Accounting, Payroll & Pension Issues/Payroll taxes and pensions

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Expert: - 10/29/2008


Question
Hi, my question is we are a company of 3 people and I we never had benefits calculated from our payroll.  My question is do we adjust the taxes after the pensions come out of our paychecks or before.  Do the pension get calculated as income toward our payroll amount? or pension - payroll and than recalculate taxes. Please explain on your e-mail.

Thanks, Nancy

Answer
It depends on what type of pension plan you have.

If your pension plan is under the 401(K) or the section 125 federal standards than you would withhold the pension before calculating taxes.

If your pension plan is not a qualified plan or is a Roth IRA plan than the taxes are calculated on the total amount including the pension amount.

Shirley

Accounting, Payroll & Pension Issues

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Shirley McAllister, CPP, PHR

Expertise

I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.

Experience

25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.

Organizations
SHRM, APA, I.O.M.A.

Publications
I.O.M.A. and BNA

Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration. Boise State University Human Resource Certification

Awards and Honors
APA Hotline Citation of Merit for last 8 years.

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