total check to IRA distribution

SUGGESTED

I have an employee wanting to put his entire paycheck for this week into his IRA.  Today's PR transaction also includes our year bonus.  I have updated his employee DEDUCT to what his gross pay and bonus is.  How will that work as far as taxes, etc.?

  • 0

    He can put his entire net wages into his IRA.  It is taxable for SOC and MEDI and depending upon the type of IRA may be completely taxable.  Do not deduct the entire gross including his bonus.  Give him the check as normal and have him deposit it into his IRA for himself.  This would be the safest method.

  • 0 in reply to Rhonda V

    so then should i just remove the IRA deduct entirely today, do his chekc like normal, and then make the deposit of his check to his IRA account?

  • 0 in reply to DCHaccountMGR

    I'd remove the deduction.  If you do his check as normal, HE would have to make the deposit to his IRA account.  

  • 0 in reply to Rhonda V

    okay.  Thank you for your replies!  Have a great weekend!

  • 0 in reply to Rhonda V
    SUGGESTED

    Another option, if you want to accommodate the employee's request to contribute the full amount of his NET check, would be to generate the check as usual, and before printing or generating direct deposit, use "Enter Checks" to call up the check, and then try entering different amounts into the IRA deduction field, and re-process, until you achieve a very low dollar amount for the NET check amount.  This is an iterative process, because increasing the IRA deduction, will reduce certain taxes, but not all taxes, and you will have to try to come as close as possible to a zero net check amount, but because you can't generate a zero amount check, you would need to leave a small amount to be paid on the check for it to process normally.

  • 0 in reply to ArtMinds

    My senior consultant that has our account just emailed me and suggested this.  He also made another suggestion to leave his IRA contribution as normal, enter his check as normal, and just have him endorse his check over to our IRA holder for deposit into his IRA account. 

  • 0 in reply to DCHaccountMGR

    Frankly, I think you have to draw the line on what you're willing to do sometimes.  You don't have his account information, nor would I want it.  You're not aware of his tax picture to know whether there is a limit being approached, or not.  It's maybe just asking too much in some instances.  Why not pay his rent or his car payment, you know? :-)

     Further, there are rules in banking that could prohibit you from doing this for him.  It happened to us several years ago on a HSA contribution someone wanted us to make from their check.  Sources of funds are important to banks since 911.