Does Your 401k Contribution Show on a W2?

The W-2 Form, the Wage and Tax Statement, is an annual document employers issue to employees, summarizing their yearly earnings and taxes withheld. This form is used for filing federal, state, and local income tax returns. It provides a clear record of compensation and deductions, ensuring accurate tax reporting. This article explains how 401(k) contributions are reflected on your W-2 Form.

Identifying 401(k) Contributions on the W-2

Employee contributions to a 401(k) plan are reported in Box 12 of your W-2 Form. This box reports various types of compensation and benefits. Each entry in Box 12 includes a letter code followed by the corresponding dollar amount.

For traditional 401(k) contributions, which are made with pre-tax dollars, employers use Code D. This amount represents the elective deferrals you made to your plan during the tax year. If you contribute to a Roth 401(k) plan, your contributions are identified by Code AA in Box 12. This figure reflects your after-tax contributions to the Roth account.

Understanding the Impact on Taxable Wages

The type of 401(k) contribution affects the taxable wage amounts displayed on your W-2. Pre-tax 401(k) contributions, reported with Code D in Box 12, directly reduce the amount shown in Box 1, your federal taxable wages. This reduction is the basis for the “tax-deferred” benefit of traditional 401(k)s, as it lowers your current year’s taxable income. These pre-tax contributions do not reduce the amounts reported in Box 3 (Social Security wages) or Box 5 (Medicare wages). This means that while your income tax liability is reduced, your wages remain subject to Social Security and Medicare taxes.

In contrast, Roth 401(k) contributions, identified by Code AA in Box 12, do not reduce the amount in Box 1. This is because Roth contributions are made with after-tax dollars. The primary benefit of a Roth 401(k) is that qualified withdrawals in retirement, including earnings, are tax-free. Therefore, the reporting in Box 12 for Roth contributions serves informational purposes, confirming the amount contributed without altering your current taxable income.

Common Questions and Clarifications

Employer contributions, such as matching or profit-sharing contributions, to your 401(k) plan are not reported in Box 12 of your W-2. These contributions are separate from your elective deferrals and do not appear on your W-2 as part of your reported wages. Some after-tax contributions or other employer benefits might be reported in Box 14, but employer matching is not.

If you changed employers during the year or contributed to multiple 401(k) plans, you would receive a separate W-2 Form from each employer. Each W-2 would report the contributions made to its respective plan in Box 12, identified by the appropriate code. This ensures that all contributions are accurately accounted for across different employment periods.

If you believe the 401(k) contribution information on your W-2 is missing or incorrect, contact your employer’s human resources or payroll department. They are responsible for issuing corrected W-2 Forms if any errors are identified. Accurately reported 401(k) contributions on your W-2 are necessary for correctly preparing and filing your income tax return.