What does W-2 Box 12 Code D primarily indicate?

W-2 Box 12 Code D is used to indicate elective deferrals to a 401(k) plan. This code is specifically used to report the amount of money that an employee has chosen to defer from their salary into their employer's 401(k) retirement savings plan. When these contributions are made, they are often taken from the employee's taxable income, which can help lower their overall taxable income for the year.

Understanding this code is essential for both tax preparation and for employees to grasp the impact of their contributions on future retirement savings. Those amounts deferred under Code D are not subject to federal income tax at the time of contribution, although they will be taxed when funds are withdrawn during retirement.

In the context of the other options, uncollected Medicare tax on tips, health insurance premiums paid, and other retirement contributions each have their own specific codes that are helpful for different aspects of financial reporting but do not pertain to the 401(k) contributions that Code D represents. Each code within Box 12 serves a unique purpose on the W-2, allowing employees to understand different aspects of their compensation and benefits.