What is 414 h on w2?

The term "414(h) on W-2" refers to a type of retirement plan contribution that can be included on an employee's W-2 form. It is often offered by employers as a way for employees to save additional money for retirement.

Here are some key details about 414(h) contributions:

1. Purpose: The purpose of a 414(h) contribution is to allow employees to save additional funds for retirement beyond what they contribute to a traditional 401(k) or other retirement plans. These contributions are typically made with pre-tax dollars, meaning they are not subject to income taxes at the time of contribution.

2. Eligibility: Whether an employee is eligible to make 414(h) contributions depends on their employer's specific retirement plan structure. Employers can choose to include this option in their retirement plans, but it is not mandatory.

3. Contribution Limit: The annual contribution limit for 414(h) contributions is determined by the Internal Revenue Service (IRS). As of 2022, the contribution limit is $19,500 for individuals under the age of 50 and $26,000 for individuals aged 50 and above.

4. Tax Treatment: Similar to other retirement plan contributions, 414(h) contributions are tax-deferred. This means they are not subject to income tax in the current year but will be taxed upon withdrawal during retirement.

5. Reporting on W-2: When an employee makes 414(h) contributions, the employer must report the total amount contributed on the employee's W-2 form in Box 12 with the code "414H". This helps in accurately reflecting the employee's total compensation for tax purposes.

It's crucial to consult with a tax advisor or benefits specialist to understand the specifics of your employer's retirement plan and how 414(h) contributions impact your overall retirement strategy.