Who Issues the W-2s for Private 457(b) Plans?

Q: I read your Ask the Experts column indicating that the proper reporting form for a distribution from our 457(b) plan is a W-2, as we are a private, tax-exempt employer. Since the reporting form is a W-2, does that mean we, as the employer, are required to issue that document, as opposed to the recordkeeper for our 457(b) plan?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: You raise an interesting question, as, indeed, either a plan sponsor OR a recordkeeper could issue a W-2 for such distributions. Often this service can be outsourced to the recordkeeper to reduce administration on the part of the plan sponsor, but you should not assume your recordkeeper is preparing the W-2s. It is often a negotiated service that is part of your overall service agreement with the recordkeeper.

As a reminder from our original article, W-2s are only issued for non-death distributions from private, tax-exempt 457(b) plans. For governmental 457(b) plans, the reporting form for distributions is a 1099-R.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.