Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. Special wage payments, which are for services performed in a prior year, will increase the current year earnings on Form W-2, which also may result in a reduction in the beneficiary's benefits. If a benefit is reduced because of a special wage payment, the beneficiary must get documentation from the employer before the SSA can restore the deducted portion. Therefore, employer reports of special wage payments help prevent incorrect benefit reductions.
Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. Report income, social security, and/or Medicare taxes for special wage payments on Form W-2.
In addition, report to the SSA special wage payments made during the reporting year to retired employees and employees who continue to work while receiving social security benefits. Submit reports after the close of the tax year. To avoid delays in processing, submit reports in time to reach the SSA by April 1. Use one of the following reporting methods.
Electronic submissions not meeting the specifications in Table 2 will be rejected.
Tapes or cartridges not meeting the specifications in Table 3 will be rejected. All data must be in capital letters. "Year" refers to the year the payment was reported as wages on Form W-2. Do not include prefixes or suffixes (e.g., Dr., Ms., Jr., III, MD), numbers, special characters, or punctuation (including hyphens and apostrophes) in the name fields.
Use Form SSA-131 (see page 6) to report special wage payments made to an employee. Also use this form to report nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in box 11 of Form W-2.
taxmap/pubs/p957-001.htm#en_us_publink1000100632taxmap/pubs/p957-001.htm#TXMP11e9c136
Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131
| | EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM |
| 1. | Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. |
| 2. | Enter the date the employee retired. Enter "Not Retired" if the employee has not retired. |
| 3. | Enter the date that the employee last performed services; was not expected to return to work; and was not subject to recall to render additional services. This date should be the same as or earlier than the date in item "2". Enter "Not Retired" if the employee has not retired. |
| 4. | Enter the wages that were paid to the employee in the tax year that were for services that were performed in years prior to the tax year or that were paid on account of retirement.
Examples (not all inclusive) of payments to be included: - Payments in lieu of vacation that were earned in a year prior to the tax year.
- Accumulated sick payments which were paid in a lump sum based on "retirement" as the sole condition of payment.
- Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year.
- Payments "on account of retirement"–dismissal, severance or termination pay paid because of retirement.
- Bonuses which are paid pursuant to a prior contract, agreement or promise causing the employee to expect such payments regularly; or announced to induce the employee to work more steadily, rapidly or efficiently or to remain with the employer.
- Stock Options.
|
| | Do not include in item "4" payments: - For annual, sick, holiday, or vacation pay if used (absence from work) prior to the date of retirement (earlier of items "2" or "3").
- That were reported or will be reported under "Nonqualified Plans" on the Form W-2.
- That were deducted from the employee's wages and paid to a deferred compensation plan (e.g., 401k).
- Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages).
- Bonuses earned and paid in the tax year.
|
| 5. | Check whether payments listed in item 4 will be made for years after the tax year. If yes, please show the amounts and years in which these will be paid, if known. |
| 6. | Nonqualified deferred compensation and section 457 plans only. If you were unable to report nonqualified deferred compensation or section 457 plan payments and deferrals (contributions) on Form W-2 because both payments and deferrals occurred during the year, show the amount of wages earned by the employee during the tax year. Generally, the wages earned will be the compensation reported in block 1 of Form W-2 less payments from a nonqualified deferred compensation (or 457) plan, but including any amounts deferred under the plan during the tax year (See IRS Publication 957). |
| Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404.702. The information that you provide will be used in making a determination regarding the amount of Social Security benefits payable to the above named individual. While your response is voluntary, if you do not respond we may not be able to make a correct determination regarding the amount of Social Security benefits payable to the above named individual for the year in question. |
We may also use the information you give us when we match records by computer. Matching programs compare our records with those of other Federal, State, or local government agencies. Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. The law allows us to do this even if you do not agree to it.
Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. If you want to learn more about this, contact any Social Security Office. |
| The Paperwork Reduction Act : This information collection meets the clearance requirements of 44 U.S.C. §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. You are not required to answer these questions unless we display a valid Office of Management and Budget control number. We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. |
| Form SSA-131 (8-2001) EF (06-2002) |
Submit Form SSA-131 to the SSA office nearest your place of business. Or, the employee can submit it to the SSA office handling the claim. You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. If reporting on more than one employee, complete a separate Form SSA-131 for each employee or use the paper listing format (except for reporting nonqualified and section 457 plan deferrals and payments) in Table 5.
 | Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. |
taxmap/pubs/p957-001.htm#en_us_publink1000100634A nonstatutory (nonqualified) option to purchase stock which is exercised in a year after the year in which the option was earned is a special wage payment. It should not count for the social security earnings test. Nonstatutory (nonqualified) options exercised as special wage payments by retired employees or employees who continue to work while receiving social security benefits should be reported by employers using the above reporting methods.
taxmap/pubs/p957-001.htm#en_us_publink1000100635A nonqualified deferred compensation plan is a plan or arrangement established and maintained by an employer for one or more of its employees that provides for the deferral of compensation, but does not meet the requirements for a tax-qualified deferred compensation plan. For social security and Medicare purposes, deferred compensation plans for employees of state and local governments (section 457 plans) are treated the same as nonqualified plans. Nonqualified and section 457 plans are reported differently than other special wage payments. See
Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions.
Generally, when the related services are performed, nonqualified deferred compensation is subject to social security and Medicare tax when deferred. However, if nonqualified and section 457 plans contain provisions that delay the employee's right to receive payments from the plan, a period of substantial risk of forfeiture exists. The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends.
taxmap/pubs/p957-001.htm#en_us_publink1000100637If there is no risk of forfeiture, report wage amounts deferred to a nonqualified deferred compensation or section 457 plan in box 3 (up to the wage base maximum) and/or box 5 of Form W-2.
taxmap/pubs/p957-001.htm#en_us_publink1000100638Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. The plan has no risk of forfeiture. Employee A defers $20,000 to the plan from a total salary of $200,000.
| Form W-2 Completion |
| Box | Amount |
| 1 | $200,000 |
| 3* | 106,800 |
| 5 | 200,000 |
| *Wage base maximum for tax year 2009 |
If the substantial risk of forfeiture lapses before the employee retires, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year.
Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. If the employee continues working, future deferrals are social security and Medicare wages when they are earned.
| Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. |
taxmap/pubs/p957-001.htm#en_us_publink1000100641When an employee's right to a payment is contingent upon working until retirement, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, as social security and/or Medicare wages in the year of retirement. Add the amount to other wages paid in that year, and enter in box 3 (up to the wage base maximum) and/or box 5 of Form W-2.
Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture.
| Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. |
taxmap/pubs/p957-001.htm#en_us_publink1000100643Example—risk of forfeiture.(p9)
At the end of the risk-of-forfeiture period for Company Y's nonqualified deferred compensation plan, employee B's accumulated deferrals, plus interest earned by the plan, are $120,000, not including B's $20,000 deferral for this year. B's wages, including this year's deferred amount, are $80,000.
| Form W-2 Completion |
| Box | Amount |
| 1 | $60,000 |
| 3* | 106,800 |
| 5 | 200,000 |
| 11 | 120,000 |
| *Wage base maximum for tax year 2009 |
When an employee or former employee retires and begins receiving payments (distributions) from a nonqualified or nongovernmental section 457 plan, report the payments in boxes 1 and 11 of Form W-2. Report payments (distributions) from a governmental section 457 plan on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
taxmap/pubs/p957-001.htm#en_us_publink1000100645Employee D retired from the XYZ company and began receiving social security benefits. XYZ paid D a $12,000 bonus upon retirement for sales made in a prior year, and D received $25,000 in payments from XYZ's nonqualified deferred compensation plan. In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. D made no deferrals to the nonqualified plan this year.
| Form W-2 Completion |
| Box | Amount |
| 1 | $52,000 |
| 3 | 27,000 |
| 5 | 27,000 |
| 11 | 25,000 |
| Report the $12,000 bonus to the SSA using electronic reporting, magnetic media, a paper listing, or Form SSA-131. For more information, see Reporting Special Wage Payments on page 5. |
taxmap/pubs/p957-001.htm#en_us_publink1000100646Do not complete box 11 when payments (distributions) are made from a nonqualified plan and deferrals are reported in boxes 3 and/or 5 of Form W-2 (including current year deferrals). Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. Normally, the amount earned is the amount reported in box 1 of Form W-2 less payments from a nonqualified (section 457) plan, but including any amounts deferred under the plan during the tax year. See Form SSA-131 and its instructions on pages 6 and 7.
taxmap/pubs/p957-001.htm#en_us_publink1000100647Employee K retired this year from Company XYZ and began receiving social security benefits. During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. K also received $75,000 in payments from the company's nonqualified plan.
| Form W-2 Completion |
| Special Wage Payment | $75,000 |
| Wages | $50,000 |
| Minus: deferral | 35,000 |
| Total reported in Box 1 | $90,000 |
| | |
Wages including deferral reported in
Boxes 3 and 5 | $50,000 |
| | |
| Leave Box 11 blank. File Form SSA-131 | -0- |
| | |
| Form SSA-131 Completion |
| Amount from Box 1 of Form W-2 | $90,000 |
| Minus: payments from a nonqualified plan | 75,000 |
| Plus: amounts deferred into the plan during the year | 35,000 |
| Total wages earned for purposes of Form SSA-131 (item 6) | $50,000 |
taxmap/pubs/p957-001.htm#en_us_publink1000121363 Table 2. Specifications for Electronic Reporting of Special Wage Payments
| Record Position |
Field
Size |
Description |
| Start | End |
| 1 | 3 | 3 | Record Type—must include only the capital letters "SWP" |
| 4 | 12 | 9 | SSN—must be numeric and may not be all zeros |
| 13 | 27 | 15 | Last Name—all capitals and no punctuation; may have blanks on right only |
| 28 | 38 | 11 | First Name—all capitals and no punctuation; may have blanks on right only |
| 39 | 39 | 1 | Middle Initial—must be either a capital letter or blank |
| 40 | 48 | 9 | EIN—must be numeric and may not be all zeros |
| 49 | 59 | 11 | Payment—must be numeric; may not be all zeros; last two digits on right are
assumed to be cents; no period or dollar sign |
| 60 | 63 | 4 | Payment Year—must be only a four-digit year |
| 64 | 66 | 3 | SSA Office Code—must be numeric and may be all zeros |
| 67 | 67 | 1 | Payment Type Code—must be the capital letter "T" |
| 68 | 117 | 50 | Filler |
The record format is a fixed length of 117. |
The file format is ASCII. |
Submit only one file at a time. |
| |
taxmap/pubs/p957-001.htm#en_us_publink1000121364 Table 3. Specifications for Magnetic Media Reporting of Special Wage Payments
| File Name: SOSWAP.PXXXXXXX – (X=FIRST 7 LETTERS OF COMPANY NAME) |
| | | | |
| A. | DENSITY | | 6250 bpi |
| | | | |
| B. | LABEL | | SL |
| | | | |
| C. | RECORD FORMAT | | FB |
| | | | |
| D. | RECORD LENGTH | | 55 |
| | | | |
| E. | BLOCK SIZE | | 23430 |
| | | | |
| F. | CODING SCHEME | | EBCIDIC |
| | | | |
| | | | |
| DATA RECORD | | |
SEQ
# | TYP | FLD
SIZE | BEG
POS | END
POS | |
DATA ELEMENT NAME |
COMMENTS |
| | | | | | | | | |
| | | | | | | | |
| 1 | N | 9 | 1 | 5 | | SOCIAL SECURITY NUMBER | PACKED |
| | | | | | | | | |
| 2 | A | 15 | 6 | 20 | | SURNAME | |
| | | | | | | | | |
| 3 | A | 11 | 21 | 31 | | FIRST NAME | |
| | | | | | | | | |
| 4 | A | 1 | 32 | 32 | | MIDDLE INITIAL | |
| | | | | | | | | |
| 5 | N | 9 | 33 | 37 | | EMPLOYER IDENTIFICATION NUMBER | PACKED |
| | | | | | | | | |
| 6 | N | 11 | 38 | 43 | | AMOUNT OF SWP S9(09) V99 | PACKED & SIGNED |
| | | | | | | | | |
| 7 | N | 4 | 44 | 47 | | YEAR | FORMAT: YYYY1 |
| | | | | | | | |
| 8 | AN | 4 | 48 | 51 | | ESTABLISHMENT CODE | |
| | | | | | | | | |
| 9 | AN | 4 | 52 | 55 | | FILLER | |
| | | | | | | | | |
| | | | | | | | |
| | | | | |
| PLEASE PREPARE AN EXTERNAL LABEL WITH THE FOLLOWING INFORMATION: |
| | | |
| SPECIAL WAGE PAYMENTS — TYPE: SWP | |
| | | | | |
| | | | | |
| DSN:SOSWAP.PXXXXXXX2 | Payment Year | | |
| | | | | |
| EIN: NNNNNNNNN3 | Reel of | | |
| | | | | |
| Company Name: | | | | |
| | | | | |
| Record Count: | Return Tape? Y N | | | |
| | | | | |
| Block Size | LRECL Density | | | |
| | | | | |
| Vol Ser # | Label? SL/NL | | | |
| | | | | |
| | | | | |
| 1 YYYY = YEAR. EXAMPLE: 2009. |
| 2 XXXXXXX = FIRST SEVEN LETTERS OF THE COMPANY NAME. |
| 3 NNNNNNNNN = THE COMPANY'S EMPLOYER IDENTIFICATION NUMBER. |
| | | | | |
taxmap/pubs/p957-001.htm#en_us_publink1000121365 Table 4. Sample Transmittal Form for Submission of Special Wage Payment Data
| 1. | Name and address of company
(Include street, city, state and zip code)
DO NOT USE P.O. BOX ADDRESSES | 2. | Contact name and phone number
(Provide name, area code and number of person SSA should contact regarding this tape) |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| 3. | Process type—SWP | 4. | Payment year |
| | | | | |
| 5. | EIN | 6. | Data set name
SOSWAP.P | |
| (First 7 characters of company name) |
| | | | | |
| 7. | Label type (e.g., SL, NL) | 8. | Tape density |
| | | | | |
| 9. | Block size/LRECL | 10. | Record count |
| | | | | |
| 11. | Volume serial number(s) | 12. | Number of reels |
| | | | | |
| 13. | Date this tape was mailed | | |
| | | | | |
| Mail your tapes/cartridges to: | |
| | |
| Social Security Administration | Please include a transmittal for each tape and/or cartridge submission. |
| Tape Operations Section | |
| Attn: Outside Agency | |
| National Computer Center | |
| 6201 Security Boulevard | |
| Baltimore, MD 21235 | |
taxmap/pubs/p957-001.htm#en_us_publink1000121366 Table 5. Sample—Paper Listing for Reporting Special Wage Payments to Several Employees
| Report of Special Wage Payments Tax Year: Page of |
|---|
| A. | Employer Name: EIN: |
| | Address: Contact Name: |
| | | Phone: ( ) |
| | . |
| 1) | B. | Employee Name: (Last) | (First) (MI) |
| | C. | SSN: | D. | SWP:$ | E. | Type: Other: |
| 2) | B. | Employee Name: (Last) | (First) (MI) |
| | C. | SSN: | D. | SWP:$ | E. | Type: Other: |
| 3) | B. | Employee Name: (Last) | (First) (MI) |
| | C. | SSN: | D. | SWP:$ | E. | Type: Other: |
| 4) | B. | Employee Name: (Last) | (First) (MI) |
| | C. | SSN: | D. | SWP:$ | E. | Type: Other: |
| 5) | B. | Employee Name: (Last) | (First) (MI) |
| | C. | SSN: | D. | SWP:$ | E. | Type: Other: |
| |
| | INSTRUCTIONS: |
| | Enter tax year and page number. |
| | A. Employer name, employer identification number (EIN), address, the name of a contact person, and a phone number where the contact person can be reached during normal business hours. |
| | B. Employee's name. |
| | C. Employee's social security number (SSN). |
| | D. Total amount of special wage payments made to the employee. |
| | E. Type of special wage payment from the following list: (1) Vacation Pay, (2) Sick Pay, (3) Severance Pay,
(4) Bonus, (5) Deferred Compensation, (6) Stock Options, and (7) Other—Please explain. |
| | Do not use a paper listing for nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in block 11 of Form W-2. (Get Form SSA-131.) |
| | | | | | | | |
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