457 pension on W-2 reporting

[taxmandan]

New client is a county employee in a neighboring state and he contributes to a 457 retirement plan. The W-2 shows the amount in box 14 not box 12. Is that correct? I've only seen employee contributions to retirement in box 12, it would result in a retirement savings credit for him on the return. Or do I just put the amount on the RTS form 8880?

[Burke]

A 457 plan is a deferred compensation plan. The contributions paid are pre-tax for income tax purposes, but are subject to FICA. They are considered deferred wages. The wages are then reported to the IRS & recipient in the years after retirement on a W-2, and subject to income taxes, but not FICA since that has already been paid. Instructions for the Saver's Credit indicate they are eligible for the credit. The W-2 is incorrect. They should be in Box 12, Code G. TP needs to get it corrected by employer.

[New York Enrolled Agent]

A 457 plan is a deferred compensation plan. The contributions paid are pre-tax for income tax purposes, but are subject to FICA. They are considered wages. The wages are then reported to the IRS & recipient in the years after retirement on a W-2, and subject to income taxes, but not FICA since that has already been paid. Instructions for the Saver's Credit indicate they are eligible for the credit. The W-2 is incorrect. They should be in Box 12, Code G. TP needs to get it corrected by employer.

I don't know the answer for sure but elective deferrals under a section 457 plan do qualify for the credit. However, box 14 is used for non-elective contributions to a retirement plan. Without knowing all the facts, is it possible the employer is making contributions other than elective deferrals?

I think TMdan needs to make further inquiries. I don't think any answer can be given with 100% certitude without a follow up by TMdan. The same situation can possibly occur in section 403(b) plans.

[Lion]

See if his final check stub clears up the question of elective vs. non-elective. Otherwise, or in addition to, have client speak with his HR/payroll/benefits department &/or the plan administrator. He should have or be able to get the plan summary. And, the paperwork he filled out making his election.

[taxmandan]

See if his final check stub clears up the question of elective vs. non-elective. Otherwise, or in addition to, have client speak with his HR/payroll/benefits department &/or the plan administrator. He should have or be able to get the plan summary. And, the paperwork he filled out making his election.

The amount was not in box 1 but is in Box 3 & 5. The HR/payroll people say they've been doing it this way for 14 years and don't see what the problem is and ask why he is trying to start trouble. I was sure it belonged in 12 with code G and wanted to get a consensus from the board too. Thanks for the quick replies, have to see what HR/payroll is going to do.

[New York Enrolled Agent]

The amount was not in box 1 but is in Box 3 & 5. The HR/payroll people say they've been doing it this way for 14 years and don't see what the problem is and ask why he is trying to start trouble. I was sure it belonged in 12 with code G and wanted to get a consensus from the board too. Thanks for the quick replies, have to see what HR/payroll is going to do.

Hard to make a determination without all the details.

In NYS we have public employees who have 414(h) retirement contributions. Not in box 1 but in both box 3 & 5. Also in box 14 on the W-2 form. These contributions are not elective and don't qualify for the saver's credit. Thus you can see it's hard to give a definitive answer.