401k contribution taxed at 10.69%

#5 12-24-2003, 04:52 PM

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message
news:KbZFb.231162$Ec1.8188606[at]bgtnsc05-news.ops.worldnet.att.net...
- quote -

> "Stu Redman" <Stu.Redman[at]east.texas.com> wrote in message
> news:E8OFb.1923$Ba6.692[at]newssvr22.news.prodigy.com...
> > I do not pay SS/Medicare on my
> > 401(K) contributions. These are a federal tax, so I don't know why Ohio
> > would be any different from the rest of the US.
> I think you might want to re-check this. Your 401k does not reduce SS and
> Medicare taxes. None of your earned income below $87,000 is exempt from SS
> and no earned income is exempt from Medicare. If your employer isn't
> deducting this tax, you could have a problem.
> Elizabeth Richardson

You are quite right, Elizabeth. My mistake!

#4 12-24-2003, 12:10 AM

"Stu Redman" <Stu.Redman[at]east.texas.com> wrote in message news:<E8OFb.1923$Ba6.692[at]newssvr22.news.prodigy.com> ...
- quote -

> "sssmith" <smiths280[at]sbcglobal.net> wrote in message
> news:77c40de0.0312220757.681bdf5[at]posting.google.com...
> > Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote in message
> news:<uad5lodng.fsf[at]animato.arlington.ma.us> ...
> > > smiths280[at]sbcglobal.net (sssmith) writes:
> > > > > > I recently invested a lump sum payment from my employer into my 401k.
> > > > This contribution was taxed 7.65% social security/medicare, plus
> > > > 3.04%federal/state income tax. I was told by my human resources dept.
> > > > that this is correct. I can understand the 7.65% for s.s., but do not
> > > > understand the 3.04% income tax.I thought 401k contributions were
> > > > income tax free. Can anyone explain this? Thank-you.
> > > > > States are free to tax 401(k) contributions. Perhaps
> > > your state does.
> > > Thanks, Rich, for reply. Ohio must be one of the states to tax 401k,
> > but how about the federal income tax I paid on this, will it be
> > accounted for when I fill out my year end federal taxes, since my
> > taxable income will be adjusted?
> > My H.R. dept. says the federal and state taxes are actually taxes on
> > the S.S./medicare. I'm having a hard time believing that explanation.
> > This is the way it was taxed: gross pay $5,800.00
> > fed. income tax -$155.14
> > state income tax -21.72
> > s.s. tax -359.60
> > medicare tax -84.10
> > ___________
> > 401k contribution $5,179.44, my pay stub
> > states this amount is excluded from federal taxable wages.
> > I think what they must be saying is that $359.60+$84.10 is not eligible for
> the tax-deferred contribution, since these amounts were extorted, uh, I
> mean, deducted for SS and Medicare. Therefore, you must pay federal and
> state tax on $359.60+$84.10. I think it's pretty convoluted, and I
> personally have not heard of this before. I do not pay SS/Medicare on my
> 401(K) contributions. These are a federal tax, so I don't know why Ohio
> would be any different from the rest of the US. Is there a max you've
> exceeded on 401(K) contributions? (Just throwing that out -- I really don't
> know.)

Yes, you are right, except the $155.14+$21.72 is also not eligible.
My check states that $620.56(total amount of taxes) are federal and
state taxable wages. No, I haven't maxed out the 401k. I
understand,from googling, that 401k contributions are subject to SS
and medicare taxes.I also just realized my wife's employer, also in
Ohio, does not deduct any taxes from her contributions either. The
only difference is she contributes 10% weekly, whereas I contribute a
monthly incentive bonus and the once a year lump sum. Thanks, for the
input.

#3 12-24-2003, 12:07 AM

"Stu Redman" <Stu.Redman[at]east.texas.com> wrote in message
news:E8OFb.1923$Ba6.692[at]newssvr22.news.prodigy.com...
- quote -

> I do not pay SS/Medicare on my
> 401(K) contributions. These are a federal tax, so I don't know why Ohio
> would be any different from the rest of the US.

I think you might want to re-check this. Your 401k does not reduce SS and
Medicare taxes. None of your earned income below $87,000 is exempt from SS
and no earned income is exempt from Medicare. If your employer isn't
deducting this tax, you could have a problem.

Elizabeth Richardson

#2 12-23-2003, 12:42 PM

"sssmith" <smiths280[at]sbcglobal.net> wrote in message
news:77c40de0.0312220757.681bdf5[at]posting.google.com...
- quote -

> Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote in message
news:<uad5lodng.fsf[at]animato.arlington.ma.us> ...
> > smiths280[at]sbcglobal.net (sssmith) writes:
> > > > I recently invested a lump sum payment from my employer into my 401k.
> > > This contribution was taxed 7.65% social security/medicare, plus
> > > 3.04%federal/state income tax. I was told by my human resources dept.
> > > that this is correct. I can understand the 7.65% for s.s., but do not
> > > understand the 3.04% income tax.I thought 401k contributions were
> > > income tax free. Can anyone explain this? Thank-you.
> > > States are free to tax 401(k) contributions. Perhaps
> > your state does.
> Thanks, Rich, for reply. Ohio must be one of the states to tax 401k,
> but how about the federal income tax I paid on this, will it be
> accounted for when I fill out my year end federal taxes, since my
> taxable income will be adjusted?
> My H.R. dept. says the federal and state taxes are actually taxes on
> the S.S./medicare. I'm having a hard time believing that explanation.
> This is the way it was taxed: gross pay $5,800.00
> fed. income tax -$155.14
> state income tax -21.72
> s.s. tax -359.60
> medicare tax -84.10
> ___________
> 401k contribution $5,179.44, my pay stub
> states this amount is excluded from federal taxable wages.
I think what they must be saying is that $359.60+$84.10 is not eligible for

the tax-deferred contribution, since these amounts were extorted, uh, I
mean, deducted for SS and Medicare. Therefore, you must pay federal and
state tax on $359.60+$84.10. I think it's pretty convoluted, and I
personally have not heard of this before. I do not pay SS/Medicare on my
401(K) contributions. These are a federal tax, so I don't know why Ohio
would be any different from the rest of the US. Is there a max you've
exceeded on 401(K) contributions? (Just throwing that out -- I really don't
know.)

#1 12-22-2003, 10:18 PM

Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote in message news:<uad5lodng.fsf[at]animato.arlington.ma.us> ...
- quote -

> smiths280[at]sbcglobal.net (sssmith) writes:
> > I recently invested a lump sum payment from my employer into my 401k.
> > This contribution was taxed 7.65% social security/medicare, plus
> > 3.04%federal/state income tax. I was told by my human resources dept.
> > that this is correct. I can understand the 7.65% for s.s., but do not
> > understand the 3.04% income tax.I thought 401k contributions were
> > income tax free. Can anyone explain this? Thank-you.
> States are free to tax 401(k) contributions. Perhaps
> your state does.

Thanks, Rich, for reply. Ohio must be one of the states to tax 401k,
but how about the federal income tax I paid on this, will it be
accounted for when I fill out my year end federal taxes, since my
taxable income will be adjusted?
My H.R. dept. says the federal and state taxes are actually taxes on
the S.S./medicare. I'm having a hard time believing that explanation.
This is the way it was taxed: gross pay $5,800.00
fed. income tax -$155.14
state income tax -21.72
s.s. tax -359.60
medicare tax -84.10
___________
401k contribution $5,179.44, my pay stub
states this amount is excluded from federal taxable wages.

12-22-2003, 12:16 AM

smiths280[at]sbcglobal.net (sssmith) writes:

- quote -

> I recently invested a lump sum payment from my employer into my 401k.
> This contribution was taxed 7.65% social security/medicare, plus
> 3.04%federal/state income tax. I was told by my human resources dept.
> that this is correct. I can understand the 7.65% for s.s., but do not
> understand the 3.04% income tax.I thought 401k contributions were
> income tax free. Can anyone explain this? Thank-you.

States are free to tax 401(k) contributions. Perhaps
your state does.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

#-1 12-21-2003, 11:52 PM

hi,
I recently invested a lump sum payment from my employer into my 401k.
This contribution was taxed 7.65% social security/medicare, plus
3.04%federal/state income tax. I was told by my human resources dept.
that this is correct. I can understand the 7.65% for s.s., but do not
understand the 3.04% income tax.I thought 401k contributions were
income tax free. Can anyone explain this? Thank-you.

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