Company is doing some fancy dance around a contract that promises to reimburse for any tax
implications on a loan (really a moving bonus disguised as a loan). Here is the contract language in question:
"The company will annually "gross up" the payments to Otteman in order to cover the income
and payroll tax
impact and interest
payments associated with the loan."
However, they have been withholding
$3,726.31 from his paychecks annually to cover the costs of payroll taxes.
In response to my inquiries they sent a spreadsheet explaining why the current arrangement is in our favor: "Though you are having to deduct $3,726.gtfrom your paycheck, you receive the following benefits
from above for your contribution to your 401K: $1137.11
The company matching that goes into your 401K: $1137.11
Your social security deduction that is NOT an extra tax (See NOTE 1): $1762.53
Total amount NOT reducing your cash to you by year end: $4036.75
Benefits over paycheck reduction: $310.44
At the end of the year you have this much more to your credit
than if we had not done any taxing on your
loan forgiveness. So you come out a little more than whole."
The fact that we are reducing our total amount of income that is taxable for social security and the fact that we are contributing to our 401k through this program, does not seem to me to be adequate reimbursement
for tax payments
as outlined in the contract.
Should I seek out a lawyer?