So Bonus is not included in the 401k
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@ax CONGRATS! My mortgage has been paid 3 years as of Groundhog Day (love that!) and I, too, am very glad I focused on that goal and achieved it. Some people like us need that security of the house being paid.
I agree with others who mentioned in the past the company has sent an email to remind us if we don't want any of our bonus going into the 401k when to change the pay option.
on my case my bonus is under taxed as I am in a higher tax bracket than the 25% or whatever rate they take out. regardless if you are over taxed or under taxed, uncle sam will sort it out come April
In past years it has been 2 weeks before payout date. With bonus payout on the Friday 2/13 check, that would mean adjust by Friday 1/30 at 11:59pm. But generally an HR email comes out with confirmation of the date.
Wait for the email. There’s a paycheck between now and bonus payout.
@b2 but it all normalizes once you do your taxes. Believe it or not, some of us don't live paycheck to paycheck and focus on the long term
@az correct. Bonus usually gets an additional withholding (maybe not) either way you can pay now or pay later. Your taxes indeed will not matter. Additionally if you make a big contribution all at once to your 401k you sort of negate the dollar cost averaging especially if stocks tank later in the year
@b2 your taxes saved is nothing compared to the additional payment you make to your mortgage.
@az not exactly. The bonus paycheck is taxes as if that is the rate you get paid for every pay period. So if you get a significantly bigger paycheck, it can push you into different tax brackets.
@ak if you max out your 401k with or without the bonus it doesn't matter you'll also pay the same amount in taxes regardless.
@am Hate to say this and i know it is off topic but i took the pay down my mortgage plan vs beef up 401k plan. Not sure if it was smart or not but i can tell you i have not had a mortgage payment in 15 years and i have slept pretty soundly in the face of all the layoffs knowing i didn’t have a house payment. Many of the 15 years were not generous returns in the stock market and i saved 15 years of interest.
Do it this week-- I think bonus is in early February.
Why would you not want increase your 401k during bonus time so you save more on taxes and make a large contribution?
Already have a decently sized 401k. Will use the Bonus to pay Property Taxes ( not escrowed)
Why would you not want increase your 401k during bonus time so you save more on taxes and make a large contribution?
do it now, but likely no later than next Friday Jan 23 just to be safe.
You'll get an email about that. It's usually 3 weeks prior to payday