Tax withholding on tax distributions

[Ken Davis]

A public university has a NQDC plan subject to 457(f). The annual benefit is never subject to a substantial risk of forfeiture so that amount is always reported as W-2 wages in box 1. However, the annual benefit is paid out to the employee only upon retirement, so it is not subject to income tax withholding while the employee is still employed. Because of this, the plan provides for annual distributions to help the employee pay the income tax bill on April 15.

My question is whether the annual tax distributions are subject to income tax withholding reported in boxes 2 and 17. Seems like they should be since they are a plan distribution.

Thanks,

Ken