What does BOX 12 CODE 'S' represent?

Box 12 code 'S' on the Form W-2 specifically represents contributions made to a SIMPLE (Savings Incentive Match Plan for Employees) Retirement Account. When employees make contributions to this type of retirement account, the total amount is reported in Box 12 with the code 'S'. These contributions are typically made on a pre-tax basis, which can lower the employee’s taxable income for the year, promoting retirement savings.

This choice aligns with the purpose and functionality of a SIMPLE IRA, which is designed for small businesses and self-employed individuals, allowing them and their employees to save for retirement through salary deferral contributions. The SIMPLE plan is a regulatory framework that permits specific tax advantages for retirement savings.

The other codes mentioned, while they refer to different employee benefits, do not coincide with Box 12 code 'S'. For instance, the value of Group Term Life Insurance over $50,000 would be denoted with a different code, while adoption benefits and deferred compensation also have specific codes associated with them. Understanding the distinct codes and their meanings assists payroll professionals in accurately reporting employee compensation and benefits on tax documents.