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You must ensure that the information on the Form W-2 statements that you issue to your employees contains correct retirement plan information. Employees may need that information to determine their deductions and tax credits, and the Internal Revenue Service (IRS) will use the information to determine whether you are complying with income and employment tax reporting requirements.
During Form 5500 examinations, IRS agents found employers using incorrect codes in Box 12 of Form W-2, including the following:
- Code D for 401(k) elective deferrals incorrectly included 403(b), 457, or non-qualified amounts.
- Code E was used for 403(b) contributions but the employer did not have a 403(b) plan.
- Code H was used incorrectly to report health benefits; code H is for elective deferrals to a 501(c)(18)(D) tax-exempt organization plan (only 6 percent of employers who used this code actually contributed to a 501(c)(18) plan).
- Code S was incorrectly used for a SIMPLE 401(k); a SIMPLE 401(k) should use code D.
The table below shows common codes used for Box 12.
The “Retirement plan” indicator in Box 13 shows whether an employee is an active participant in your company's plan. Checking this box lets recipients know that they may not be entitled to a full deduction for their traditional IRA contributions. You should check this box if an employee was an active participant for any part of the year in:
- A qualified pension, profit-sharing, or stock-bonus plan (including a 401(k) plan).
- An annuity plan under Internal Revenue Code Section 403(a).
- An annuity contract or custodial account under IRC Section 403(b).
- A simplified employee pension (SEP) under IRC Section 408(k).
- A SIMPLE retirement account under IRC Section 408(p).
- A trust described in IRC Section 501(c)(18).
- A plan for federal, state, or local government employees or by an agency or instrumentality thereof (other than a 457(b) plan).
Do not check the retirement plan box if your company only has non-qualified or 457(b) plans.
| Letter Code: | Used For: | Description: |
| D | 401(k) contributions | Elective deferrals to a 401(k) cash or deferred arrangement, including SIMPLE 401(k)s |
| E | 403(b) contributions | Elective deferrals made under a 403(b) salary reduction agreement |
| F | 403(b) contributions | Elective deferrals made under a salary reduction simplified employee pension plan (SARSEP) |
| G | 457(b) contributions | Elective and nonelective deferrals made to a 457(b) deferred compensation plan |
| H | 501(c)(18)(D) contributions | Elective deferrals to a 501(c)(18)(D) tax-exempt organization plan (Included in the “Wages, Tips, Comp.” amount in Box 1) |
| S | 408(p) SIMPLE contributions | Deferrals made under a SIMPLE IRA plan |
| AA | Roth contributions | Designated Roth contributions under a 401(k) plan |
| BB | Roth contributions | Designated Roth contributions under a 403(b) plan |
| EE | Roth contributions | Designated Roth contributions under a government 457(b) plan (a tax-exempt organization’s 457(b) can’t have a designated Roth account) |