Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

When my employer makes a contribution to an employee 401k account, are any taxes payed by the employee (e.g. FICA)? And does the employer match amount show anywhere on the employee's W-2 or 1040?

share|improve this question
add comment

3 Answers

up vote 4 down vote accepted

The 401K match has limits, but it is not taxable until you withdraw the money from the account. You can think of it as an initial lump of interest or gain.

When you leave the company you are allowed to keep it, if you are vested. You can then roll it over into a IRA, or another 401K.

When you withdraw money in retirement you will pay taxes on the match and all the gains from the match. Taxes on what you contribute will depend on if it was pre-tax or post-tax, or if it was deposited into a Roth IRA.

The amount you deposit pretax is noted on the W-2, which you attach to the 1040 form. The company match does not appear anywhere on the w-2 or 1040. It should show on your 401-K statements. Those statements should also tell you how much of the match has been vested.

share|improve this answer
    
Thanks, but what about the 2nd part of my question? –  Vik David Feb 7 '12 at 22:13
    
edited to cover the w-2 and 1040 part of the question –  mhoran_psprep Feb 7 '12 at 23:24
    
Taxes are paid on amounts withdrawn, third paragraph above is a bit ambiguous. –  JoeTaxpayer Feb 8 '12 at 3:47
    
updated 3rd paragraph –  mhoran_psprep Feb 8 '12 at 4:44
1  
I verified the W-2 reporting rule by looking up the General Instructions for W-2. Page 15 has an example, "The $2,000 nonelective contribution and the $3,000 nonelective profit-sharing employer contribution are not required to be reported on Form W-2, but may be reported in box 14." –  Vik David Feb 8 '12 at 18:30
show 4 more comments

Employer matches (even for Roth 401Ks) are put into traditional 401K accounts and are treated as pre-tax income.

Traditional 401K plans are tax deferred accounts, meaning you won't owe any taxes on it this year, but will have to pay taxes on it when you take the money out (likely after retirement).

401K contributions (including the match) are reported to the IRS and are entered in box 12 on the W2 form.

share|improve this answer
3  
See my comment on mhoran_psprep's answer. The match is not reported on Box 12 ... –  Vik David Feb 8 '12 at 18:42
1  
My match, and my wife's do not appear on the W2. Lots of Box 12, but not the match. –  JoeTaxpayer Feb 8 '12 at 23:08
add comment

For the 1st part of your question. Yes the other taxes still apply. You are only deferring your income tax, not the other taxes.

Read the 3rd paragraph:

http://www.irs.gov/Retirement-Plans/Plan-Sponsor/401(k)-Resource-Guide-Plan-Sponsors-401(k)-Plan-Overview

share|improve this answer
    
That link refers to employee deferrals, not employer matches. –  Craig W Mar 28 at 1:20
add comment

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.