How do you account for situations where Box 11 on my W-2 is larger than Box 1. My accounting department verified w-2 as correct. TurboTax doesn't accept this situation.

[tinawalkerusa]

The nonqualified pension plan distribution was not lump sum, but rather small monthly payments.

[rjs]

The W-2 is not correct. Point out to the accounting department that the IRS instructions for Form W-2 (page 19) say the following.

"Report distributions to an employee from a nonqualified plan or nongovernmental section 457(b) plan in box 11. Also report these distributions in box 1." [bold added]

If the amount in box 11 is also reported in box 1, box 11 cannot possibly be larger than box 1.

[dmertz]

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.

[tinawalkerusa]

The accounting department claims the w-2 is correct as Box 11 is only reflecting the vesting of an executive pension plan. The pension was not paid out as a lump sum but rather is being distributed in small monthly payments. They also produced a separate w-2 for the second half of 2025 when monthly income was actually distributed from this plan. 

I left box 11 blank in my Turbotax return since vesting in a pension plan is very different from receiving an actual cash distribution and there was no other way around this glitch. Was that correct?

[dmertz]

For a W-2 that includes no distributions and box 11 represents only vesting of prior-year deferrals (for which you answer No when asked if the amount in box 11 represents distributions), TurboTax should not be complaining about box 11 being less than the amount in box 1 (although it probably should complain if the amounts in box 5 is less than the sum of boxes 1 and 11  because both the amount in box 1 and the amount in box 11 are subject to Medicare tax).

If TurboTax is complaining inappropriately, omitting the amount from box 11 will not affect any of teh calculations on your tax return.  Although the details of your W-2 entries will accompany your e-filing, I doubt that the omission would raise any red flags with the IRS.

[tinawalkerusa]

"No" is not an answer option. Box 11 must either be a distribution or a contribution. "Neither of these two" is not an option. Maybe a third option needs to be made available?

[dmertz]

Perhaps different versions of TurboTax have different wording.  (TurboTax developers seem to have made a lot of ill-conceived wording changes this year.)  What TurboTax needs to know is that it's not a distribution, so answer that it is a contribution.  By "contribution," TurboTax means that it is either a current-year deferral that  is vested or a prior-year deferral that has now vested.

[tinawalkerusa]

Okay, thank you for the insightful responses!