Human Resources and ELM - PSFT (MOSC)

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How to report W-2 Box 12 Z nonqualified referred compensation

edited Mar 30, 2022 1:18PM in Human Resources and ELM - PSFT (MOSC) 3 commentsAnswered

I am curious to hear other customers' solutions for reporting nonqualified deferred compensation in the W-2 Box 12 Z field.

               W-2 Box 12 Z:

               Income under a nonqualified deferred compensation plan that fails to satisfy Section 409A.

               his amount is also included in Box 1 and is subject to an additional 20% tax plus interest.

My understanding is that only amounts that exceed the annual limit need to be reported. For example, in 2019 the limit is $19,000. If an employee has $21,000 in nonqualified deferred compensation only $2,000 would be reported in Box 12 Z.

So I am curious how other customers have managed reporting the "difference" in their employees' deferred compensation. Is there a delivered method of configuration to track deferred compensation that exceeds this limit, or a method to have the W-2 creation process split out the overage from the total? Or are customers performing a manual process to identify and report this information on the W-2?

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