Alex Daisy Posted January 30, 2009 Share Posted January 30, 2009 A Terminated Participant took a distribution from a Non Qualified Deferred Compensation Plan in 2008. The participant was not working for the company in 2008. Should this distribution be reported on a W-2 or 1099 Miscellaneous? Link to comment Share on other sites More sharing options...
QDROphile Posted January 31, 2009 Share Posted January 31, 2009 Check the instructions to the forms. Hint: Start with W-2 Link to comment Share on other sites More sharing options...
Just Me Posted February 2, 2009 Share Posted February 2, 2009 If he was an employee when he DID work, there, then it's a W-2. Just because he's no longer an employee does not change this. It's W-2 compensation that was deferred from some prior year and paid in 2008. Link to comment Share on other sites More sharing options...
Alex Daisy Posted February 3, 2009 Author Share Posted February 3, 2009 Check the instructions to the forms. Hint: Start with W-2 The 1099 R instructions read: Non Qualified Plans, for non employees, these payments are reportable on form 1099-Mic. Now what is a "non employee"? Is a person who used to work for the company considered a NON EMPLOYEE? Link to comment Share on other sites More sharing options...
QDROphile Posted February 3, 2009 Share Posted February 3, 2009 No. That instruction refers to directors who are not also employees, for example. You also consider the status of the person at the time the deferred compensation is earned. It is possible for someone to earn as an employee, then join the board or become a consultant to the employer after employment and earn as a non-employee. Link to comment Share on other sites More sharing options...
Just Me Posted February 3, 2009 Share Posted February 3, 2009 I've been through umpteen IRS employment tax audits, and this issue always comes up. The test of whether someone is an employee or non-employee (a/k/a independent contractor) is done at the time the services are performed. Earn as an employee today but paid 10 years from now = report on W-2. In my experience, you will get some push back from the payroll provider, since the person "does not have a record on the system". This does not change things. Create a record. To pay on a 1099-MISC will cause a failure to pay FICA tax on the employer's part (unless it's an account balance arrangement and you already paid FICA). You don't want to go there. Link to comment Share on other sites More sharing options...
Guest erisaauditor Posted March 1, 2010 Share Posted March 1, 2010 I've been through umpteen IRS employment tax audits, and this issue always comes up. The test of whether someone is an employee or non-employee (a/k/a independent contractor) is done at the time the services are performed. Earn as an employee today but paid 10 years from now = report on W-2. In my experience, you will get some push back from the payroll provider, since the person "does not have a record on the system". This does not change things. Create a record. To pay on a 1099-MISC will cause a failure to pay FICA tax on the employer's part (unless it's an account balance arrangement and you already paid FICA). You don't want to go there. So ---> What's the answer? An employe who was terminated in 2008 is now receiving a distribution in 2010. Doesn't this make his reporting on a 1099-MISC? Where can I find the authoritative reading on this? Thanks Link to comment Share on other sites More sharing options...
XTitan Posted March 2, 2010 Share Posted March 2, 2010 Check the W-2 instructions, Box 1: Box 1—Wages, tips, other compensation. Show the total taxable wages, tips, and other compensation (before any payroll deductions) that you paid to your employee during the year. However, do not include elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan) except section 501©(18) contributions. Include the following: ... 14. Distributions to an employee or former employee from an NQDC plan (including a rabbi trust) or a nongovernmental section 457(b) plan - There are two types of people in the world: those who can extrapolate from incomplete data sets... Link to comment Share on other sites More sharing options...
Just Me Posted March 5, 2010 Share Posted March 5, 2010 So ---> What's the answer? An employe who was terminated in 2008 is now receiving a distribution in 2010. Doesn't this make his reporting on a 1099-MISC? Where can I find the authoritative reading on this?Thanks Earned while employee = paid on W-2 no matter when paid. No, just because the person is no longer an employee does not mean that you can put it on a 1099-MISC. It's still employee compensation, not non-employee compensation, since it is compensation for services provided by an employee. See other response here regarding the instructions to the form. Agree that this is not as clear as you would like in the forms, but I'm telling you how the IRS applies this. You can do whatever you like. I'm putting it on a W-2. Link to comment Share on other sites More sharing options...
Anon Posted March 11, 2010 Share Posted March 11, 2010 Is the reporting the same if the payment is made to a beneficary of the ex-employee? The amounts to be received are the same that the participant would have received had he or she remained alive (ie it is not a "death benefit"). If so, is there income tax withholding and at what rate? Link to comment Share on other sites More sharing options...
XTitan Posted March 12, 2010 Share Posted March 12, 2010 Is the reporting the same if the payment is made to a beneficary of the ex-employee? The amounts to be received are the same that the participant would have received had he or she remained alive (ie it is not a "death benefit"). If so, is there income tax withholding and at what rate? Reporting is not the same. From the 2009 1009 General Instructions Distributions from a nonqualified deferred compensation (NQDC) plan to an estate or beneficiary of a deceased plan participant are no longer reported on Form 1099-R. They should be reported on Form 1099-MISC. - There are two types of people in the world: those who can extrapolate from incomplete data sets... Link to comment Share on other sites More sharing options...
Guest smitek Posted June 9, 2010 Share Posted June 9, 2010 Is the reporting the same if the payment is made to a beneficary of the ex-employee? The amounts to be received are the same that the participant would have received had he or she remained alive (ie it is not a "death benefit"). If so, is there income tax withholding and at what rate? Reporting is not the same. From the 2009 1009 General Instructions Distributions from a nonqualified deferred compensation (NQDC) plan to an estate or beneficiary of a deceased plan participant are no longer reported on Form 1099-R. They should be reported on Form 1099-MISC. Where would you report the Fica and medicare taxes then? Link to comment Share on other sites More sharing options...
XTitan Posted June 9, 2010 Share Posted June 9, 2010 Is the reporting the same if the payment is made to a beneficary of the ex-employee? The amounts to be received are the same that the participant would have received had he or she remained alive (ie it is not a "death benefit"). If so, is there income tax withholding and at what rate? Reporting is not the same. From the 2009 1099 General Instructions Distributions from a nonqualified deferred compensation (NQDC) plan to an estate or beneficiary of a deceased plan participant are no longer reported on Form 1099-R. They should be reported on Form 1099-MISC. Where would you report the Fica and medicare taxes then? Since FICA is assessed upon earning, not distribution, there's usually nothing to report. Certainly in some non-account balance plans, excess earnings, or accelerated vesting cases you could have FICA due. In the year of the employee's death, if there is any deferred comp that is subject to FICA, it would also be reported on the employee's final W-2 in addition to reporting on a 1099-MISC (according to the W-2 instructions and revenue ruling 86-109). Payments after the year of death aren't subject to FICA, just 1099-MISC reporting. - There are two types of people in the world: those who can extrapolate from incomplete data sets... Link to comment Share on other sites More sharing options...
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