TN 24 (05-98)

RS 02510.019 SWPs Reported on Form W-2

A. Background

Effective with the 1990 tax year (TY), employers must record in the "nonqualified plan" box of the W-2, the amount of distributions to an employee in the TY from a nonqualified deferred compensation plan, including section 457 IRC plans as explained in RS 01505.031. (These payments are also included in the amount in the box "Wages, tips, other compensation" and may be included in the Social Security wage box.)

IRS Publication 957 is available to employers from the Internal Revenue Service. The publication contains background information on special wage payments as well as complete reporting instructions.

B. Policy

1. General

A nonqualified deferred compensation plan includes any plan or other arrangement for deferral of compensation to or on behalf of an employee where payments to or from the plan are not excluded from wages. (See the explanations regarding these plans in RS 01402.326 and RS 01505.031.)

2. Posting

The amount in the "nonqualified plan" box of the W-2 is posted during the regular annual wage reporting (AWR) process to the unposted detail section of the MEF. It is subsequently subtracted from the beneficiary's total earnings for enforcement purposes since the services for these wages were rendered in a prior period.

FO and PSC adjudicators do not post to the MEF, amounts already shown (or that will be shown) in the "nonqualified plan" box of the W-2.

C. Procedure

Apply the procedures in this subsection if there is an error on the W-2 pertaining to nonqualified plan payments.

1. General

When a beneficiary alleges nonqualified deferred compensation payments for a closed taxable year and these were not properly recorded in a box of the W-2 as required, use the SSA-131 to obtain a signed statement from the employer certifying the amount of such payments for that year(s), along with a description of the kind of payment involved.

2. No Evidence

If the employer has moved to an unknown address, has gone out of business, refuses to (or is unable to) provide the requested information) accept the beneficiary's explanation if satisfactory. If the explanation is unsatisfactory and there are no other development leads, adjudicators then determine, based on all the facts, whether or not to post any of the alleged SWP.

3. Notice

If the adjudicator determines that no SWP should be posted, or determines to post an amount less than alleged by the beneficiary, adjudicators notify the beneficiary, giving the facts and reason for the decision, and include a reconsideration paragraph.

4. Posting to the MEF

Adjudicators post the amount of the SP so determined to the MEF.

5. Annotating the MBR

Adjudicators annotate the "Special Message" field of the MBR with an abbreviated summary of the notice to the beneficiary to serve as documentation of the postings to the MEF.

NOTE:Adjudicators may prong-file supporting documentation in the claims folder if it is the judgement of the adjudicator, that it is needed to supplement the information in the "special message" field of the MBR. If not needed, the supporting documentation may be discarded.

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RS 02510.019 - SWPs Reported on Form W-2 - 05/13/1998
Batch run: 07/09/2013