If you are laid off and get severance, does anyone know how it is paid out and do you have a choice in the matter? Is it one lump sum or bi-weekly?
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There may be no reason to sign up for Cobra if you can go on MNSure's exchange and purchase a cheaper plan and take advantage of any possible pre-funded tax credits. Also, you don't have to buy insurance via MNSure's exchange - you can also shop around and deal directly with the health insurance companies such as Medica, HealthPartners, UCare, Blue Cross, etc. and purchase their non-MNSure plans.
ALSO - when you are laid off and are still receiving company health insurance, it is a good idea take advantage of your coverage while it is still inexpensive and at least get a physical, a flu shot and address any health issues for which you have put off seeing a doctor.
103871- thank you very much for the info. Was concerned when they wanted us to sign up for COBRA as that's usually very expensive. Sounds like I can be covered fairly cheaply until November then. Plan to have another FT job before then though.
103775 - if you choose to remain on TGT insurance after your separation date, you actively register for it through COBRA. You'll pay the same rate you pay now (1st 6 months), but write a check to TGT. After 6 months, the rate goes up since you pay 100% of the premium.
How does the insurance get paid? Is target paying for six months starting when you were laid off or from your last pay? Does the emplotpyee still need to pay a portion?
Be relevant and you won't be laid off
Also, no worries about a huge 401(k) deduction on the severance check if you increase at layoff. It's not allowed so 401(k) only comes out of your regular checks. But expect the net of the severance to be about half of what you see on your paperwork. Mine was 51% of the gross severance at 16 weeks pay (6 weeks + 10 years). same with unemployment if you get that far - choose deductions carefully so as to avoid surprises at tax time.
Yes, don't stop your 401k if you're contributing enough for a Target match. Might as well squeeze a little more from the bullseye.
DO NOT confuse WITHHOLDING with the actual amount of TAXES you are required to pay in a given tax year. Severance and vacation pay ARE NOT taxed at a higher rate; they are taxed at the same rate as earned income. Federal WITHHOLDING for a severance payment is a flat 25%. That may or may not be greater than what you have instructed your employer via your W-4 to withhold from your regular paychecks. The amount of actual taxes that you were required to pay in a given tax year is determined when you complete and file your tax return. If too money much was withheld over the course of the year, you get it back as a refund. If not enough money was withheld, you owe additional taxes.
Also - a word of practical advice regarding your 401(k): if you typically max out your annual 401(k) contributions and you are laid off and receive 60 days notice, you should consider substantially increasing the 401(k) deduction for the regular paychecks that you continue to receive during those 60 days so you can take advantage of the full individual contribution limit for 2015. If you are 49 or younger, the 2015 individual contribution limit is $18,000. If you are 50 or older, the 2015 individual contribution limit is $24,000. I have never been employed by Target. However, when I was laid off at the beginning of May a few years ago, I was given 60 days notice (like Target employees) so I continued to receive regular paychecks through the end of June. When I received my layoff notice, I immediately substantially increased the deduction for my 401(k) contributions. Ultimately, even though I received only six months of regular pay, I was still able to contribute the annual maximum allowed to my 401(k), just as I had done in prior years when I was fully employed.
You will also be taxed at a higher rate like this is a bonus. Most likely you will get a refund of a part of that % at the end of the year. So, don't assume that the $ are what the dollars are. I agree you can tweek the deductions and other withholding to compensate for that BUT don't over tweak because otherwise you will get hit with a big tax bill...just an FYI
You don't get a choice in the matter. For those laid off in March, they continued to be paid through last Saturday via normal paychecks. And then, they'll receive one more check before June 5th, which is equivalent to 5 weeks of pay + 1 week of pay for each year of service - all of this wrapped into one lump sum.
One suggestion - if you think you're going to be laid off, be sure to discontinue deductions from your check ASAP. This would include parking, 401K, etc. - all of this is continued to be deducted, so if you can eliminate it now, you'll do yourself a favor.