When I was layed off in 11/2023 I was not allowed to do this. It is stated in the severance policy somewhere i think. They took nothing from severance for my 401k. The last paycheck with accrued PTO etc, did put money in the 401k.
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Call HR. You can decide how much (or little) you want taken from a severance. Keep in mind, Uncle Sam want's what his at the end of the year. Plan accordingly..
You can max out 401k. IRA and HSA. That is basically it. That would barely dent your 80K severance. Taxes, I believe this is why we never see any Nov/Dec layoffs. By the time the checks are cut we are into 2025 tax season for organizations. Enjoy the holidays.
@1vso+1vfRKHfT thank you for the information. Im opening a case with human capital tomorrow. it is inevitable that us based call center employees will be Riffed.
I used bing copilot to ask the question:
How to avoid paying taxes from severance?
Copilot Answered:
While it's not possible to completely avoid paying taxes on severance pay, there are several strategies to minimize the tax burden:
- Contribute to a Retirement Account: You can put some or all of your severance pay into a tax-deferred account like an Individual Retirement Account (IRA) or 401(k). This can help defer taxes until you withdraw the funds in the future.
- Health Savings Account (HSA): If you have a high-deductible health insurance plan, you can contribute to an HSA. This can help you save for future medical expenses while reducing your taxable income.
- Spread Out Payments: Ask your employer if it's possible to receive your severance pay over two years instead of a lump sum. This can help you avoid moving into a higher tax bracket.
- 529 Plan: If you're a parent, you can use some of the severance pay to fund a 529 educational savings account for your child's education.
- Donate to Charity: You can donate a portion of your severance pay to a charity and take a tax deduction for the donation.
It's always a good idea to consult with a financial advisor or tax professional to ensure you're making the best decisions for your specific situation.
nope
Good question? I suppose you could.