i heard they take 50%??????? can we defer this for 2026 as i'll have low income that year
5 replies (most recent on top)
@a3 yes, they will match it
Severance is just a lump sum of wages/income. Its not taxed and higher or lower than normal wages.
@a2 will the company still match your 5% contribution of your severance check to 401k ?
You could try updating your W4 Tax forms on pay & benefits today and go Exempt, if you end up being safe, update again to your normal withholding. It might not update in time but worth a shot if you’re really worried and need to make that money last. Same goes for 401K contributions. I would recommend trying to update that to 0 if you need the money now (you don’t want 5% of your severance payout to go to your 401k).
they will take your severance and multiply it with 26, that will give you an annual income. than they will apply the federal / state brackets.
for example, if you get 20k in severance, they will calculate that 26*20k=520k
Gross 20,000 biweekly. Est taxes: federal 5,600 + FICA 800 + Minnesota 1,540 ≈ 7,940. Net take home ≈ 12,060 per paycheck.