 2020, there was a limit on the contributions based on if the owner was prior to the age 70½ year and using IRA Limits. As of 1/1/2020, there is no such restriction when “IRA Limits” is selected as the Plan Type. Checking this box disables the boxes in the upper panel.
• Inflation Rate: Enter the rate by which the contribution limit will rise.
• Last Contribution Year: Enter the last year that contributions will be made.
• Limit Rules to Apply: Select IRA Limits, Roth IRA Limits or 401(k) Limits.

 

Note: All fund activity takes place at the beginning of the year. This includes required minimum distributions, any specified distributions, and any contributions. If you prefer, you can have all fund activity take place at the end of each year. Generally, additional contributions cannot be made after the Required Beginning Date.

The program now includes warnings about contributions that could be disqualifying additions under Rev. Rul. 2002-62, §2.02(e)(ii) during pre-59½ distribution years.

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