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Final Paycheck
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Final Paycheck
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When processing an terminated employee's final paycheck is appropriate to NOT take out 401k contributions.? The paycheck will include one day worked, payout for accrued vacation time and severance.
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Final Paycheck
posted at 12/20/2011 2:33 PM EST
on Workforce Management
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Posts: 6
First: 9/23/2011 Last: 12/20/2011 |
When processing an terminated employee's final paycheck is appropriate to NOT take out 401k contributions.? The paycheck will include one day worked, payout for accrued vacation time and severance. |
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Re: Final Paycheck
posted at 12/27/2011 1:27 PM EST
on Workforce Management
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Posts: 127
First: 9/21/2011 Last: 11/12/2012 |
You need to read the 401k plan document very carefully and see what the definition of eligible wages is.....Each 401k plan document is very different so no one here who has not looked at your specific document can tell you. I always recommend that payroll have a current copy of the plan document for reference purposes, because getting it wrong can put the 401k plan in tax and penalty jeopardy. You must follow the plan document EXACTLY as it is written, even if you do not agree with it! But generally, the wages for one day worked at least would be considered 401k eligible wages, the vacation and severance might be again, depending on the actual definition in the plan. |
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Re: Final Paycheck
posted at 12/27/2011 4:39 PM EST
on Workforce Management
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Posts: 148
First: 9/20/2011 Last: 12/12/2012 |
In Response to Re: Final Paycheck: You need to read the 401k plan document very carefully and see what the definition of eligible wages is.....Each 401k plan document is very different so no one here who has not looked at your specific document can tell you. I always recommend that payroll have a current copy of the plan document for reference purposes, because getting it wrong can put the 401k plan in tax and penalty jeopardy. You must follow the plan document EXACTLY as it is written, even if you do not agree with it! But generally, the wages for one day worked at least would be considered 401k eligible wages, the vacation and severance might be again, depending on the actual definition in the plan. Posted by rrupert rrupert is spot on. You should always read the actual plan document as it contains the definition of eligible wages. In general, any day worked and all vacation payouts are normally eligible for 401(k). Severance pay is normally not eligible. |
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Re: Final Paycheck
posted at 1/4/2012 2:03 PM EST
on Workforce Management
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Posts: 2
First: 1/4/2012 Last: 7/25/2012 |
In Response to Re: Final Paycheck: In Response to Re: Final Paycheck : rrupert is spot on. You should always read the actual plan document as it contains the definition of eligible wages. In general, any day worked and all vacation payouts are normally eligible for 401(k). Severance pay is normally not eligible. Posted by howard7 Which earnings are eligible 401(k) earnings and which earnings are not eligible 401(k) earnings should be set-up in the payroll system. |
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Re: Final Paycheck
posted at 1/4/2012 3:35 PM EST
on Workforce Management
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Posts: 1
First: 1/4/2012 Last: 1/4/2012 |
In Response to Final Paycheck: When processing an terminated employee's final paycheck is appropriate to NOT take out 401k contributions.? The paycheck will include one day worked, payout for accrued vacation time and severance. Posted by dwheeler It is usually necessary and this is why at the exit meeting I include a 401K deferral notice change form. I explain that the final check wil be considered wages under the 401K plan and if they don't want any further deductions they need to fill out the paperwork before the final check is cut, All employees have appreciated this knowledge and usually stop their deferral. Judy |
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Re: Final Paycheck
posted at 1/5/2012 12:49 PM EST
on Workforce Management
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Posts: 148
First: 9/20/2011 Last: 12/12/2012 |
In Response to Re: Final Paycheck: In Response to Final Paycheck : It is usually necessary and this is why at the exit meeting I include a 401K deferral notice change form. I explain that the final check wil be considered wages under the 401K plan and if they don't want any further deductions they need to fill out the paperwork before the final check is cut, All employees have appreciated this knowledge and usually stop their deferral. Judy Posted by Matern Matern - Since most 401k deferrals are matched, it does not seem smart to me to stop the withholdings. |
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