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Q&A: Section 125 Plans

Answers are provided by Robyn Morris of R. C. Morris, Incorporated

How does a W-2 show Section 125 Plan benefits?

(Posted February 15, 1999)

Question 140: Where do I report Section 125 Plan benefits on my employees' Form W-2s?

Answer: Most of the pre-tax dollars to a Cafeteria Plan are mysteriously missing from a W-2! Dependent Care benefits are shown in box 10. Contributions for health insurance or to a medical reimbursement account are not specifically shown!

The Federal and Social Security wages will be decreased by all pre-tax contributions. The State taxable income for most States will be the same as the Federal wage amount. The Local Wage box might not may not match the Federal amount. Many localities do not recognize these plans, so local tax (if any) might be on unreduced pay, before pre-tax deductions. If so, the Local box will show higher wages than the Federal/Social Security boxes.

Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. The laws, regulations and court decisions in this area change frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the laws, regulations or court decisions that occur after the date on which that Q&A is posted.
Copyright 1997-1999 R. C. Morris, Incorporated
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