401(k) W-2 Box 12 Codes: What Do They Mean?

When you receive your annual Form W-2, Wage and Tax Statement, Box 12 contains important informational codes that provide details about compensation and benefits. This area of the form uses single and double letter codes to report amounts that may or may not be included in your taxable income. Understanding these codes, particularly those related to your 401(k) retirement plan, is a part of managing your financial picture.

Decoding Common 401(k) Related Codes in Box 12

The codes in Box 12 of your W-2 provide a breakdown of specific monetary values. For retirement savings, the most frequent code you will encounter is Code D. This code signifies the total amount of elective deferrals you contributed to a traditional 401(k) plan during the calendar year.

Another common code is AA, which represents your contributions to a designated Roth 401(k) plan. The purpose of reporting it in Box 12 is for informational tracking by the IRS and your plan administrator.

While Codes D and AA are specific to 401(k) plans, you might see other similar codes if you participate in other types of retirement plans. For instance, Code E is used for elective deferrals to a 403(b) plan, common for employees of public schools and certain non-profits. Code G reports deferrals to a 457(b) deferred compensation plan, often available to state and local government employees. Similarly, Code BB indicates designated Roth contributions to a 403(b) plan.

How Box 12 Amounts Affect Your Taxable Income

The amounts reported next to specific codes in Box 12 have a direct impact on the taxable wages shown in Box 1 of your W-2. When you see an amount next to Code D, this figure has already been subtracted from your total gross earnings for the year. This pre-tax deduction results in a lower taxable income reported in Box 1, which reduces your current year’s income tax liability.

For example, if your gross annual salary was $60,000 and you contributed $5,000 to your traditional 401(k), your employer subtracts that $5,000 before calculating your taxable wages. This means your Box 1 wages would be closer to $55,000 (excluding other pre-tax deductions). The $5,000 contribution is then reported next to Code D in Box 12 for informational purposes.

Conversely, amounts listed with Code AA for a Roth 401(k) do not reduce your taxable income in Box 1. Since these contributions are made with post-tax dollars, the amount shown with Code AA is purely informational. If you earned that same $60,000 salary and contributed $5,000 to a Roth 401(k), your Box 1 taxable wages would remain at $60,000. The difference lies in when you pay the taxes—now with a Roth, or later in retirement with a traditional 401(k).

Verifying Your Box 12 Information

To verify the amounts in Box 12 related to your 401(k), you should compare them to your final pay stub for the calendar year. Your pay stub will show a year-to-date (YTD) total for retirement plan deductions. The YTD amount for your traditional 401(k) should match the figure next to Code D, and the YTD for a Roth 401(k) should match the amount for Code AA.

If you discover a discrepancy between your pay stub and your W-2, you should immediately contact your employer’s human resources or payroll department. Only your employer can correct the mistake by issuing a Form W-2c, Corrected Wage and Tax Statement.

A common point of confusion for employees is the absence of employer contributions in Box 12. Any matching funds or profit-sharing contributions your employer makes to your 401(k) are not reported here. Information about employer contributions is typically found on your 401(k) plan statements provided by your plan administrator.