As administrators begin preparing year-end tax documents, it’s important to ensure W-2s correctly reflect an employee’s participation in the Missouri Local Government Employees Retirement System (LAGERS). Because LAGERS is a defined benefit plan, rather than an individual account-based plan like a 457 plan, its reporting rules can differ.
Below are the top three things every LAGERS employer must do when completing W-2s, along with a simple checklist you can use when reviewing forms before distributing them.
- Report employee contributions as taxable wages in Box 1.
Employer contributions to LAGERS are not reported on an employee’s W-2 because they are made by the employer, not the employee, and are not considered taxable wages or employee income. Employee contributions to LAGERS are made after taxes. This means they do not reduce taxable income at the time of contribution and count as regular taxable wages that should be included in Box 1 on a W-2.
2. Do not report employer or employee contributions as retirement plan contributions on a W-2.
Employee contributions to LAGERS are not pre-tax and are not a 401(k), 457, or any other type of deferred retirement contribution. They should not be reported in Box 12 or as a special retirement item in Box 14.
3. Check Box 13 for any employee covered by LAGERS.
Be sure to check the “Retirement Plan” box in Box 13 for any employee covered by LAGERS. This includes any employee who was an active participant in LAGERS for any part of the year, even if they were in their free six-month period.
This is the only visible indicator on a W-2 that an employee participates in LAGERS, so it is important that this box is checked.
When completing W-2s for any employee covered by LAGERS, be sure to follow these guidelines:
- Box 1: Include all employee contributions (because they are after-tax).
- Boxes 12 and 14: Do not report employee or employer LAGERS contributions in these boxes.
- Box 13: Must be checked if the employee was in a LAGERS-covered position at any time in the year. This includes employees still in their six-month waiting period.
- Confirm that employer contributions are not included in any box on the W-2.
