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Ask the Experts January 20, 2026
On What Form Should 457(b) Distributions of Excess Deferrals Be Reported?
Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.
Reported by PLANSPONSOR Staff
Q: I read in an Ask the Experts column that 457(b) distributions for private tax-exempt plans are reported on Form W-2, not Form 1099-R. Is that the case for distributions of excess deferrals as well?
Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:
A: Interesting question! The IRS webpage on distributions of excess deferrals from 457(b) plans states the following:
“In a 457(b) tax-exempt plan, the excess deferrals are taxable in the year of deferral and must be distributed prior to April 15 of the following year. Only the earnings on the excess deferrals are subject to income tax in the year of distribution, and such earnings should be reported on Form W-2 for the year of distribution.”
For distributions prior to April 15, though this language states that earnings on excess deferrals are reported on Form W-2, it is silent on the reporting on the excess deferral itself, other than to state that it is taxable. However, the Form 1099 instructions are quite clear that Form 1099-R should only be used for distributions from governmental 457(b) plans and not private tax-exempt 457(b) plans.
Therefore, absent guidance, it is reasonable to reflect the full deferral amount, including excess amounts, in Box 12 (Code G) of Form W-2 in the year of the deferral (and the participant should report the excess amount on their Form 1040). See https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.
Having said that, you should confirm with retirement plan counsel well-versed on the correct distribution tax reporting for your particular 457(b) plan.
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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