Will W-2 form report a deferred compensation contributed to a supplemental 401k? I thought this would be reported on W-2 box 12-Y, but I can't find it. Is this normal?

[LindaS5247]

Generally, your deferred compensation isn't subject to income tax withholding at the time of deferral, and you don't report it as wages on your tax return, because it isn't included in box 1 wages on your Form W-2. However, it should be  included as wages subject to withholding for social security and Medicare taxes. 

In general, a Code "Y", in Box 12 would be for a nonqualified deferred compensation plan contribution. 

The instructions for Form W-2 Box 12, Code Y state:

Code Y—Deferrals under a section 409A nonqualified deferred compensation plan.

It is not necessary to show deferrals in box 12 with code Y. For more information, see Notice 2008-115. However, if you report these deferrals, show current year deferrals, including earnings during the year on current year and prior year deferrals. See Nonqualified deferred compensation plans under Special Reporting Situations for Form W-2.

 

Nonqualified deferred compensation plans.

Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are currently includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income, unless certain requirements are met. Generally, section 409A is effective with respect to amounts deferred in tax years beginning after December 31, 2004, but deferrals made before that year may be subject to section 409A under some circumstances.

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 using code Y. 

Click here for Form W-2 instructions, under Nonqualified deferred compensation plans.

If you believe your W-2 is incorrect you should ask your employer about it before entering it.

[hyoonx]

First of all thank you so much for your response to my question. I understood it for Federal tax report. How about for NJ tax report?

Per Turbo tax, NJ does not allow me to exclude from wages amounts I contributed to deferred compensation and retirement plans, other than 401k plans. It also states "State Wages" figure on my w-2 from employment outside NJ may need to be adjusted to reflect NJ tax law.  

Per this rule, I found a question from Turbo tax asking me to enter a deferred compensation and retirement plan amount manually.  

Here is my question. Since my W-2 form does not show "deferred compensation (saying $20,000 last year)" at all, I don't think I need to enter this $20,000 for NJ state tax report, either. Shall I still add $20,000 to my wages for NJ state tax report even though it was not shown on w-2 form? 

@LindaS5247

[Cynthiad66]

Yes, you must include in NJ income.  New Jersey does not allow you to exclude from wages amounts you contribute to deferred compensation and retirement plans, other than 401(k) Plans.

Click this link for information from NJ:   NJ Department of Revenue

@hyoonx

[jongler]

I see that your question has already been answered, but I just wanted to add that it's always a good idea to double-check with your employer if you have any concerns about your W-2 form. They should be able to provide you with any additional information or clarification you need.
Also, I wanted to mention that I recently came across a post about 409a valuation startups. It was really interesting to learn about how startups use 409a report to determine the fair market value of their stock options, which can affect the taxes you owe when exercising those options. It's definitely worth looking into if you're interested in startups and stock options.