Consider Directing Your Lump Sum to Your Existing or New Retirement Account
Your questions answered by the benefits office on October 23 & 24.
You will receive your lump sum payment in your November paycheck. The lump-sum will be a multi-thousand dollar increase to your paycheck for one month. There are tax implications to such an increase and you have options you may want to consider.
If you do nothing, the lump sum will be subject to all the same tax witholding as your normal income. If you redirect your lump sum to your SRA retirement account, you can avoid federal and state income tax and only pay FICA taxes.
The Benefits Office will be at the House Officer Lounge to answer questions on October 23 and October 24 from 11:30 AM to 1:00 PM.
The Benefits Office has prepared following document for house officers:
Please see the following chart for this year's Lump Sum Payment
|Lump Sum Payment||Lump Sum Less FICA|
If you do not want to redirect your lump sum to a retirement account, you may want to consider adjusting your W-4 allowances before your November paycheck. Doing so may help you avoid having too much money withheld by the IRS. Please use the Withholding Calculator on the IRS website to figure this out. If done right you can have more money in your pocket in November and December instead of a large tax return in April. You can adjust your W-4 at any time in Wolverine Access. Remember to change your allowances back in January. If you fail to do so you may end up with a tax bill at the end of next year. Each person's situation is different, please consult your tax professional before making any changes.