Does Your W-2 Show 401(k) Contributions?
Learn how 401(k) contributions are reflected on your W-2, how they impact your taxable income, and how to verify their accuracy.
The W-2 form is a document employers provide annually, detailing wages earned and taxes withheld. Understanding how 401(k) contributions appear on this form is important for accurate tax filing. Your retirement savings are reported in specific sections of the W-2.
Identifying 401(k) Contributions on Your W-2
Your 401(k) contributions are located in Box 12 of your W-2, which is designated for various types of compensation and benefits. This box uses specific codes to identify the amounts reported.
For traditional 401(k) contributions, you will find Code D, signifying elective deferrals. If you contribute to a Roth 401(k), Code AA identifies those contributions. Each code is followed by the dollar amount of your contributions for the year.
Understanding Contribution Types and W-2 Codes
Box 12 codes differentiate between pre-tax (traditional) and Roth 401(k) contributions. Pre-tax contributions are made before income taxes are applied, reducing your current taxable income. The tax benefit for these contributions is realized in the year they are made.
Roth 401(k) contributions are made with after-tax dollars. This means income taxes are already withheld from your wages, so they do not reduce your current taxable income. The advantage of Roth contributions is that qualified withdrawals in retirement, including any earnings, are tax-free.
How 401(k) Contributions Affect Your Taxable Income
The type of 401(k) contribution you make directly impacts the amount reported in Box 1 of your W-2, labeled “Wages, tips, other compensation.” Traditional (pre-tax) 401(k) contributions reduce the amount shown in Box 1. This reduction reflects that these pre-tax deferrals are not subject to federal income tax withholding, effectively lowering your current taxable income.
In contrast, Roth 401(k) contributions do not reduce the amount in Box 1. Since these contributions are made with after-tax dollars, they are already considered part of your taxable wages for income tax purposes. While Box 12 shows the total amount of both traditional and Roth 401(k) contributions, Box 1 represents your wages after any pre-tax deferrals have been subtracted.
Steps for Correcting W-2 Information
If your 401(k) contributions are incorrectly reported or missing from your W-2, take prompt action. Your first step is to contact your employer’s human resources or payroll department. Provide them with supporting documentation, such as pay stubs or contribution statements, that clearly show the correct amounts you contributed.
Your employer is responsible for issuing a corrected W-2, known as Form W-2c. This form is used to rectify errors on a previously issued W-2, including mistakes in reported wages or retirement plan contributions. An accurate W-2 is important for filing your tax return correctly and avoiding potential issues with the IRS.