Are Employee Mandatory Contributions to 403(b)s Reported on W-2s?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

I work at a university where we have an employee mandatory contribution that is pursuant to a one-time irrevocable election as to whether to participate in our 403(b) plan. Our payroll people insist that the mandatory contributions don’t have to be reported on the W-2 at all, but I always thought that they needed to be reported somewhere. Who is correct?”

Charles Filips, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

You’re both correct—in a way. Let the Experts explain.

Employee mandatory contributions, defined as employee contributions that are either a) a condition of employment, or b) pursuant to a one-time irrevocable election as to whether to participate in the plan, are NOT elective deferrals and are thus are not subject to the required reporting of elective deferrals in Box 12 of the W-2. However, the W-2 instructions are quite clear that mandatory contributions that are not reported in Box 12, instead, MAY be reported in Box 14, but are not REQUIRED to be reported there (see page 19 of the W-2 instructions “you MAY report in Box 14…required employee contributions”).

So, technically, your payroll provider is correct, reporting of the contribution itself is not required, though many employers elect to report it to the employee in Box 14 for informational purposes. Furthermore, mandatory employee contributions are subject to FICA and FICA Medicare withholding, and thus must be included as wages in Box 3 (FICA Wages) and Box 5 (Medicare Wages) on Form W-2. So, you can certainly make the argument that such contributions are required to be reported, just not as a separate line item.

Thus, you’re both correct!


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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