457 plan

[deebrook]

I have a 457f plan from a hospital i left in 1985.  Last year I started RMD's.

 the RMD was a little over $20,000 and the VOYA reported about $40,000 as wage income and in box 11 as non-qualified income.  why was this amount reported as income and if $108,000 was originally deferred how will the IRS determine how much to show as wage income/nonqualified income each year and will that stop when the total $108,000 original contribution is reported?

[Anonymous_]

@dmertz?

[dmertz]

I don't know much about these plans.  You might find some answers in the instructions for Form W-2 or section 409A of the tax code:

https://www.irs.gov/pub/irs-pdf/iw2w3.pdf

https://www.law.cornell.edu/uscode/text/26/409A

[NCperson]

@deebrook suggest asking VOYA how they determined this number.  Since this is a deferred income plan, I suspect you never paid SS or Medicare on what was deferred and now it's time to do so, hence the W-2 reporting.  It should stop at $108,000, but again I would ask VOYA. 

[SusanY1]

The amount in box 11 should have been the same as the amount in box 1. These types of plans are considered nonqualified plans and, as such, are taxed as wages on a W-2 not as retirement income on a 1099-R. The Box 11 amount tells us that its from a deferred compensation plan and, therefore, isn't earned income. This excludes the income from things such as calculations for the earned income credit.

Somewhat confusing, though, is that RMDs don't typically apply to 457f plans (but they do to 457b plans).

It sounds like they began distributions based on their plan rules and that $40,000 was the gross distribution and $20,000 was the net distribution after withholding taxes (though that seems a bit high).

All of the money deferred to the plan will be taxed as "nonqualified" coming out, unless some of it was previously taxed. For that information, as suggested above, VOYA should be able to assist.