Question for the Money Doctors
Question submitted on May 10, 2010.
QuestionWould a supplemental plan benefit of a single life annuity be paid to someone on a W-2 if they are of retirement age and are receiving their monthly annuity income?
This answer and issue can get quite complicated quickly. I am assuming that you are talking about a non-qualified deferred compensation plan. Your plan administrator and their tax advisor should be familiar with the payroll tax rules regarding your specific plan. From an employee standpoint, it really depends upon whether Social Security and Medicare taxes were paid when the compensation was earned. If these payroll taxes were withheld when the compensation was earned, then you should likely be receiving a form 1099 or the W-2 should show 0 for wages subject to Social Security and Medicare taxes. If these payroll taxes were NOT withheld when they were earned, then they will likely be withheld when the compensation is paid and a W-2 would be issued. Again, whether one way is actually right or not depends upon your specific plan.
For additional information visit http://www.360financialliteracy.org/