Does Box 1 on a W-2 Include 401(k) Contributions?

The W-2 form, or Wage and Tax Statement, is a document employers provide annually that summarizes your earnings and the taxes withheld from your pay. Many individuals wonder how their 401(k) contributions are reflected on this form, particularly in Box 1, which reports taxable wages. Understanding your W-2 is important for accurate tax filing and comprehending your overall taxable income.

Understanding Box 1 of Form W-2

Box 1 on Form W-2, labeled “Wages, tips, other compensation,” represents the amount of your earnings subject to federal income tax. This figure includes your salary, bonuses, and other taxable compensation received from your employer throughout the calendar year. The amount in Box 1 is frequently lower than your total gross pay before deductions because certain pre-tax deductions, like contributions to health insurance or retirement plans, reduce your taxable income.

Pre-Tax 401(k) Contributions and Box 1

Contributions to a traditional (pre-tax) 401(k) plan are not included in the amount reported in Box 1 of your W-2. These contributions are made with pre-tax dollars, which directly reduces your current taxable income for federal purposes. For instance, if your annual salary is $50,000 and you contribute $5,000 to a pre-tax 401(k), your Box 1 wages would reflect $45,000, assuming no other pre-tax deductions.

The amount in Box 1 is your taxable income after these pre-tax contributions have been subtracted. You will only pay taxes on these amounts when you withdraw them in retirement.

Roth 401(k) Contributions and Box 1

In contrast to pre-tax contributions, Roth 401(k) contributions are included in the wages reported in Box 1 of your W-2. This is because Roth contributions are made with after-tax dollars, meaning you have already paid income tax on that money. Therefore, these contributions do not reduce your current taxable income.

While Roth 401(k) contributions are taxed when made, qualified distributions from a Roth 401(k) in retirement are generally tax-free. This provides a benefit in retirement, as both your contributions and any earnings can be withdrawn without further federal income tax, provided certain conditions are met.

Verifying Your W-2 Information

To verify your 401(k) contributions are accurately reported on your W-2, examine Box 12. This box contains various codes and amounts that report specific types of compensation and benefits. For traditional 401(k) contributions, you will typically see Code ‘D’ followed by the total amount you contributed for the year.

For Roth 401(k) contributions, Box 12 will usually show Code ‘AA’ along with the contributed amount. Compare the amounts reported in Box 1 and Box 12 of your W-2 with your last pay stub or year-end retirement plan statement. This comparison helps ensure the figures align with your records and that your taxable wages and retirement contributions have been correctly reported.