Back when I had an accountant, she entered very different numbers on lines 3 ("wages, tips and othe compensation") and 5a ("taxable social security wages") of the federal 941 form, with a lower number for line 3. The books for my sole member S corp are very simple; there's a 401(k), that's pretty much it. Could the difference be due to the employer (or employee) contribution to the 401(k)? Why would she have entered these numbers differently?

Closely related: are the employer or employee contributions to a 401(k) subject to social security and Medicare? Has this changed between 2013 and 2015?

1 Answer 1


You're correct, the difference is probably due to the 401(k) contributions. Employee deferred compensation to 401(k) plan is taxed currently under FICA. I.e.: 401(k) deferrals are pre-tax for income taxes, but post-tax for Social Security/Medicare taxes. Accordingly, 401(k) distributions are only taxed for income taxes, and no FICA taxes.

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