If you are about to be RELEASED from Mother, then consider the fact that your normal 401K deduction will still be in effect. I personally would like to keep as much of my money as possible, in case I need it during the CF; which is finding another job !
This is bad advice. Stop contributing and miss the free money from matching. It's not like the contributions are not still yours.
Exactly. Some get angry and make a stupid knee jerk reaction ( 15 guy comes to mind) based on emotion. Don't. Merck has NO emotion towards you. Be rational, now more than ever and think only of what's best for yourself.
If you're worried about cash flow, drop your contribution to 6% so you don't miss out on the tax benefit or the match. If you stop altogether the tax impact will lower what you think you'll get anyway.
Does 401K come out of the severance? No benefits, either correct? So just one lump sum of pay with taxes.
Yes, they give a lump sum with big, big, big tax and ss deductions. Like a large one week paycheck. Had a small severance from another company in the past. It was minuscule after the government dirty work.
Yes...one check after about 35% given to Uncle Sam. (However, if they over withheld, you will get it back at tax time next year). COBRA will be billed monthly, if you choose it.
Also keep in mind that the severance check will not come until later this year Sept or Oct, which means your lump sum payout could throw you into the Alternative Minimum Tax (AMT)category for 2014. I mean lets face it, in the governments eyes you just won the lottery and they are going to share in your winnings come hell or high water.
Severance is taxed the same as a bonus. The IRS calls them 'special' payments. No regard for pre-tax deductions so: straight 28% Fed, 6.2% social security (if you haven't maxed out for the year), 1.45% medicare and most states (cities too if you have them) kick up to a flat percentage on these payments. I've been out of payroll for awhile but NJ was 12.5% on these payments back then. Good luck.
26 year gal...got the severance...60 weeks pay...194 K pre-tax,,,135k in my hands after taxes. AND....the chance to get out of this shit hole company. Thanks Merck...I stayed home 2 days a week the last 5 years to boot !!! and took the lump sum option on retirement....being 58 .... I think they call that SWEET.... Did I mention...I no longer have to embarrass myself at parties saying I work for Merck.
Actually you might want to call Fidelity asap and max out your 401K and if you qualify by being 50 and over max out your catch up savings. This is important especially if you will be getting a big lump sum severance. In the past Merck would pay severance as they did your salary, monthly. So if you had 6 months severance coming you would receive 6 monthly checks. This is no longer the case. Now they will give you only one check. So this will bring those with lengthy service into a much higher taw bracket. This would make Uncle Sam very happy. Speak to an accountant and explain to the accountant your potential payout and what you can do to minimize the tax bite. But the first thing and easy thing to do in max out the 401K and Catch up savings. Good luck.
The size if the payment has nothing to do with the tax - PeopleSoft has the option to choose the number of weeks you want any check taxed. They can easily put in $150k check and tax it as a 52 week payment. IRS rules make it a 'special' payment so they hit the flat (higher) taxes.
Very silly, knee-jerk advice. The 401K "deduction" is still YOUR money. It is not in your immediate paycheck, but it's not like anyone is taking that money away from you! Plus you would miss out on the company match, which is FREE money. I agree with the other responders, this is just TERRIBLE advice all around.
OP here...... I knew that the title would draw some attention as I was looking for so good advice from all; to include those who have been thru this before. So thanks to everyone who has replied. Sounds like the best thing to do is to continue with at least 6%. If I am clear, it also sounds like mother does not deduct $$$ toward your 401K upon the lump sum severance pay off. Good Luck to all.
1. Yes, stay with the 6%. 2. Start working another job now, on Merck time. Just get your b.s. sigs, fake some lunches like you care about Merck's sh!tty products and get started on the next job for at least 20 hours per week. You'll cruise out of Merck with a smile.
Yes, at least in NJ. Max unemployment is $636 a week. Take out the optional 10% tax and that leaves you with a big whopping $572 a week. Oh, and its approximately 41.5% tax taken out of the lump sum severance (check also includes any earned vacation). It's taxed at a flat rate of "supplemental income". Supposedly, you'll get it back next April. Hahahaha. Sure. There may be a tiny "surprise" check too... a refund on the medical/dental/extra life insurance/etc.. deductions already taken out of your last regular check...
