Posted on 09/29/2009 2:19:43 AM PDT by TigerLikesRooster
Unused Vacation? It May Pay
by Laura Saunders
Tuesday, September 29, 2009
Taking vacation pays dividends -- especially if your company allows you to put unused vacation or sick-leave days into your 401(k) or profit-sharing plan.
To encourage savings, the Obama administration recently blessed such transfers. While companies may have to amend their benefit plans to allow it, the administration hopes firms will do so. "We tried to build in as much flexibility as possible to make it attractive," says Mark Iwry, a senior Treasury official.
The techniques are available for use with all qualified plans, which include 401(k), Keogh and profit-sharing plans but not individual retirement accounts or SEP-IRAs. While the rules don't currently extend to the 403(b) plans used by nonprofit organizations, the Treasury is willing to consider expanding them to include such plans, Mr. Iwry says.
The rules apply to "cash-outs" of unused vacation, sick leave or personal days that occur either annually or when an employee leaves a job. If an employer pays for such leave either in whole or in part, the worker could contribute the entire payment to the company's plan, unless he or she has already maxed out the annual contribution limit. This year the limit for most workers is $16,500, or $22,000 for those over 50.
(Excerpt) Read more at search.finance.yahoo.com ...
Ping!
My company has a better way. They put a wad of cash in an escrow account and I can use it to buy leave, insurance, or invest. What’s left over at the end of the year I get in cash. Gives me lots of choices.
I’ve got 280 hours (35 days) of vacation on the books right now...yes, I am a workaholic...but I don’t believe I would want to risk putting it in my 401(k) as shaky as the economy is. Not to mention that the idea of eliminating tax breaks on 401(k) plans has already been proposed so this would fit right in with their plans to confiscate more of my hard earned wealth. No thanks.
I’m up to 20 days per year paid vacation and that is the maximum our company allows. This is after 20 years of employment. Since I am classified as an “exempt” employee, I either “use it or lose it” each year so there are some vacation days taken in the dreary weather month of December. I am pushing management to allow the “exempt” employees to roll a certain number of days into the next year so as not to exceed your annual number of days + the allowed rollover number of days.
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