Reporting Solo 401k After-Tax Contributions (non Roth) for an S-corp or C-corp | Form W-2

If your self-employed business is an S-Corp or C-Corp that sponsors a solo 401k plan, and you elect to make after-tax contributions to the solo 401k plan, you may report these contribution on Form W-2 line 14. See below.

IMPORTANT NOTE: Don’t confuse after-tax solo 401k contributions with Roth solo 401k contributions as they are different. For example, gains on Roth solo 401k contributions grow tax free whereas after-tax solo 401k contributions earnings are subject to taxes once distributed. For this reason, business owners will convert their after-tax solo 401k contributions immediately to a Roth solo 401k or Roth IRA.

Please see following 2 excerpts from page 19 of the Form W-2 instructions (available HERE) which states the following (emphasis added):

The following are not elective deferrals and may be reported in box 14, but not in box 12:

 ….

  • After-tax contributions that are not designated Roth contributions, such as voluntary contributions to a pension plan that are deducted from an employee’s pay. See Box 12—Codes for Code AA, Code BB, and Code EE for reporting designated Roth contributions. Required employee contributions. Employer matching contributions.

Example of reporting excess elective deferrals and designated Roth contributions under a section 401(k) plan. For 2017, Employee A (age 45) elected to defer $18,300 under a section 401(k) plan. The employee also made a designated Roth contribution to the plan of $1,000, and made a voluntary (non-Roth) after-tax contribution of $600. In addition, the employer, on A’s behalf, made a qualified nonelective contribution of $2,000 to the plan and a nonelective profit-sharing employer contribution of $3,000.
Even though the 2017 limit for elective deferrals and designated Roth contributions is $18,000, the employee’s total elective deferral amount of $18,300 is reported in box 12 with code D (D 18300.00). The designated Roth contribution is reported in box 12 with code AA (AA 1000.00). The employer must separately report the actual amounts of $18,300 and $1,000 in box 12 with the appropriate codes. The amount deferred in excess of the limit is not reported in box 1. The return of excess salary TIP deferrals and excess designated contributions, including earnings on both, is reported on Form 1099-R. The $600 voluntary after-tax contribution may be reported in box 14 (this is optional) but not in box 12. The $2,000 nonelective contribution and the $3,000 nonelective profit-sharing employer contribution are not required to be reported on Form W-2, but may be reported in box 14.

To learn more about he solo 401k rules, VISIT HERE.

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