Taxation and Regulatory Compliance

What Box on a W2 Shows 401k Contributions?

Navigate your W2 to clearly understand your retirement contributions and their effect on your taxable income.

The W-2 form is an important document employees receive annually from their employers, summarizing their earnings and taxes withheld. This form serves as the primary record for preparing and filing individual income tax returns. It provides a detailed breakdown of wages, tips, and other compensation, along with federal, state, and local taxes that were withheld. Understanding the information on your W-2 is important for accurate tax reporting.

Identifying 401(k) Contributions on Your W-2

Your 401(k) contributions are reported in Box 12 of your W-2 form. Box 12 reports various types of compensation and benefits to the IRS, using letter codes to identify the nature of the reported amounts. For 401(k) contributions, you will find Code D, which represents elective deferrals to a section 401(k) cash or deferred arrangement plan, including SIMPLE 401(k)s.

Another relevant code in Box 12 is AA, which signifies designated Roth contributions under a section 401(k) plan. Other common retirement plan contributions that may appear in Box 12 with different codes include 403(b) plans (Code E), 457(b) plans (Code G), and SIMPLE IRAs (Code S). The amount next to these codes reflects the total contributions made for the year.

Understanding the Reported 401(k) Amount

The amount displayed next to Code D in Box 12 represents your own pre-tax contributions, known as elective deferrals, to your 401(k) plan for the year. These contributions are made with pre-tax dollars, meaning they reduce your taxable income. For instance, if your gross salary was $50,000 and you contributed $5,000 to a traditional 401(k), your Box 1 wages would reflect $45,000.

Conversely, the amount next to Code AA signifies your Roth 401(k) contributions. These contributions are made with after-tax dollars and do not reduce your current taxable income. While Roth contributions are reported in Box 12, they are still included in your Box 1 wages.

How 401(k) Information Affects Your Tax Filing

The Box 12 information directly impacts how your tax return is prepared. Pre-tax 401(k) contributions reported with Code D are already excluded from the wages shown in Box 1 (Wages, Tips, Other Compensation). This means these contributions automatically reduce your taxable income reported on Form 1040, providing an immediate tax benefit.

For Roth 401(k) contributions (Code AA), the reported amount is included in your Box 1 wages. Since these contributions are made with after-tax dollars, they do not reduce your current taxable income. However, qualified withdrawals from Roth 401(k)s in retirement are tax-free. Tax software and tax professionals are designed to correctly interpret these Box 12 codes and integrate them into your tax return, ensuring accurate calculation of your tax liability.

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