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
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|
|Distributions from nonqualified plan||75,000|
|Less amount deferred||35,000|
|Form W-2, box 1 amount||$90,000|
|Form W-2, box 3 amount||$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|
|Less distributions from nonqualified plan||75,000|
|Form SSA-131, item 6 amount||$ 50,000|
Box 12, Codes Is the Next Topic