What Does Box 12 Code AA Mean on Your W-2?

Code AA in Box 12 on your W-2 reports the total you contributed to a Designated Roth 401(k) through payroll during the calendar year. That money was already taxed for income tax and FICA before it went into the account, so it needs no deduction, no extra form, and no special handling on your return in most cases. The tradeoff comes later: qualified withdrawals in retirement, including all the growth, come out federal-income-tax-free.

What the Number Represents

The dollar figure next to Code AA is your elective deferral to the Roth side of your employer’s 401(k). It’s your contribution only. Employer matching dollars don’t appear here, even if your plan offers a Roth match, because matches are tracked separately and typically land in a pre-tax account unless the employer has adopted the newer designated Roth matching option under SECURE 2.0.¹

Because you paid tax on this money before it was deferred, the Code AA amount is already baked into Box 1 (wages), Box 3 (Social Security wages), and Box 5 (Medicare wages) of the same W-2. There is nothing to deduct and nothing to add back.²

How Code AA Differs From Code D

If your W-2 also shows Code D in Box 12, that’s your traditional pre-tax 401(k) contribution. Code D money is excluded from Box 1 because it hasn’t been taxed yet; you’ll owe income tax when you withdraw it. Code AA money is included in Box 1 because you’ve already paid the tax.²

Both types are subject to Social Security and Medicare tax, so both appear in Boxes 3 and 5. The only tax difference is Box 1. If you split contributions between the Roth and traditional sides, the combined Code AA and Code D totals share a single annual limit.

Does Code AA Change Your Tax Return?

For most filers, no. The contributions were taxed through payroll, and the code appearing on your W-2 doesn’t create any additional filing step. The IRS uses the reported amount to verify you stayed within the deferral limit and to mark the start of the five-year clock that governs tax-free withdrawals later.

There is one item worth checking. If your income is modest, Roth 401(k) contributions can qualify for the Retirement Savings Contributions Credit (the Saver’s Credit). For 2026, single filers with AGI up to $40,250, heads of household up to $60,375, and joint filers up to $80,500 can claim a credit worth 10% to 50% of up to $2,000 in contributions ($4,000 if married filing jointly).³

The 2026 Limit Code AA Counts Toward

Your Code AA amount counts against the annual elective deferral ceiling that covers all employee contributions to 401(k), 403(b), and governmental 457(b) plans combined. For 2026, that ceiling is $24,500.⁴ If you contributed to both the Roth and traditional sides, add Code AA and Code D together and compare the sum to that limit.

Catch-up contributions sit on top of the base limit and depend on your age at year-end:⁴

Age 50 to 59, or 64 and older: an additional $8,000, for a $32,500 total.
Age 60 through 63: an additional $11,250 under SECURE 2.0, for a $35,750 total.

The 60-to-63 window is narrow and gives you a larger catch-up than workers on either side of it. Check your age carefully if you’re near the edges.

What You Get Later for Paying Tax Now

The reason Code AA money is taxed upfront is that qualified withdrawals come out tax-free. Two conditions must both be met.¹

First, you must have held a designated Roth account in that plan for at least five tax years. The clock starts January 1 of the first year you made any Roth contribution to that specific plan. Second, the withdrawal must happen after age 59½, or be triggered by disability or death. Meet both, and the entire distribution, contributions and earnings, is federal-income-tax-free.⁵

Take money out before meeting both rules and the earnings portion becomes ordinary income, plus a 10% additional tax if you’re under 59½. Your original contributions come back tax-free either way, since tax was already paid on them.⁶

If You Contributed to More Than One Plan

Job changes and second jobs are the usual way people cross the deferral limit without noticing. Add every Box 12 Code AA and Code D amount across all W-2s and compare the total to $24,500 (or your applicable catch-up total). Anything over the limit is an excess deferral, and the tax cost of ignoring it is severe: the excess is taxed when contributed and taxed again when eventually withdrawn.⁷

To avoid the double tax, ask one of your plan administrators to return the excess plus any earnings by April 15 of the following year. For excess deferrals made during 2026, that deadline is April 15, 2027. Filing an extension does not push it back. Miss the window and the excess stays trapped in the plan until it can otherwise be distributed, with the double tax still owed.⁷

If Code AA Looks Wrong

Compare the Code AA figure to your final pay stub or plan statement. If the number is off, or the code itself is wrong (for example, your contributions were traditional pre-tax and should be Code D), ask your employer’s payroll or HR department for a corrected W-2, known as a W-2c. The IRS lists Code AA errors among the common reporting mistakes on retirement plan W-2s.⁸

Don’t file with a number you know is wrong. An inflated Code AA can make it look like you exceeded the deferral limit; an inaccurate figure also misstates your Roth basis, which is harder to fix once the return is on file. Get the correction from your employer before submitting your return.

1
Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
2
Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
3
Internal Revenue Service. Retirement Savings Contributions Credit (Saver’s Credit)
4
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
5
Office of the Law Revision Counsel. 26 U.S. Code 402A – Optional Treatment of Elective Deferrals as Roth Contributions
6
Internal Revenue Service. Topic No. 558, Additional Tax on Early Distributions from Retirement Plans
7
Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan
8
Internal Revenue Service. Common Errors on Form W-2 Codes for Retirement Plans