Report any income from employee nonqualified deferred compensation in Box 11 “Nonqualified Plans” on a W2 form. You must report the income for an employee on Form W2 regardless of whether the individual is still an employee at your company. Unsure about how your business benefits from giving your employees a nonqualified plan? The plans benefit employers in a few significant ways:
Improved Cash Flow – Defer a portion of the earned compensation to the future.
Employee Loyalty – These plans create incentives for employees. Many employees forfeit their plan if they switch companies.
Simple Setup – Your business will not pay high fees for setup and administration, and there are no surprise annual costs. The Internal Revenue Service does not require you to file anything.
We help small businesses understand the ins and outs of filing a Form W2 with our W2/1099 Forms Filer software. Download our free 1099-etc Demo software today and utilize the available video tutorials for each of our six optional add-on program modules.