Does a W-2 Include Your 401(k) Contributions?

The Form W-2 serves as an annual summary of an individual’s earnings and tax withholdings. It provides essential information for preparing a tax return. Alongside reporting wages and taxes, the W-2 also reflects contributions to retirement savings vehicles, such as a 401(k) plan. Understanding how 401(k) contributions appear on this form helps in accurately filing taxes and verifying financial records.

Locating 401(k) Information on Your W-2

Contributions made to a 401(k) plan are specifically reported in Box 12, not in Box 1, which represents your taxable wages. Box 12 is a designated area on the W-2 for reporting certain types of compensation and benefits that may or may not be taxable, using specific letter codes to identify them.

For traditional 401(k) contributions, which are made on a pre-tax basis, you will typically find Code D followed by the total amount contributed during the year. This code signifies elective deferrals to a 401(k) cash or deferred arrangement. If you contribute to a Roth 401(k), which involves after-tax contributions, the amount will be reported under Code AA. For those participating in other specific retirement plans, Code BB is used for designated Roth contributions under a 403(b) plan, and Code G indicates contributions to a 457(b) deferred compensation plan.

How 401(k) Contributions Affect Taxable Wages

The way your 401(k) contributions impact your taxable wages depends on whether they are pre-tax (traditional) or after-tax (Roth). Pre-tax 401(k) contributions reduce the amount reported in Box 1. This means the income in Box 1 has already had your pre-tax 401(k) contributions subtracted, lowering your federal taxable income for the year. This reduction provides an immediate tax benefit, as you are taxed on a smaller portion of your gross earnings.

However, this reduction in taxable wages does not extend to other wage boxes on the W-2. Specifically, pre-tax 401(k) contributions do not reduce the amounts reported in Box 3 (“Social Security wages”) or Box 5 (“Medicare wages”). These boxes reflect your earnings subject to Social Security and Medicare taxes, respectively, and include your pre-tax 401(k) contributions. In contrast, Roth 401(k) contributions, while reported in Box 12, do not reduce wages in Box 1, Box 3, or Box 5. This is because Roth contributions are made with after-tax dollars, meaning you have already paid income tax on those funds, and qualified distributions in retirement are tax-free.

Understanding Other Related W-2 Boxes

Beyond Box 1 and Box 12, other sections of the W-2 provide information related to your earnings and payroll taxes. Box 3 reports your wages subject to Social Security tax, up to the annual Social Security wage base limit. Box 5 details your wages subject to Medicare tax, which has no wage limit.

This distinction is important because Social Security and Medicare taxes, often referred to as FICA taxes, are calculated on a broader definition of wages than federal income tax. Therefore, even if your pre-tax 401(k) contributions reduce your federal income tax liability, they do not reduce the amount of Social Security and Medicare taxes withheld from your pay. The amounts in Box 3 and Box 5 accurately reflect the earnings on which these specific payroll taxes were computed.