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Do payments to a profit-sharing or stock bonus plan count as wages?

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at ssa.gov.

1313. Do payments to a profit-sharing or stock bonus plan count as wages?

Effective January 1, 1984, payments your employer makes to a profit-sharing or stock bonus plan are wages if:

  1. You have the choice of receiving cash instead;

  2. The payments and the amounts are not included in your gross income because of section 402(a)(8) of the IRC; and

  3. One of the following conditions exists:

    1. The payments are made under a qualified cash or deferred arrangement; or

    2. The payments are made under section 401(k)(2) of the IRC.

The payments are counted as wages at the time the distributions are paid to the trust.

Last Revised: March, 2001

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