Vision Payroll

January 18, 2011

2010 Form W-2 Tips, Part 12, Box 11 Nonqualified Plans

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. 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 Distributions from 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 May Show Earnings and Deferrals That Became Taxable

Box 11 should show deferrals and earnings that became taxable for social security and Medicare purposes in 2010 because the deferrals and earnings were no longer subject to a substantial risk of forfeiture, but only if the amounts were for services before 2010 and no distributions were made in 2010. These amounts must also be reported in box 3, up to the $106,800 wage limit, and box 5.

Box 11 Not to Be Used for Deferrals Included in Box 3 and/or 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 2010.

Use Form SSA-131 to Report When Payments and Deferrals Are Made in the Same Year

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, but only if the employee was age 62 or older by the end of 2010. Generally the employer should report the amount from box 1 of Form W-2, plus any amounts deferred during 2010, less any payments from the nonqualified plan.

Amounts for Form W-2
Wages$50,000
Distributions from nonqualified plan75,000
Sub-total125,000
Less amount deferred35,000
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

Assume Jessica retired during 2010. She earned $50,000 in wages, but deferred $35,000 of that amount in a nonqualified deferred compensation plan. Since she retired, she also received $75,000 in payments from the plan. Since there are both distributions and deferrals in 2010, no amount is reported in box 11. 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.

Amounts for Form SSA-131
Form W-2, box 1 amount$  90,000
Plus 2009 deferral    35,000
Sub-total   125,000
Less distributions from nonqualified plan    75,000
Form SSA-131, item 6 amount$  50,000

Box 12, Codes Is the Next Topic

The next topic in this continuing series will be Box 12, codes. Contact Vision Payroll with any questions on the 2010 Form W-2.

January 23, 2010

2009 Form W-2 Tips, Part 12, Box 11 Nonqualified Plans

This is one in a continuing series on the 2009 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 1, 2010. 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 2009 because the deferrals and earnings were no longer subject to a substantial risk of forfeiture, but only if the amounts were for services before 2009 and no distributions were made in 2009. These amounts must also be reported in box 3, up to the $106,800 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 2009.

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 2009, less any payments from the nonqualified plan.

Amounts for Form W-2
Wages$50,000
Distributions from nonqualified plan75,000
Sub-total125,000
Less amount deferred35,000
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

Assume Cameron retired during 2009. 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. Since there are both distributions and deferrals in 2009, no amount is reported in box 11. 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.

Amounts for Form SSA-131
Form W-2, box 1 amount$  90,000
Plus 2009 deferral    35,000
Sub-total   125,000
Less distributions from nonqualified plan    75,000
Form SSA-131, item 6 amount$  50,000

The next topic in this continuing series will be Box 12, codes. Contact Vision Payroll with any questions on the 2009 Form W-2.

January 26, 2009

2008 Form W-2 Tips, Part 12, Box 11 Nonqualified Plans

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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