This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 11, nonqualified plans.
Box 11 shows the amount of distributions from a nonqualified plan or a nongovernmental §457(b) plan. These distributions should also be reported in box 1. Distributions from governmental §457(b) plans are not reported in this box.
Box 11 should show deferrals and earnings that became taxable for social security and Medicare purposes in 2008 because the deferrals and earnings were no longer subject to a substantial risk of forfeiture, but only if the amounts were for services before 2008 and no distributions were made in 2008. These amounts must also be reported in box 3, up to the $102,000 wage limit, and box 5.
Box 11 should not be used for deferrals that are included in box 3, up to the wage limit, and box 5 and that are for services performed in 2008.
Box 11 should also not be used when payments are made from a nonqualified plan and deferrals are included in box 3, up to the wage limit, and box 5. Employers should use Form SSA-131, Employer Report of Special Wage Payments. Generally the employer should report the amount from box 1 of Form W-2, plus any amounts deferred during 2008, less any payments from the nonqualified plan.
Assume Cameron retired during 2008. He earned $50,000 in wages, but deferred $35,000 of that amount in a nonqualified deferred compensation plan. Since he retired, he also received $75,000 in payments from the plan.
|
Amounts for Form W-2 |
|
|
Wages |
$ 50,000 |
|
Distributions from nonqualified plan |
75,000 |
|
Sub-total |
125,000 |
|
Less amount deferred |
35,000 |
|
Form W-2, box 1 amount |
$ 90,000 |
|
|
|
|
Wages |
$ 50,000 |
|
Form W-2, box 3 amount |
$ 50,000 |
|
|
|
|
Wages |
$ 50,000 |
|
Form W-2, box 5 amount |
$ 50,000 |
Since there are both distributions and deferrals in 2008, no amount is reported in box 11.
|
Amounts for Form SSA-131 |
|
|
Form W-2, box 1 amount |
$ 90,000 |
|
Plus 2008 deferral |
35,000 |
|
Sub-total |
125,000 |
|
Less distributions from nonqualified plan |
75,000 |
|
Form SSA-131, item 6 amount |
$ 50,000 |
Box 11 should also not be used to report special wage payments earned in a prior year such as accrued sick pay or vacation pay. These amounts should be reported on Form SSA-131, however, so that the Social Security Administration may accurately calculate the recipient’s social security benefits.
The next topic in this continuing series will be Box 12, codes. Contact Vision Payroll with any questions on the 2008 Form W-2.
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