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  1. #1

    401K deducted from bonus check?

    What is the name of your state? CA

    I received a nice bonus check recently due to the outstandingly good year my company had last year. That's the good news.

    From my normal paychecks, I have a certain percentage deducted every pay period for my 401K account. Unfortunately, that same percentage was deducted from my bonus check so a rather large chunk of my bonus went pre-tax into my 401K account.

    Should 401K deductions be taken from a bonus check? I didn't really think of it as *salary* and I had thought 401K would only be taken from my normal salary, not from other monetary compensations and bonuses from the company. Are there any laws regarding this subject?

    Thanks for any insight you can offer.

  2. #2

    to elaborate a little more

    Maybe I can elaborate a little more to help facilitate an answer.

    My authorization for payroll deductions for the 401K specifies XX amount (expressed as either a flat dollar amount, or as a percentage amount - employee's choice), per pay period. This in particular is what led me to believe 401K would only be deducted from normal "paychecks" and not from any other checks. Here's the exact wording,


    Defer _____ % of my current and future salary per pay period. This agreement applies to amounts earned until changed by me in writing. I understand my plan sponsor may reduce my deferral only when required to meet certain plan limits."

    . . . applies to amounts earned . . . and . . . per pay period . . .

    doesn't that imply that I have only authorized 401K deductions from my paychecks? And a bonus check does not apply to any "pay period."

  3. #3
    Join Date
    Nov 2001
    It depends on what the plan document says. The law neither prohibits nor requires this.

  4. #4

    What plan document

    What plan document are you referring to? And where do I get it? And it's going to say whether 401K should be taken only out of paychecks or whether bonus checks can be deducted from, too?

    Isn't my authorization for deductions more pertinent in this case?

  5. #5
    Join Date
    Oct 2004
    small town, PA
    You should ask your Benefits Administrator for a copy of the 401(k) SPD (Summary Plan Document). The company is required to have this document. This will give you an overview of the definitions that the company must adhere to in administering the plan, including what types of compensation are excluded and/or included (if any exceptions) as 401(k) eligible earnings.

    There are many ways to define such words as "salary", total compensation, etc.

    You authorize the company to deduct from the components of your compensation in accordance with the Plan Document. You cannot pick and choose which elements to include in eligible earnings, on which your contributions are based. The company must follow the plan document or the tax-deferred status of the plan could be invalidated.

    You have not won the law suit lottery; in fact, you haven't even won the law suit scratch-off.
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