Social Security Questions? Ask a Social Security Expert
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The type of deferred compensation drives the social security treatment. Was this income previously reported to you on W-2, but payment deferred to today? Or was it part of a deferred comp plan?
I believe the income was reported as deferred on my W2; however, I don't have it in front of me at the moment.
If this was reported to you as wages in a prior year, or even now, it it treated as wages in the year reported to you, and never again (https://secure.ssa.gov/poms.nsf/lnx/0301401090):
RS 01401.090 Nonqualified Deferred Compensation PlansA. POLICY — GENERALBeginnning 1984, amounts to or from a nonqualified deferred compensation plan are wages for social security purposes when:services are performed; or, if later,when the employee's right to payment is no longer subject to substantial risk of forfeiture, i.e., when conditions required for the payment are met.Once a deferred compensation amount is credited as wages in a given period, it is never again counted for social security purposes in any other period.
So, if it was reported as W-2, it can't be counted twice as income.
Just confirm it is treated as wages already, and you should be fine.
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So I need to check my W2 to see if, in fact, it was reported. When I discussed with the company administering the plan, they said that I would receive a W2 and that they would take out the applicable taxes (Fed/State). They were unsure how my filing would be impacted - if at all.
Is this a 457 plan?
I honestly don't know - sorry to say.
I should have had all this together before I joined Just Answer.
A review of your W-2 for a prior year is in order. Check line 11 (nonqualified plans) and line 12 (qualified plans, like a 401(k)) to see what was withheld from your wages and the tax treatment.
Once you can review the form, you can make the determination. If the amount going to your deferred compensation was in your line 1 wages, then it will not affect your earnings limit for 2014. Otherwise, it will.
Thanks again fro asking at Just Answer. I'm PDtax.