Hi I know that the 401k limit was raised to $23k in 2024.
I have my deductions set to 10% for the biweekly paychecks (even though they are matching only 6% of it).
I see the announcements that typically come about last day to adjust is so and so.
Since the annual bonus is taxed heavily - what do people usually do? Increase the deduction to higher % like 25% for that specific check?
If you are a high earner you should put as much in 401k as possible. So that bonus is taxed at the top bracket now... Put it in 401k then you could withdraw it later when you are retired at a lower tax rate.
I'm not withholding sh-t. We could get our as--s canned and have no money. I can fund my 401k with my next employer. I'd rather add to my rainy day fund.
I changed my 401k contribution one time for 2/2/2024 payroll because I want to receive post-tax bonus $$$ to invest outside of WF 401k -- in Roth IRA w/better investment options.
Note: I max out my WF 401k the rest of the year ($30,500 IRS limit for 2024, which incl. catch-up contribution), which leaves me w/higher net paycheck the last few mos. (once contribution limit reached).
Those in the comments bragging about not taking advantage of 401k are going to be in dire straits come retirement (they might never be able to retire). It's one thing to not be in a financial position to contribute to 401k. It's another to not grasp how valuable 401ks are in financial planning mix.
They may withhold at a certain rate when the bonus is paid out, but in the end it’s not in a special tax category, at least not in my state it isn’t. On your W2 your bonus just counts toward your total income for the year like all your other paychecks. So effectively it gets taxed at your marginal tax rate. If it was over or under taxed based on that at time of disbursement, that will be corrected in your refund when you file. I’d say you should make your bonus contribution based on how much money you want to put in your 401k this year, not based on taxes.
The 6% match is up to 6% of Total comp for that year though, so you’re voluntarily forgoing some of your potential employer contribution, unless you make an extra contribution later to make up for it.
I always set mine to 0% for the bonus, and then bump it back to 6%. I'd rather have more of my bonus money in hand, instead of sitting in my 401k.
This is a layoff site!! Now we ask for financial planning advice here, pretty soon we will be asking for arranged marriages advices too.
"I don’t even contribute to 401k, su-k it WF!"
Don't worry, you will eventually when you grow up.
I’m considering quitting right after bonus so will max out the 401k contribution at 50%. This will give me a good head of steam for the year with my retirement savings in case it takes a few months to get another job with 401k access.
The 401k contribution change must be made by Jan. 19. The one-time change applies to your entire Feb. 2 paycheck (not just the bonus portion). If you set the change to one time only, it will automatically revert back to your regular contributions in subsequent paycheck -- no manual change needed after Feb. 2 paycheck.
Detailed instructions on the 401k change process in Empower during bonus time were sent in an email to all staff today.
You'll be taxed on your bonus regardless of whether you defer taxes or not. There's no way to avoid Uncle Sam on any income. You'll pay the same taxes now or later.
50%.
if you are in a 35% tax bracket and they only take 22% the. you will still owe the remaining 13% come tax time. on the knverse, if you end the year in a tax bracket less than 22% then you'll likely get a refund on the difference. either way, come tax time uncle sam will make sure you pay what you owe
Bonus is considered as a supplement income and will be taxed the same as your regular income. I personally increase my contribution for first several pay check and then gradually decrease the contribution toward the end of the year.
Why would your tax bracket change? You’ll be earning the same total income either way. Changing your contribution timing wouldn’t change anything if you contributed the same amount. The only benefit to contributing earlier is that you’ll have money in the market earlier and therefore earn higher returns if you assume the market is always going up on average.
You realize not investing in the 401k is throwing away free money... who's su-king it now bozo.
I put it to 50% for the bonus payout (one time only) and back to 8% for rest of the year. I like having larger checks end of the year when it maxes out during holiday time.
Bonuses are usually taxed at a flat 22%, which may be more or less tax than your bracket.
You should leave the financial service industry today.
It's funny that you think you're sticking it to WFC when you're just sticking it to yourself.
To the person who doesn’t invest in their 401(k), you don’t have to invest in Wells Fargo stock, I don’t, but I absolutely want the 6% that they match even if they give it to me and Wells Fargo stock.
I personally set my contribution amount really high and so I max out in October, that also gives me higher paychecks the last part of the year.
Bonuses are absolutely taxed heavily because they're considered supplemental income by the IRS.
For OP: Yes, increasing your 401k contribution % for your bonus payments means you'll be paying a lower percentage of your bonus in taxes.
I budget super hard to put it at 50% pre tax from January through to bonus payout so I can contribute as much possible toward the yearly max 401k contrition.
Haven’t always been able to do this but when I can, I do.
I don’t even contribute to 401k, su-k it WF!
Does anyone not realize this is a layoff site!!? Now we ask for financial planning advice here, too?
Some people have the strategy to not put anything in at all (at least the first few months of the year) because if they leave/get fired there is no match at all and a new employer may match right away.
“…Bonus is taxed heavily…”
That is not even remotely what happens.