Front & Back Pay Award for Wrongful Termination

[bcriado]

Since this is considered "income" and is taxed accordingly -

Should this also be included as income when the company calculates my retirement income and does Social Security also include these monies in their calculations?

 

[pattytx]

Relative to retirement income under your company plan, we would have no way of knowing. The plan document will contain the answer.

Back pay settlements that are deemed income for income tax are generally also subject to FICA taxes. I would have to have more information about the "front pay" to make a determination. Some of the information that may affect the answer are whether the front pay was a settlement, dismissal pay, court-ordered, pursuant to a bona fide contract, etc.

 

[bcriado]

Thank you for your response - when you say company document would you suggest I call the company and request - what? A description of what qualifies as income - what Im concerned about is giving them a heads-up and killing my chances of the income being included in the calculation. Would this be mandated by law? I didn't leave the company on very good terms...obviously!

FICA - there wasn't any deducted & once again I don't want to open "pandoras box" unless it will be to my benefit. How would I know if the amounts of income added into my current statement sheet would make a significant increase and does the company have to contribute to FICA.

and finally...should I need to contact a lawyer regarding this what specialization would this fall under?

Thank you!

 

[pattytx]

Ask for the Summary Plan Document for the retirement plan. There must be one by law.

Relative to FICA, back pay IS subject, as I noted. It can be all recorded in the year paid or, preferably, allocated by the employer to each year to which it applies. If the sum is large, and it is allocated over a substantial period of time it MAY make a difference in your future benefits, but we would have no way of knowing the actual amount. The employer must match your FICA contributions.

I'm an HR/Payroll professional, not a lawyer, but maybe an Enrolled Agent could give you more complete advice before you consider an attorney.

 

[bcriado]

I do appreciate your assistance with this situation. I have been going through my papers and the best I can come up with regarding the company info in the formula they used to calculate the numbers up to my separation date. Front & back pay was not included because it was dated prior to the final resolution
My question is; if I call and request the document plan are they obligated to provide it to me - if they ask "why" I want it, how should I respond?
Thanks,
Beth

 

[pattytx]

Yes, they are required to provide the SPD. Answer? Cause you would like to review it.

 

[bcriado]

Uh - duh?!? - I sure feel silly asking such an obvious question! I'll let you know how I make out!
Beth