Thread regarding Optum layoffs

Can you put your severance package in 401k to avoid taxes?

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| 1191 views | | 7 replies (last November 8, 2024) | Reply
Post ID: @OP+1vfRKHfT

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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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Post ID: @9dkm+1vfRKHfT

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..

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Post ID: @2ihv+1vfRKHfT

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.

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Post ID: @1pun+1vfRKHfT

@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.

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Post ID: @1gpu+1vfRKHfT

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

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Post ID: @1vso+1vfRKHfT

nope

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Post ID: @wdc+1vfRKHfT

Good question? I suppose you could.

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Post ID: @mnp+1vfRKHfT

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