Your Lump Sum
A link to the investment toolkit to help guide your choice. The deadline to redirect to retirement is November 15.
You will receive your "payment to encourage savings" in your November 30 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 withholding as your normal income. If you redirect your lump sum to your retirement account, you can avoid federal and state income tax and only pay FICA taxes.
Please see the following chart for this year's Lump Sum Payment
|Lump Sum Payment||Lump Sum Less FICA|
If you're thinking of directing your payment to encourage savings to a retirement account, here are a couple of things to remember:
If you already make a contribution to the 403(b) SRA or 457(b) and wish to increase it to include the November lump sum payment, enter the total amount to be deducted, not just the amount of the increase. After your November pay, you must make a second change back to your normal lower deduction (if desired) or the new amount will be deducted from your December 30 pay as well. It does not automatically revert back!
If you do not already contribute, the amount you elect to contribute from the November lump sum payment will continue to be deducted with the December paycheck and beyond. Again, you will need to make a second election to lower or cancel the adjusted amount for the December 30 paycheck or it will continue to be deducted.
Please keep in mind that there are deadlines for making changes to your deductions. You can find these in the 2023 Lump Sum Investment Tool Kit.
The Benefits Office Can Answer Your Questions
Contact the Benefits Office at (734) 615-2000
Suzanne Drews Giddings is happy to speak to individual House Officers who have questions.
- uniqname: suzg
Not redirecting your lump-sum?
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 instead of a larger tax return in April. You can adjust your W-4 at any time in Wolverine Access. If you increase the number for withholding for November, remember to change it back in December. Each person's situation is different, please consult your tax professional before making any changes.