Accounting, Payroll & Pension Issues/Deferred Comp and future SS taxes

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Expert: - 5/20/2011


Question
If I am above the current social security wage base and contribute to my companies deferred comp plan, how do I ensure the money is not subject to social security tax when withdrawn during retirement years when income could be below the SS wage base?

Answer
If you contribute to a 401K plan that money is taxable when withdrawn later.

If you wish it to be contributed to a plan that does not tax than you need to put the money in a Roth IRA plan, or a Roth 401K Plan.

If it is some other arrangement it will more than likely be considered deffered compensation and taxed at a later date.

I know of no way to differentiate within a plan taxable and non taxable funds unless the plan itself is a Roth plan or other arrangement where taxes are already taken out before the funds are put into the plan.

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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