As the fourth quarter of 2022 is upon us, you may consider providing annual bonus payouts to your employees. It’s a great way to thank them for their hard work.
Once you settle on the bonus amounts, consider notifying each employee before you make the payments to provide them with a choice as to how they prefer to receive the funds. They could choose to take it as regular income or invest it in their retirement account.
If your company already has a 401(k) plan, depositing their year-end bonus will function like any other payroll deductions you make on their behalf.
If your employee has already maxed out their 401(k) contributions for the year, you may be able to send their bonus to their IRA.