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Publication 957
taxmap/pubs/p957-002.htm#en_us_publink1000291661

Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) Plans(p9)

rule
It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. For more information, see Notice 2008-115, 2008-52 I.R.B. 1367, available at www.irs.gov/irb/2008-52_IRB/ar10.html.
Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a "plan failure"). Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. See Notice 2008-115.
The following examples use small dollar amounts for illustrative purposes. However, the amount reported in box 3 of Form W-2 is always limited by the social security earnings wage base (for example, $110,100 for 2012). The term "vested" in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. Conversely, the term "not vested" means that the amount deferred is subject to a substantial risk of forfeiture. The examples assume that the NQDC plan is in compliance with section 409A, and that amounts deferred under the plan are not includible in gross income as they are deferred. For purposes of the examples, it is assumed that the regular pay of the employee is remuneration for employment and wages for employment tax purposes except to the extent the deferral of a portion of the regular pay results in a reduction in wages.
taxmap/pubs/p957-002.htm#en_us_publink1000291664

Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals.(p9)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested.
Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10.
Form W-2 Completion Amount
Box 1 ($200 Regular pay minus $20 vested deferral)$180
Box 3 ($200 Regular pay plus $10 Employer match, vested)210
Box 5 ($200 Regular pay plus $10 Employer match, vested)210
Box 11-0-
taxmap/pubs/p957-002.htm#en_us_publink1000291667

Example 2: Deferral with delayed vesting (substantial risk of forfeiture) of employee and employer portions (no distributions and no vesting of prior-year deferrals).(p9)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. The deferral of $20 was not vested upon deferral, and there was an employer match of $10 under the plan, which was also not vested.
Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10.
Form W-2 CompletionAmount
Box 1 ($200 Regular pay minus $20 Deferral, not vested)$180
Box 3 ($200 Regular pay minus $20 Deferral, not vested)180
Box 5 ($200 Regular pay minus $20 Deferral, not vested)180
Box 11-0-
taxmap/pubs/p957-002.htm#en_us_publink1000291668

Example 3: Deferral that is immediately vested with prior-year deferrals and investment earnings on the prior-year deferrals that are now vesting (no distributions). (p10)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. The deferral of $20 was vested upon deferral. During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested.
Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15.
Form W-2 CompletionAmount
Box 1 ($200 Regular pay minus $20 Deferral, vested)$180
Box 3 ($200 Regular pay plus $100 vested prior-year deferral plus $15 earnings on deferral) 315
Box 5 ($200 Regular pay plus $100 vested prior-year deferral plus $15 vested investment earnings on prior year deferral) 315
Box 11 ($100 vested prior-year deferral plus $15 earnings) 115
taxmap/pubs/p957-002.htm#en_us_publink1000291669

Example 4: No deferrals but there are distributions (no vesting of prior-year deferrals). (p10)

For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. There was no vesting of prior-year deferrals under the plan. During the year, there were total distributions of $50 from the plan to the employee.
Regular pay = $100; Distribution = $50.
Form W-2 CompletionAmount
Box 1 ($100 Regular pay plus $50 Distribution)$150
Box 3 ($100 Regular pay )100
Box 5 ($100 Regular pay)100
Box 11 ($50 Distribution)50
taxmap/pubs/p957-002.htm#en_us_publink1000291670
Special rule for box 11 of Form W-2 (distributions and deferral in the same year).(p10)
If, in the same year, there are NQDC distributions and there are deferrals that are reportable in boxes 3 and/or 5 (current or prior-year deferrals) of Form W-2, do not complete box 11. Instead, report on Form SSA-131 the total amount the employee earned during the year.* Submit the SSA-131 to the nearest SSA office or give it to the employee.
*Generally, the amount earned by the employee during the tax year for purposes of item 6 of Form SSA-131 is the amount reported in box 1 of Form W-2 plus current-year deferrals that are vested (employee and employer portions) less distributions. Do not consider prior-year deferrals that are vesting in the current year. If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure.
taxmap/pubs/p957-002.htm#en_us_publink1000291677

Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals).(p10)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. There was also an employer match of $10. The deferral and employer match were vested upon deferral. There was no vesting of prior-year deferrals under the plan. During the year, there were total distributions of $50 from the plan to the employee.
Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50.
Form W-2 CompletionAmount
Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, vested)$230
Boxes 3 and 5 ($200 Regular pay plus $10 vested employer match) 210
Leave Box 11 blank. File Form SSA-131-0-
  
Form SSA-131 Completion
Item 6 - amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $30 vested current year employee deferral and employer match) $210
taxmap/pubs/p957-002.htm#en_us_publink1000291678

Example 6: Deferral with delayed vesting and there are distributions (no vesting of prior-year deferrals).(p10)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. The deferral was not vested upon deferral. There was no vesting of prior-year deferrals under the plan. During the year, there were total distributions of $50 from the plan to the employee.
Regular pay = $200; Deferral, not vested = $20; Distribution = $50.
Form W-2 CompletionAmount
Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, not vested)$230
Boxes 3 and 5 ($200 Regular pay minus $20 deferral that is not vested) 180
Box 11 ($50 Distribution).50
taxmap/pubs/p957-002.htm#en_us_publink1000291682

Example 7: Deferral that is immediately vested and there are distributions (also vesting of prior-year deferrals and earnings on those prior-year deferrals). (p10)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. The deferral was vested upon deferral. There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. During the year, there were total distributions of $50 from the plan to the employee.
Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115.
Form W-2 CompletionAmount
Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 vested deferral$230
Boxes 3 and 5 ($200 Regular pay Plus $115 vested prior deferral (with vested earnings on the deferral))315
Leave Box 11 blank. File Form SSA-131-0-
  
Form SSA-131 Completion
Item 6, amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $20 vested current year deferral) $200
taxmap/pubs/p957-002.htm#en_us_publink1000291683

Example 8: Deferral with delayed vesting and there are distributions (vesting of prior-year deferrals, including employer matches, and earnings on those deferrals). (p11)

For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. The deferral was not vested upon deferral. There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). During the year, there were total distributions of $50 from the plan to the employee.
Regular pay = $200; Deferral, not vested = $20; Distribution = $50; Vesting of prior-year deferrals and employer match = $100 plus earnings on that $100 of $15.
Form W-2 CompletionAmount
Box 1 ($50 Special Wage Payment (Distribution) plus $200 regular pay minus $20 Deferral, not vested) $230
Boxes 3 and 5 ($200 Regular pay plus $115 vested prior-year deferral and prior year employer match and earning on the prior year amounts minus $20 deferral that is not vested) 295
Leave Box 11 blank. File Form SSA-131-0-
  
Form SSA-131 Completion
Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution)$180
taxmap/pubs/p957-002.htm#en_us_201301_publink1000121363

Table 2. Specifications for Electronic Reporting of Special Wage Payments

Record Position
Field
Size


Description
StartEnd
133 Record Type—must include only the capital letters "SWP"
4129 SSN—must be numeric and may not be all zeros
132715 Last Name—all capitals and no punctuation; may have blanks on right only
283811 First Name—all capitals and no punctuation; may have blanks on right only
39391 Middle Initial—must be either a capital letter or blank
40489 EIN—must be numeric and may not be all zeros
495911 Payment—must be numeric; may not be all zeros; last two digits on right are
 assumed to be cents; no period or dollar sign
60634 Payment Year—must be only a four-digit year
64663 SSA Office Code—must be numeric and may be all zeros
67671 Payment Type Code—must be the capital letter "T"
6811750 Filler

The record format is a fixed length of 117.

The file format is ASCII.

Submit only one file at a time.
 
taxmap/pubs/p957-002.htm#en_us_201301_publink1000121366

Table 3. 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.)