Good morning!
Thanks for the great resource & community and also thanks for the opportunity to post a question regarding my 457b and taxes.
I have a 457b as a municipal employee and am on track to contribute the max for this year ($19,500).
As a result of contract settlement between my union and my employer we will soon be issued back pay checks (I believe it will be paid on the January 1st 2022).
My back pay check is going to be around the range of $25k-$27k (before taxes). Additionally, my 457b will allow contributions to the account from the back pay check. I was thinking about maxing out the 457b from my back pay check under the belief that I would avoid more tax liability. Big check, big taxes?
My question: Would it be better for tax purposes to contribute the max to the 457B from my back pay check? Or should I stay the course with regular bi-monthly contributions to the account?
Thanks for your time & your help is greatly appreciated!
457b & Taxes Question ~ Large Back Pay Check vs. Regular Contributions
Re: 457b & Taxes Question ~ Large Back Pay Check vs. Regular Contributions
You are going to get the check anyway. You are going to put $19.5k into the 457b anyway. When you put the money in the 457 or where that money comes from is not going to change your taxable income for the year one way or the other.
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Re: 457b & Taxes Question ~ Large Back Pay Check vs. Regular Contributions
You are confusing tax withholding with tax owed.ericwol wrote: ↑Fri Oct 22, 2021 10:58 am Good morning!
Thanks for the great resource & community and also thanks for the opportunity to post a question regarding my 457b and taxes.
I have a 457b as a municipal employee and am on track to contribute the max for this year ($19,500).
As a result of contract settlement between my union and my employer we will soon be issued back pay checks (I believe it will be paid on the January 1st 2022).
My back pay check is going to be around the range of $25k-$27k (before taxes). Additionally, my 457b will allow contributions to the account from the back pay check. I was thinking about maxing out the 457b from my back pay check under the belief that I would avoid more tax liability. Big check, big taxes?
My question: Would it be better for tax purposes to contribute the max to the 457B from my back pay check? Or should I stay the course with regular bi-monthly contributions to the account?
Thanks for your time & your help is greatly appreciated!
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
Re: 457b & Taxes Question ~ Large Back Pay Check vs. Regular Contributions
Got it..thanks very much. I knew I was confused about some aspect of it all but I'm looking forward to maxing out that 457b contribution for this year & next (and so on!) so thanks very much for all your time & help!