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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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My employer lets us allocate 100% of our bonus to our 401K

Customer Question

my employer lets us allocate 100% of our bonus to our 401K on a pretax basis. This is stated that way in our policy. I did allocate 100% of my bonus to the 401K and when I received my bonus they had taken out ss which I expected buy also withheld federal, state and local tax from it. I think this is wrong and the only answer I can get from my employer is it was done correctly !!!??? Can you help with this?
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: someone there ????
Submitted: 5 months ago.
Category: Tax
Expert:  Lane replied 5 months ago.

Hi My name's Lane.


I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986.

Bear with me just a moment and I’ll provide my initial response and then we can go from there if you have further questions on this.

Expert:  Lane replied 5 months ago.

WAIT your question makes no sense. You can't both receive a check AND have the bonus allocated (contributed) to the 401(k). It's one of the other.

Customer: replied 5 months ago.
No, when I look at my bonus stub ...when payroll ran our bonus checks I received a bonus of $8200 ...and by th time they took out ss (which I expected that to be deducted) and also took out local,state and federal tax (which I didn't expect to be deducted) I only had 6900 going to my 401K. So it wasn't done on pretax basis...they took out over $700 in withholding tax from me.
Customer: replied 5 months ago.