Question

 

What are the penalties for not making timely payroll deposits?

If a business fails to make payroll deposits, who is held responsible?

What are the differences between a defined benefit pension plan and a defined contribution pension plan?

Briefly discuss the conditions necessary for a taxpayer to be permitted to make tax-deductible contributions to a traditional IRA.

Anne, a single taxpayer under age 50, has wage income of $74,000 and is not covered under a retirement plan by her employer. She would like to start a retirement plan if possible. What options are available to her?

Answer 1

1. The penalties for paying the payroll deposits late are:

• 2% for deposits made 1 to 5 days late.
• 5% for deposits made 6 to 15 days late.
• 10% for deposits made after 15 days.
• 15% for the deposits unpaid for the period of more than 10 days when the IRS sends the first notice to the payer.

1. The employer is responsible in case of sole proprietorship.

In case of company, the employee is held accountable who is responsible for paying taxes on time.

Defined Benefit Pension Plan	Defined Contribution Pension Plan
It is a retirement account and the employer decides where to invest the money	It is a retirement plan and the employee decides how much money should be invested and where to invest it.
It is a guaranteed payout	It has high risk
It provides members with the lifetime retirement income	It helps the employees to accumulate the retirement savings.

1. The main condition for a taxpayer is that he should be under 50 years of age with a contribution of $5500, and it is $6500 if the age is above 50. The taxpayer and the spouse should not opt the employer sponsored retirement plan.

1. The different retirement plan option available are:

• Traditional IRA
• Roth IRA
• Social security
• Pension
• Defined contribution plan.