compensation and w-2

[cpc0506]

Client provided us a copy of all employee's w-2s to verify compensation. Employee A had $50,000 in Box 1 and Box 16 (state wages) of W-2 and nothing else.

Definition of compensation for plan is wages, tips and other compensation on Form w-2. I have not seen a w-2 like this before.

Are these wages included in compensation for plan purposes?

[BG5150]

Always use a payroll report. Some states are tougher than others to glean gross comp.

[cpc0506]

Why would a payroll report help me in this instance?

[hr for me]

Are you saying that there were no taxes withheld? No FICA?

Because a payroll report should link you back to the numbers that played into the W-2 calculation (any pretax deductions, etc) if you are questioning the actual W-2 numbers.

[BG5150]

Why would a payroll report help me in this instance?

A payroll report will show you gross comp before any deductions, and that's what you want. With W2's, you often have to back into the correct number, the methodology depending on the state.

[cpc0506]

Nothing held at all, no Federal, no State, no FICA, etc....

[BG5150]

I would go back to client and ask them.

[mbozek]

I have never seen a w-2 with income that did not have withholding for taxes and FICA. I don't think there is a minimum amt of w-2 wages needed for FICA withholding.

[My 2 cents]

I have never seen a w-2 with income that did not have withholding for taxes and FICA. I don't think there is a minimum amt of w-2 wages needed for FICA withholding.

If there were a minimum amount of wages needed for FICA withholding, it would surely be well below $50,000!

There may be some exceptions for students (but that would probably be inconsistent with there having been $50,000 reportable income) or for certain kinds of non-covered governmental work (i.e., if the employer is a governmental entity not participating in Social Security). Would either of those apply?

Otherwise, how could someone earn $50,000 and not pay FICA taxes?

[hr for me]

Some religious entities are exempt from FICA and possibly some educational groups. For example in TX, teachers don't pay FICA, but do pay into another state retirement plan. Even then they would have to show that somewhere on the W-2 since it is taken pretax. I'd have to ask my sisters on how it shows on their W-2.

Something is really wrong with your W-2s unless it is a very unusual exception. I would expect at least some employees to have some FIT withheld. Definitely go back to the client.

[david rigby]

Whose responsibility is this? The TPA may have encountered something that looks like under-withholding of taxes, but is that the concern of the TPA?

The TPA might draw attention to this as a courtesy, mainly to confirm the ER has provided the information intended. However, it seems unlikely the TPA has any place in objecting to this documentation, or asking for any additional explanation. If the ER confirms ("yes, that W-2 comp is correct"), the TPA accepts it and moves on.

[BG5150]

Soemtimes in W2 runs, I've seen people in there twice. Are you sure this person wasn't listed twice?

[hr for me]

BG5150 has a point. Is the "corrected" box checked? Is this a W-2C? If so, this could be a duplicate/corrected on another W-2 that already existed and when you correct, you only put in the information that was wrong/corrected and don't put any other financial info on the W-2.