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Message
Bonus - Tax Implications
Posted on 7/1/14 at 8:58 pm
Posted on 7/1/14 at 8:58 pm
About to receive a 100% bonus as a retention incentive. Already over the Social Security yearly limit. Anything I should due to limit Uncle SAM's take? TIA.
4
Posted on 7/1/14 at 9:55 pm to Mr. Curious
100% bonus, so doubling your yearly salary?
Max the 401k for the year, Max the wife's 401k, Max the Roth.
Max the 401k for the year, Max the wife's 401k, Max the Roth.
Posted on 7/2/14 at 10:59 am to eng08
Maxing a Roth IRA would have no implication on his tax situation.
In addition, if he is doubling his salary, and is already maxing Soc. Sec. his income would be too high for funding a Roth.
In addition, if he is doubling his salary, and is already maxing Soc. Sec. his income would be too high for funding a Roth.
Posted on 7/2/14 at 11:01 am to Mr. Curious
quote:
About to receive a 100% bonus as a retention incentive.
That is a hell of a retention incentive.
Posted on 7/2/14 at 12:07 pm to barry
Defer as much as you can to Qualified plans, as mentioned before. I changed on my benefits package that more be held specifically from bonuses for traditional 401k contributions vs what comes from my salary/commissions. Employers typically w/h the max from your bonuses.
Posted on 7/2/14 at 12:30 pm to krehn11
quote:
In addition, if he is doubling his salary, and is already maxing Soc. Sec. his income would be too high for funding a Roth.
You are correct, but he could simply use the backdoor contribution for high earners.
Posted on 7/2/14 at 1:47 pm to ISDSTiger
Thanks. I'm in a similar situation as the OP and this helps a lot. I do worry about what happens when they close the loophole though... think the IRS would put some sort of "clawback" for the high earners that took advantage of this?
Posted on 7/2/14 at 1:57 pm to Mr. Curious
You can give everyone who posts in this thread up to $14,000.
Posted on 7/3/14 at 1:25 pm to sneakytiger
quote:
Thanks. I'm in a similar situation as the OP and this helps a lot. I do worry about what happens when they close the loophole though... think the IRS would put some sort of "clawback" for the high earners that took advantage of this?
I do this each year and try not worry about future tax code changes. They talk about taxing my 401k in a few years (or more) but I'm still going to max it out for the foreseeable future.
If there were a clawback, wouldn't it only be taxed on the difference between Roth IRA and Traditional IRA?
Posted on 7/3/14 at 1:31 pm to Mr. Curious
If you have a health saving account, can't you put some of it in there since its you don't pay tax on it? or am I totally wrong?
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