Is severance pay on W2 considered as retirement plan for tax purposes? I received 3 months of severance pay in 2017, and on my W-2 Box 13 had retirement plan checked, is that correct??? Thanks.
No. Severance pay is ''separation'' pay given to employees by some employers upon termination of employment. If Box 13 was checked for Retirement plan this means that you participated in your employer's retirement plan during the year. This might be a 401(k) plan, 403(b) plan, SEP-IRA, SIMPLE-IRA, or another type of pension plan. If you participate in a retirement plan, your ability to deduct contributions to a traditional IRA may be limited based on your income.
Thank you, TurboTaxDawnC. I also believed that there was a mistake on that W-2. I called company benefits and their people also feel that box was checked in error, so told me to call Payroll Dep't. to get a corrected W-2 made. So now I have a Case Number there. Thanks.
You are welcome - the check in that box doesn't mean that your severance pay is retirement income - it only means that you were enrolled in a retirement plan..
I received severance from my company in Texas inJanuary, and moved to Michigan January 1, 2019. Plus I received a payout from a Non-qualified Pension Plan. All had federal, SS Taxes, but nothing in the state of Michigan. My tax burden in Michigan is now huge based on this payout. It will also happen again in 2020 as my severance is paid in two lump sums. Since it is from my work in Texas it is really taxable income in Michigan?