Partner 401k contributions reported on W-2

I have a client that is a partnership, and partners are paid via guaranteed payments. They contribute to a 401k, as do their employees, and received k-1s that report their retirement contribution & match. New payroll provider this year issued them w-2s reporting only their 401k contributions on line 12D. Nothign else on the W-2s. This is the 1st time they've received w-2s, and after researching, it seems like a gray area. Logically it seems incorrect, and should be on k-1 only. But the payroll provider is sticking to this position, saying they do this for all their w-2s. They're a big provider too.

Have you ever seen this? If so, did reporting this way cause any issues for your client, e.g. inquiries from irs?

Never seen this in over 4 decades.

Look at the codes for the K-1 form instructions, assuming they file form 1065. See code 13R. That is where 401k contributions are disclosed for the partners

Agree with Doug. Should be 13R on the K-1.

inquiries from irs?

It's a good question.

Wouldn't reporting the contribution on the 1040, Sch 1 and the W-2, Box 12 be double counting the same contribution?

I cannot efile a tax return with nothing in box 1 wages.

I cannot efile a tax return with nothing in box 1 wages.

Sure you can. Just delete the W2 from your software, since it is meaningless. Now we have a paper W2 with nothing in Box 1 and an e-filed return. Seems that you can easily efile in this situation. Might be that your software ignores the W2 anyway if you actually leave it in there.

Wouldn't reporting the contribution on the 1040, Sch 1 and the W-2, Box 12 be double counting the same contribution?

No. You’re missing the point. The guy got a W2 with nothing on it other than a Box 12 entry. Just ignore the W2.

did reporting this way cause any issues for your client, e.g. inquiries from irs?

So what if it does, even though it won’t. If something happens, just deal with it then. It’s pretty easy to explain that it’s just a reporting matter and the contribution was deducted once in whatever place it was deducted.

But what is the IRS really gonna say to your client, “Hey, you got a W2 with a Code D on it and nothing else…and…and…and…” And so what.

There is no point in talking to the payroll provider about this issue. There is no point in trying to get the W2 rescinded. It is all a waste of time.