Which Box 12 Code is associated with Section 401(k) elective deferrals?

The correct option associated with Section 401(k) elective deferrals is represented by the code D in Box 12 of the Form W-2. This code is specifically designated for elective deferrals made to a 401(k) plan, which allows employees to contribute a portion of their earnings to retirement savings on a pre-tax basis.

The importance of using the correct Box 12 code lies in ensuring accurate reporting for both employees and the Internal Revenue Service (IRS). The code D informs taxpayers that contributions made to a 401(k) plan reduce their taxable income, which can result in tax savings.

Understanding these codes is crucial for payroll professionals, as it ensures compliance with IRS regulations and accurately supports employees in their retirement savings efforts.