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New Initiatives For Retirement savings

In The President's Weekly Speech were a number of new initiatives. One was "we?ll make it possible for employees to put payments for unused vacation and sick days into their retirement plan if they wish. Right now, most workers don?t have that option."

My understanding and experience is that every state except California allowed a 'use it or lose it' for vacation time, and that few, if any, non-California companies ever paid out for vacation time except upon dismissal. Would this provision change any of that? If not, it's a nice idea, but moot. Joe

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JoeTaxpayer
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I had a situation similar to that. I was allowed to accumulate vacation leave but had to take 2 weeks every year. Sick leave was accumulated but was put into a "fund" for medical insurance or a supplement to medicare.

Forcing some vacation is important to determine what staffing is needed to replace a person.

The sick leave credit encourages employees not to take sick leave. The sick leave credit isn't invested so the amortized value of the credit is less than the nominal value.

-- Ron

Reply to
Ron Peterson

Andy comments:

Same where I worked. However, in order to "save" their sick leave and realize the cash or equivalent time off, employees would come to work when they could barely walk... Things like influenza would therefore be spread throughout the workplace. I can't recall a single instance where an employee that was coughing and sneezing all over the place was ever sent home.....

Sick leave is as much for the protection of the healthy employees as it is a consideration for the sick ones. Any system that encourages an employee to "hoard" it, for any reason, is counterproductive to the business..

Andy in Eureka, Texas

Reply to
AndyS

When, I was first being treated for hypertension, I was given an ACE inhibitor which caused me to cough frequently.

My workplace had Norovirus circulating and one co-worker passed out from it at work requiring an IV at the emergency room.

I think that is a good idea for employees to be able to accumulate sick leave to allow for those case requiring a few weeks away from work.

-- Ron

Reply to
Ron Peterson

Interesting that our esteemed President would come up with this now.

IRS Private Letter Ruling 9635002 issued 12/10/1996 allowed this almost 13 years ago. You do have to jump through a few hoops, this is subject to the top heavy testing and anti-discrimination rules, but if you've got unused vacation time you can't take and your plan allows it you can move that money into your 401(k).

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

My last post somehow included an email from the IRS (no, I'm not getting audited :-). That's the problem with switching client software - a lot of "oops" moments.

Worse, it wasn't even the relevant IRS email - the one that discussed IRS revenue rulings and the like for Obama's Retirement & Savings Initiatives. You can find the substance of that email here:

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Mark Freeland

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Mark Freeland

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