Nonqualified Pension Plan

[david86303]

I have an amount in Form W-2 Box 11, a distribution from a non-qualified pension plan. The amount in W-2 Box 1 is lower by the amount of my employer's deduction for my health care plan, i.e., a "pre-tax deduction." Because the amount in Box 11 is now reported on Schedule 1 Box 8t, Turbo Tax creates a NEGATIVE AMOUNT in Form 1040 Line 1a. Will this cause a rejection of my Form 1040 submission? If so, how do I avoid this while following instructions for Schedule 1?

[Mike9241]

did the employer include box 11 in box 1?

w-2 box 11 instructions

Box 11. This amount is (a) reported in box 1 if it is a distribution made to
you from a nonqualified deferred compensation or nongovernmental
section 457(b) plan, or (b) included in box 3 and/or box 5 if it is a prior
year deferral under a nonqualified or section 457(b) plan that became
taxable for social security and Medicare taxes this year because there is
no longer a substantial risk of forfeiture of your right to the deferred
amount. This box shouldn’t be used if you had a deferral and a
distribution in the same calendar year.

[david86303]

Hi, Mike 9241

Thank you for responding to my query.

This amount IS in Box 1, as it is a distribution from a non-qualified plan to which I did not contribute.  The Box 1 amount does not include the amount deducted, "pre-tax", by my employer for my health care plan. The amount in Box 11 is the total distribution from the non-qualified plan, including the amount I never received that was deducted for the health care plan. So the  amount reported on Schedule 1 Box 8t is from W-2  Box 11. Because it is greater than W-2 Box 1, Turbo Tax creates a negative entry in Form 1040 Line 1a. This creates an error message in Turbo Tax that I am afraid will cause my return to be rejected.

[ThomasM125 · Accepted solution]

It seems that you actually received the amount reported in box 1 on your W-2 form, but box 11 reports that amount plus the health insurance premiums you paid. I believe the W-2 form may be reported incorrectly. You are correct, you won't be able to e-file the return with an error message like you described.

The best thing to do would be to get a corrected W-2 form. The next best thing would be to mail the return in. The last option would be to change the amount in box 11 to equal the amount in box 1 on your W-2 form, assuming that doesn't lower your tax. That may result in the IRS sending you a tax due notice however, which would entail you having to correspond with them to straighten the matter out.

[david86303]

I am having the same issue in TurboTax 2025 as I did last year. The W-2 is NOT INCORRECT, that is, there were pre-tax deductions from the non-qualified plan distribution. I think TurboTax is incorrectly identifying an "error". This did not happen in pre-2024 versions. Please advise.

[DaveF1006 · Accepted solution]

Yes, this can happen when Box 1 (Wages) is less than Box 11 (Non-qualified distributions). Pre-tax deductions, like health insurance or 401k contributions, lower the amount in Box 1. As a result, Box 1 ends up smaller than Box 11, and TurboTax flags this as a "math error" because it reads it as "negative wages." Thankfully, several ways can be used to not "trigger" an error in your TurboTax return.

1. Go to your W-2 entry and ensure the numbers match your paper form exactly.
2. Proceed to the "follow-up" questions after the W-2 grid.
3. When it asks: "Did you take money out of a non-qualified pension plan?"—Answer "NO."
4. Line 1A includes the non-qualified distribution, the amount remains as taxable. By telling TurboTax you took the distribution, the amount in Box 11 will be added to Schedule 1 (Line 8t). This will subtract the amount in Box 1A.
5. When this happens, it creates a negative wage amount and triggers this as a math error.

If the error persists after trying Option 1, you can mute the box that’s creating the software conflict.

1. Edit the W-2 and delete the amount in Box 11 (leave it blank).
2. Keep the amount in Box 1 exactly as it appears on your paper form.

Box 11 helps the Social Security Administration track your period of service, but it doesn’t affect your tax amount. Removing it from the software clears up the math error, and your total taxable income in Box 1 stays accurate.

@david86303 

[david86303]

Thank you, answering "no" cleared the "math error" but leaves the Box 11 entry intact. No need to clear the Box 11 entry. I wish I had gotten this answer last year, but now I know how to avoid the "error."

Thanks again!