After nearly 32 years... They are now paying overtime each pay period instead of banking as COMP time. The problem it now creates for me is the added taxes. My plan was for all my last check to go into my 401K... including all my comp pay. Being it was pushing the contribution limit, I cut my regular 401 to almost nothing. What I was figuring on being before contributions in the final check, will now be after tax. Debating on upping the regular 401 contributions for the 5 remaining checks, or just let it roll and put the extra cash into our new Roths after the 1st of the year...
UGH.... Now they pay overtime.
- Thread starter old medic
- Start date
Out-to-Lunch
Thinks s/he gets paid by the post
Will you be ABLE to contribute to a Roth next year? You need income....
(Alternately, you could use the cash to pay the taxes on a tIRA -> Roth conversion, which has the same effect of moving taxable funds into a Roth vehicle.)
pacergal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yep, our employer switched from comp to payout a few years prior to retirement.
Luckily, it gave me enough time to use it before I had to have pay out on my last check!!
It sometimes sucks when they switch the rules just before you retire. But, such is life.
OP, can you have ALL of the last few checks go into your 401 and use your savings for the next few weeks before retirement? Don't know if that would make a difference, I am definitely not a tax person.
Luckily, it gave me enough time to use it before I had to have pay out on my last check!!
It sometimes sucks when they switch the rules just before you retire. But, such is life.
OP, can you have ALL of the last few checks go into your 401 and use your savings for the next few weeks before retirement? Don't know if that would make a difference, I am definitely not a tax person.
38Chevy454
Thinks s/he gets paid by the post
At my old employer, once you hit the max pretax limit on contribution to 401k, it switched to after tax 401k. Which I then promptly at year end would transfer to my Roth IRA. Since it was already after tax money, I did not have to come up with any additional tax to cover the Roth increase.
So the point of my statement is that you maybe can just max contributions from here on out if the employer's 401k system allows you to automatically switch over to after tax. No worries for you to monitor it and concern for over limit pretax. The after tax can just be transferred to your Roth once you are done and no longer working. Agree on the comment that you can;t do Roth contribution if you do not have income. Although you can do conversion form pretax, but then you need to come up with the tax money to pay on that conversion.
So the point of my statement is that you maybe can just max contributions from here on out if the employer's 401k system allows you to automatically switch over to after tax. No worries for you to monitor it and concern for over limit pretax. The after tax can just be transferred to your Roth once you are done and no longer working. Agree on the comment that you can;t do Roth contribution if you do not have income. Although you can do conversion form pretax, but then you need to come up with the tax money to pay on that conversion.
With the DW still working I can, Plus I'm considering continuing PT just to contribute to the Roth. Also looking at doing some back door Roth conversions up to the next tax bracket.
My whole last check is going into my 401K and will nearly hit the max catch up limit.
I can't help but laugh, My last check with the extra Vacation comp time will be more than my yearly salary the 1st year I worked here....
Thanks, I will look into that... only have room for $1000 in my Roth
