It's possible, perhaps even likely, that the W-2 is correct. The amount shown in box 11 can represent one of two different things depending on the circumstances. Box 1 can be lower than box 11 if the amount in box 11 represents amounts deferred in a prior year have now vested during the current year, and the amount of deferrals that have now vested is greater than the amount of wages minus new vested deferrals. If this is the case, when asked if the amount in box 11 represents distributions, you must answer No. You can verify that you have answered this way by observing that the amount on TurboTax's W-2 form in the box labeled Distributions from sect. 457 and nonqualified plans is blank.
If the amount in box 1 instead represents a distribution from the plan, the amount in box 11 is required to be included in box 1. Under these circumstances, the amount in box 11 cannot be less than the amount in box 1.
