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Conference 7.286::digital

Title:	The Digital way of working

Moderator:	QUARK::LIONELON

Created:	Fri Feb 14 1986
Last Modified:	Fri Jun 06 1997
Last Successful Update:	Fri Jun 06 1997
Number of topics:	5321
Total number of notes:	139771

2747.0. "Opt-Out Program and SAVE Contributions" by CENPCS::BIRMINGHAM (Does anyone know who is in charge here...) Thu Oct 28 1993 13:37

    In the most recent Benefits sign-up package, a comment is made that if
    your have chosen Opt-Out as your insurance program, that your Opt-out
    payment of $25.41 can be placed into your SAVE account as long as you
    don't violate the SAVE plan requirements or exceed contribution limits.
    
    Here's the big question:
    
    Assume that an employee is contributing the maximum of 8% into SAVE of
    his/her salary, but that contribution doesn't exceed the IRS maximum
    limit of 8K$(+/-). Now that employee choses Opt-out AND wants that to
    go into SAVE as well.
    
    	1. Does the Opt-out payment get factored into the base salary and
    	   become part of the 8%, or can the employee contribute the 
    	   8% of base salary + Opt-out payment as long as the combined amount
    	   does not exceed the 8K$ IRS limit ?
    
    	2. If the answer is 8%*<base_salary> + Opt-out payment combined , 
           then what's the procedure for getting the Opt-out payment 
    	   redirected to SAVE ?
    
    
    Thanks,
    George

T.R	Title	User	Personal Name	Date	Lines
2747.1	Excellent Questions!	WITNES::PILLIVANT		`Thu Oct 28 1993 13:56`	13
	I read and re-read all material and cannot find an answer to these excellent questions. I have tried to find on the forms how you direct this opt-out payment into Save and cannot find a field for that option. Worse yet I can't figure out who to call to find the answers. How can we (Digital) sent two communications - one to my home and one at work - both mentioning this option without explaining HOW TO DO IT! Worse yet, did I have this option last year and no one told me at all?
2747.2	OPT-OUT	WMOIS::ZEINER		`Thu Oct 28 1993 16:08`	1
	THE OPT_OUT IS FIGURED IN YOUR GROSS AND IS PART OF THE 8%
2747.3	Call PSN 592-7500	NEMAIL::YATES		`Fri Oct 29 1993 12:00`	6
	re: last 2 notes You shuld be able to get these questions answered by calling the Personnel Service Network on DTN: 592-7500. Hope this helps.
2747.4	A response is coming...	CENPCS::BIRMINGHAM	Does anyone know who is in charge here...	`Mon Nov 01 1993 13:42`	7
	To all: Barbara at PSN is investigating this issue and has promised to send me E-mail by Friday. I will post her response here. George :-)
2747.5	What I found out...	CENPCS::BIRMINGHAM	Does anyone know who's in charge ?	`Mon Nov 08 1993 11:17`	17
	It appears that when you OPT-OUT, that the $25.41 is added to the base salary used to calculate your contribution to SAVE. So, if you are contributing the maximum of 8%, then you are contributing 8% of Opt-Out into SAVE. I re-read the Health Care stuff, and the paperwork does seem to imply that the Opt-Out funds could be sheltered completely, IN ADDITION TO your normal SAVE contribution. Apparently that's not the case. I also had my site personnel rep contact the SAVE folks, and it's the same story there as well. So it looks like the government wins again...! :-( Regards, George
2747.6		QUARK::LIONEL	Free advice is worth every cent	`Mon Nov 08 1993 11:52`	10
	Re: .5 > So it looks like the government wins again...! :-( How do you figure this? The government doesn't get any of the money - 8% (or whatever) goes into YOUR 401K, which is tax-exempt. I'd be glad for any opportunity to increase contributions to my 401K, why aren't you? Steve
2747.7	The government always gets the better deal	CENPCS::BIRMINGHAM	Does anyone know who's in charge ?	`Mon Nov 08 1993 13:14`	9
	The government wins because they get more of my income in taxes - which they will inevitably waste. And, I'll bet that they will figure out a way to get rid of 401k's just like they did IRA's. And, YES, I am glad to be able to add to my 401K contributions. That extra $2.03 will really add up fast. George
2747.8		RAINBO::PANDYA		`Tue Nov 09 1993 11:17`	23
	-< Glass half empty Vs half full >- Re:.7 I had similar questions about your question as .6 did. 1. How does the government win? YOU chose to opt out and hence retained the same income you would have otherwise had. As a matter of fact, if you chose not to opt out, the government provides you the benefit of not being taxed (or lowering your tax bracket). You cant have the cake and eat it too! 2. $2.03 added is that much added. The choice would have been not to add even as much. So in effect, you are $2.03 richer/week...that is about $105 per year. Can you not use that (however little) money esp since this is being tax sheltered? 3. Even if the government got rid of the IRA's, whatever you saved till the time they were available, is your retirement (tax deferred) money. Look at the 401K's the same way. I am happy with these choices... Atul
2747.9		RAINBO::PANDYA		`Tue Nov 09 1993 11:19`	7
	-< Wrong on item 1>- Re:.8 Please ignore my point on item 1....my mistake! Atul
2747.10		TLE::TOKLAS::FELDMAN	SDT Software Engineering Process Group	`Tue Nov 09 1993 12:46`	16
	re: .7 Is the elimination of IRAs in the new tax package? The belief that IRAs were eliminated several years ago is a myth. What did change a few years ago is that if your income exceeds a certain amount, and you are covered by an employer-paid pension plan, then you may not defer the tax on your contribution. Income earned by the IRA is still tax deferred. This isn't quite as advantageous, and it does create more bookkeeping work, but it is still an option worth considering. For 1992, single taxpayers with incomes less than $25000, and married taxpayers with incomes less than $40000 could defer taxes on their entire IRA contribution. Gary
2747.11	You all missed the point here...	CENPCS::BIRMINGHAM	Does anyone know who's in charge ?	`Tue Nov 09 1993 15:21`	1
	Rat-hole... I'm outta here..!