for people expecting to be paid on Friday 1/1/2021 - slightly odd note from employer HR

[AnEngineer]

Getting paid on 1/1 seems odd to me. I get paid the 15th and end-of-month, adjusted for weekends/holidays. If Sunday is the 15th, I get paid Friday. If Friday is December 25th or January 1st, I get paid Thursday. I can only speak for myself, but I've had a few jobs over many years in Corporate America, and this has always been the practice.

I get paid every other Friday. The 1/1 is a payday for me also.

You might want to double-check.

I want to highlight in general there are two completely separate discussions going on in this thread.

First, that those paid fortnightly mostly have 26 pay periods, but occasionally have 27. Some employers apparently adjust pay and benefits costs in such years. This seems bizarre to me, when you could instead just index everything to the pay period. The only impact would be the tax impact of the annual pay being occasionally a bit higher from the extra pay period.

Second, that those expecting to be paid on 1/1 may have their payday moved to 12/31 because 1/1 is a bank holiday. I checked my company calendar and it says I'll be paid on 1/1, but the last time I was supposed to be paid on a bank holiday (Christmas a few years ago), they moved it up by a day. I'm concerned that this will both impact my tax planning and lose my 401k match if an extra after tax contribution gets made as part of that paycheck.

[lstone19]

First, that those paid fortnightly mostly have 26 pay periods, but occasionally have 27. Some employers apparently adjust pay and benefits costs in such years. This seems bizarre to me, when you could instead just index everything to the pay period. The only impact would be the tax impact of the annual pay being occasionally a bit higher from the extra pay period.

For a short period, I worked for a company where I had a monthly salary but it was paid bi-weekly. IIRC, the monthly salary was converted to a bi-weekly salary by taking the monthly salary, multiplying by 12 (to make it annual), dividing by 365 (to make it daily), and then multiplying by 14 (to make it bi-weekly). With such a method, there is no need to adjust salary for the one year in 12 or so the there are 27 pay periods.

The funny thing is, considering all the hand-wringing going on, is that for those paid a monthly salary semi-monthly or monthly, the daily rate varies depending on how many workdays there are in the month which for a normal 5 day a week will vary between 20 and 23. Yet you don't hear complaints about how they're making less per day in a month with 23 workdays as compared to one with 20.

That employer that paid me a monthly salary bi-weekly eventually switched to semi-monthly so I don't think I ever experienced a 27 pay check year with them. But when they did, you should have heard the complaints from the people who lived paycheck-to-paycheck and were up in arms about those periods where they'd have to stretch a paycheck across three weekends (paid on a Friday, then next check 17 or 18 days later - e.g. 15th is on a Sunday so paid on the 13th, then next check on Tuesday the 31st). And yes, it was the three weekends that was the issue for them.

[aristotelian]

We get paid twice a month so there is no uncertainty. It sounds like you will get a slightly higher salary than expected in 2020 but then you should be slightly lower in 2021. Perhaps there is something you can do to take advantage next year.

[lstone19]

We get paid twice a month so there is no uncertainty. It sounds like you will get a slightly higher salary than expected in 2020 but then you should be slightly lower in 2021. Perhaps there is something you can do to take advantage next year.

With the method I described a couple of posts above, if you have an an annual salary of $100,000, then in a year with 26 pay dates you get $99,726 but in a year with 27 pay dates $103,561 (but only once every 11 to 12 years). It all averages out in the end.

[pasadena]

DH had a conversation with his HR department about this situation. HR seemed to indicate that payday was being moved to 12/31/2020. But, when DH asked if there were 27 pay periods this year he was told no. (But, with a pay day on 12/31 there would be 27 pay periods).

ok, so the way I understand this is the way it worked for me above. The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

So, the employer is post-dating the checks? That may be illegal.

No. They can pay you whenever they want for a given pay period. In my example, our pay periods would always end on Sunday, but we would get the deposit on Friday. If Friday was a holiday, then on Thursday. They're paying EARLIER so there is no post dating of anything. Pay period and "pay day" are two different concepts.

[rkhusky]

DH had a conversation with his HR department about this situation. HR seemed to indicate that payday was being moved to 12/31/2020. But, when DH asked if there were 27 pay periods this year he was told no. (But, with a pay day on 12/31 there would be 27 pay periods).

ok, so the way I understand this is the way it worked for me above. The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

So, the employer is post-dating the checks? That may be illegal.

No. They can pay you whenever they want for a given pay period. In my example, our pay periods would always end on Sunday, but we would get the deposit on Friday. If Friday was a holiday, then on Thursday. They're paying EARLIER so there is no post dating of anything. Pay period and "pay day" are two different concepts.

If the paycheck says Jan 1 2021, but you get it on Dec 31 2020, that is post-dating.

If the paycheck says Dec 31 2020, but you get it Jan 1 2021, that is not post-dating.

Some states have laws about what your checks say and when you get them.

[pasadena]

DH had a conversation with his HR department about this situation. HR seemed to indicate that payday was being moved to 12/31/2020. But, when DH asked if there were 27 pay periods this year he was told no. (But, with a pay day on 12/31 there would be 27 pay periods).

ok, so the way I understand this is the way it worked for me above. The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

So, the employer is post-dating the checks? That may be illegal.

No. They can pay you whenever they want for a given pay period. In my example, our pay periods would always end on Sunday, but we would get the deposit on Friday. If Friday was a holiday, then on Thursday. They're paying EARLIER so there is no post dating of anything. Pay period and "pay day" are two different concepts.

If the paycheck says Jan 1 2021, but you get it on Dec 31 2020, that is post-dating.

If the paycheck says Dec 31 2020, but you get it Jan 1 2021, that is not post-dating.

Some states have laws about what your checks say and when you get them.

No, the paystub says one date for the pay period date, and the check says an earlier one. Most likely the paystub will say 01/03 (most pay periods end on a Sunday) and the deposit or check will be issued on 12/31.

Again, a Pay Period is a different thing than a Pay Day.

For example my last paycheck (I'm not paid bi-weekly anymore, but the idea is the same):
Check Date
Oct 30, 2020
Period Begin Date
Oct 16, 2020
Period End Date
Oct 31, 2020

If Oct 30th had been a holiday or a Saturday, then "Check Date" would have been Oct 29th

[Big Dog]

This happened a couple of times with my previous employer. HOWEVER, the pay *date* didn't change. What changed was the *deposit* date.

This sounds a little fishy to me. You might lose on some 401(k) or other benefits. And when they say that you "win" a pay period, how about next year when there will be only 25 instead of 26? I'm not even sure they could do this.

Of course they can do this. The law is clear about late payments being a no-no. Nothing anywhere that says an employer can't pay you early. 99% of the world appreciates money earlier rather than later. It's a "January" paycheck that is deposited 12/31. This is no different than your normal Friday paycheck hitting your bank account Thursday night. (And your normal Friday paycheck includes Saturday, even though its a day early: by law, a workweek is 7 days.)

No, the paystub says one date for the pay period date, and the check says an earlier one. Most likely the paystub will say 01/03 (most pay periods end on a Sunday) and the deposit or check will be issued on 12/31.

Bingo. (Except our megacorp was Sunday-Saturday workweek.)

[lstone19]

This sounds a little fishy to me. You might lose on some 401(k) or other benefits. And when they say that you "win" a pay period, how about next year when there will be only 25 instead of 26? I'm not even sure they could do this.

There will not be 25 pay checks next year. The 27th pay date occurs due to a year being a day longer (two days longer in leap years) than 26 two-week periods. When you're paid bi-weekly, there are always at least 26 pay dates but once every 11 or 12 years, a 27th date.

[rkhusky]

No, the paystub says one date for the pay period date, and the check says an earlier one. Most likely the paystub will say 01/03 (most pay periods end on a Sunday) and the deposit or check will be issued on 12/31.

Again, a Pay Period is a different thing than a Pay Day.

For example my last paycheck (I'm not paid bi-weekly anymore, but the idea is the same):
Check Date
Oct 30, 2020
Period Begin Date
Oct 16, 2020
Period End Date
Oct 31, 2020

If Oct 30th had been a holiday or a Saturday, then "Check Date" would have been Oct 29th

I have not said anything about a pay period. That's irrelevant (although some states may require payment within a certain length of time from the days that are worked).
In your example above, if the check says Oct 30, 2020, then post-dating would be giving it to you on Oct 29 or before.

The issue is, can a employer give you a check on 12/31/2020 that is dated 1/1/2021? (And therefore counts towards your 2021 W2 and presumably their 2021 expenses). The clearest thing would seem to be that if you are paid on 12/31/2020, the check should say 12/31/2020, so everyone knows to what year the check pertains.

Not sure what benefit post-dating a check provides the employer, but there must be something since some states don't allow it. I think most banks don't care what the date on the check says and will cash it.

[pasadena]

No, the paystub says one date for the pay period date, and the check says an earlier one. Most likely the paystub will say 01/03 (most pay periods end on a Sunday) and the deposit or check will be issued on 12/31.

Again, a Pay Period is a different thing than a Pay Day.

For example my last paycheck (I'm not paid bi-weekly anymore, but the idea is the same):
Check Date
Oct 30, 2020
Period Begin Date
Oct 16, 2020
Period End Date
Oct 31, 2020

If Oct 30th had been a holiday or a Saturday, then "Check Date" would have been Oct 29th

I have not said anything about a pay period. That's irrelevant (although some states may require payment within a certain length of time from the days that are worked).
In your example above, if the check says Oct 30, 2020, then post-dating would be giving it to you on Oct 29 or before.

The issue is, can a employer give you a check on 12/31/2020 that is dated 1/1/2021? (And therefore counts towards your 2021 W2 and presumably their 2021 expenses).

Not sure what benefit this provides the employer, but there must be something since some states don't allow it.

I'm sorry but you're the one who mentioned post-dating, not me. The check is dated with the date they give it to you. If they give it to you on 10/29, it's dated 10/29. The paystub in that case would reflect that. All I'm saying is that the date of the check is independant from the pay period.

If Oct 30th had been a holiday or a Saturday, then "Check Date" would have been Oct 29th

The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

I didn't say anything about the date written on the check.

[manatee2005]

I am wondering who wrote that, doesn't seem professional. Especially at the end "...buy something new for you!". Is this a Fortune 500 company or a small org?

Does it mean that in 2021 they'll get 25 paychecks? So then they have to pay more every paycheck than they did in 2020 because it's spread over 25 paychecks instead of 26.

[rkhusky]

I didn't say anything about the date written on the check.

Isn't the date on the check the same date as on the paystub?

Here are the original comments:

DH had a conversation with his HR department about this situation. HR seemed to indicate that payday was being moved to 12/31/2020. But, when DH asked if there were 27 pay periods this year he was told no. (But, with a pay day on 12/31 there would be 27 pay periods).

ok, so the way I understand this is the way it worked for me above. The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

So, the employer is post-dating the checks? That may be illegal.

If the original paydate was supposed to be Jan 1, but was moved to Dec 31 because of the holiday, then the check and paystub should both say Dec 31.

If the employer doesn't change the check date and keeps it at Jan 1, but still gives it out on Dec 31, then that is post-dating the check.

There is no post-dating if the employer moves the paydate to Dec 31 and the check and paystub are also moved to Dec 31. The pay period doesn't change, but the paystub, paydate, and check date all changed.

[lstone19]

Does it mean that in 2021 they'll get 25 paychecks? So then they have to pay more every paycheck than they did in 2020 because it's spread over 25 paychecks instead of 26.

No, it does not mean 25 checks next year. It happens because a year is longer (by one day, two in leap years) than 26 two-week periods. There are more than 26 two-week periods a year so every 11 to 12 years, there is a 27th bi-weekly pay check in a year.

[lazynovice]

We are paid every two weeks and this is occurring at my employer as well. I asked earlier in the year if it would be included on the 2020 or 2021 W-2 and was told it would be on the 2020. I had not been viewing it as “extra” money just a one day shift in the payment assuming I would have 25 pay periods in 2021. But this thread got me to count and sure enough, I will have 26 pay periods in 2021.

Being paid every two weeks means 10 months of two pay periods and 2 months of three pay periods. In most years, I have three pay periods in January and July. In 2021, July and December will be three pay period months.

[manatee2005]

Does it mean that in 2021 they'll get 25 paychecks? So then they have to pay more every paycheck than they did in 2020 because it's spread over 25 paychecks instead of 26.

No, it does not mean 25 checks next year. It happens because a year is longer (by one day, two in leap years) than 26 two-week periods. There are more than 26 two-week periods a year so every 11 to 12 years, there is a 27th bi-weekly pay check in a year.

Then I picked a good time to get promoted and get higher salary hehe.

[lazynovice]

Does it mean that in 2021 they'll get 25 paychecks? So then they have to pay more every paycheck than they did in 2020 because it's spread over 25 paychecks instead of 26.

No, it does not mean 25 checks next year. It happens because a year is longer (by one day, two in leap years) than 26 two-week periods. There are more than 26 two-week periods a year so every 11 to 12 years, there is a 27th bi-weekly pay check in a year.

Then I picked a good time to get promoted and get higher salary hehe.

Is there ever a bad time? Congratulations! A promotion in the middle of a pandemic induced recession is quite an accomplishment.

[manatee2005]

Does it mean that in 2021 they'll get 25 paychecks? So then they have to pay more every paycheck than they did in 2020 because it's spread over 25 paychecks instead of 26.

No, it does not mean 25 checks next year. It happens because a year is longer (by one day, two in leap years) than 26 two-week periods. There are more than 26 two-week periods a year so every 11 to 12 years, there is a 27th bi-weekly pay check in a year.

Then I picked a good time to get promoted and get higher salary hehe.

Is there ever a bad time? Congratulations! A promotion in the middle of a pandemic induced recession is quite an accomplishment.

Last time I got promoted was during a bad period for the company with lots of layoffs so my promotion bonus was pretty much zero.

[lazynovice]

Does it mean that in 2021 they'll get 25 paychecks? So then they have to pay more every paycheck than they did in 2020 because it's spread over 25 paychecks instead of 26.

No, it does not mean 25 checks next year. It happens because a year is longer (by one day, two in leap years) than 26 two-week periods. There are more than 26 two-week periods a year so every 11 to 12 years, there is a 27th bi-weekly pay check in a year.

Then I picked a good time to get promoted and get higher salary hehe.

Is there ever a bad time? Congratulations! A promotion in the middle of a pandemic induced recession is quite an accomplishment.

Last time I got promoted was during a bad period for the company with lots of layoffs so my promotion bonus was pretty much zero.

But you still had a job! Some times are better than others to be sure.

[erictiger12]

I get paid every two weeks. For unknown reason, our last pay date is Dec. 11. The Dec 25th check will be in 2021. I have never noticed that until today. I have to increase my 401k contribution for the remaining three pay dates as we have one less this year. My mega corp is a Fortune 100 company.

[manatee2005]

No, it does not mean 25 checks next year. It happens because a year is longer (by one day, two in leap years) than 26 two-week periods. There are more than 26 two-week periods a year so every 11 to 12 years, there is a 27th bi-weekly pay check in a year.

Then I picked a good time to get promoted and get higher salary hehe.

Is there ever a bad time? Congratulations! A promotion in the middle of a pandemic induced recession is quite an accomplishment.

Last time I got promoted was during a bad period for the company with lots of layoffs so my promotion bonus was pretty much zero.

But you still had a job! Some times are better than others to be sure.

Yes but most people who got laid off then got better jobs or went into early retirement and are enjoying themselves.
The only reason I don’t leave is cos I’m too lazy to prepare for interviews haha

[rkhusky]

I get paid every two weeks. For unknown reason, our last pay date is Dec. 11. The Dec 25th check will be in 2021. I have never noticed that until today. I have to increase my 401k contribution for the remaining three pay dates as we have one less this year. My mega corp is a Fortune 100 company.

That's odd. How many paychecks will you get in 2020? Did your late-December 2019 paycheck get moved to 2020?

[8foot7]

I get paid every two weeks. For unknown reason, our last pay date is Dec. 11. The Dec 25th check will be in 2021. I have never noticed that until today. I have to increase my 401k contribution for the remaining three pay dates as we have one less this year. My mega corp is a Fortune 100 company.

That's odd. How many paychecks will you get in 2020? Did your late-December 2019 paycheck get moved to 2020?

This scenario, unfortunately, appears to be shenanigans. If you are paid every two weeks, then you must be paid every two weeks, or your employer will have missed a payroll, unless they are bunching what would be the 12/25 check into the 12/11 check and paying it in advance. I would hope there is more to this story because otherwise this seems a blatant, willful disregard of federal and many state regulations (for example, states like Arizona have laws that dictate the maximum number of days between regular pay dates as 16, which obviously your scenario violates).

[lstone19]

This scenario, unfortunately, appears to be shenanigans. If you are paid every two weeks, then you must be paid every two weeks, or your employer will have missed a payroll, unless they are bunching what would be the 12/25 check into the 12/11 check and paying it in advance.

I agree, I don't see how they can skip 12/25 (at least without proper notice of what they are doing and why). Erictiger12, what days do you have as holidays from Christmas through New Year's Day?

Years ago, I worked for a company that paid weekly (on Thursday for work through the previous Friday). But consistent with our industry, we shut down for the holidays - all days from Christmas to New Year's Day were holidays. The week of all holidays was paid in advance. Using this year as an example, Thu 12/24 through Fri 1/1 were all holidays (seven work days). So the payroll schedule was altered for that period (and properly announced). On Wed 12/23, we would receive two checks - the regular one for the week ending 12/18 and an advance holiday check for the five holidays 12/28 through 1/1. The next week (Thu 12/31), nothing (no one there and this was long before direct deposit was available). Then on 1/7, the check for the week ending 12/25 (including the two holidays that week). Then back to the normal schedule with the checks on 1/14.

[2cents2]

DH had a conversation with his HR department about this situation. HR seemed to indicate that payday was being moved to 12/31/2020. But, when DH asked if there were 27 pay periods this year he was told no. (But, with a pay day on 12/31 there would be 27 pay periods).

ok, so the way I understand this is the way it worked for me above. The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

So, the employer is post-dating the checks? That may be illegal.

No. They can pay you whenever they want for a given pay period. In my example, our pay periods would always end on Sunday, but we would get the deposit on Friday. If Friday was a holiday, then on Thursday. They're paying EARLIER so there is no post dating of anything. Pay period and "pay day" are two different concepts.

I don't know--everyone seems to be putting their own inflection on this. Just for the record--the number of paydays you have in a given year drives the number of pay periods you have. The reason for having 27 pay periods (every 11 or 12 years or so) has been explained up thread. I don't know where post dating the checks came in and my example, the employer said they are moving the pay date to one day earlier and that date is what I expect to see on the pay stub. The first pay date of 2020 (for DH) was on 1/3/2020. Unless my spread sheet is not counting correctly, one more pay check on 12/31/2020 will make 27 for the year. I think DH's HR is just giving out bad info about the number of pay periods, so I am going to do conversions assuming that is the case (and there are 27)--and error on the side of caution.

[2cents2]

I get paid every two weeks. For unknown reason, our last pay date is Dec. 11. The Dec 25th check will be in 2021. I have never noticed that until today. I have to increase my 401k contribution for the remaining three pay dates as we have one less this year. My mega corp is a Fortune 100 company.

That is really strange. Is there anyway you could ask your HR about this?

[emoore]

I get paid weekly, every Friday according to the pay stub. But the money is deposited into my account on Thursday morning. Years ago I seem to remember the 1/1 (Friday) paycheck getting deposited on 12/31 (Thursday) like usual but it counted toward the previous years W2 and not the 1/1 year. It caused me to not get the 401k match since I had already hit the max. I assume it's going to be the same this year so I'll adjust it so I won't miss the match again. Guess I'll see if I guess correctly or not. The worse that can happen is that I'm a few bucks short of maxing out my 401k but I would rather take that chance than lose the match.

[AnEngineer]

Getting paid on 1/1 seems odd to me. I get paid the 15th and end-of-month, adjusted for weekends/holidays. If Sunday is the 15th, I get paid Friday. If Friday is December 25th or January 1st, I get paid Thursday. I can only speak for myself, but I've had a few jobs over many years in Corporate America, and this has always been the practice.

I get paid every other Friday. The 1/1 is a payday for me also.

You might want to double-check.

I want to highlight in general there are two completely separate discussions going on in this thread.

First, that those paid fortnightly mostly have 26 pay periods, but occasionally have 27. Some employers apparently adjust pay and benefits costs in such years. This seems bizarre to me, when you could instead just index everything to the pay period. The only impact would be the tax impact of the annual pay being occasionally a bit higher from the extra pay period.

Second, that those expecting to be paid on 1/1 may have their payday moved to 12/31 because 1/1 is a bank holiday. I checked my company calendar and it says I'll be paid on 1/1, but the last time I was supposed to be paid on a bank holiday (Christmas a few years ago), they moved it up by a day. I'm concerned that this will both impact my tax planning and lose my 401k match if an extra after tax contribution gets made as part of that paycheck.

I'm glad I saw this thread and checked with HR. I'm actually going to get paid on 12/31, even though the calendar says 1/1, so I adjusted 401k accordingly.

[retiringwhen]

I'm glad I saw this thread and checked with HR. I'm actually going to get paid on 12/31, even though the calendar says 1/1, so I adjusted 401k accordingly.

My MegaCorp HR Folks must have been watching this thread and today HR sent out a detail explanation of how a 12/31 paycheck will work in lieu of a 1/1 paycheck as per our fiscal calendar (we get paid semi-weekly).

They explicitly noted that we should consider adjusting 401K contributions to maximize our company match. I give them kudos, although I would think a few employees would have like to hear about it earlier (our fiscal calendar had not made this clear previously).

One thing they point out that may not have been clear in other posts is that at least at my company, the usual benefits will not be deducted (e.g., Healthcare, insurance, disability insurance, etc.) since their annual premiums are calculated on a 26 paycheck schedule. The pre-tax items will thus cause a higher withholding rate and more tax being taken out.

That does have a small impact on my as I have been managing my tax withholding pretty closely and it will probably mess up my attempt to nail the amount as close to zero as possible! (First World problems as they say....)

[VictoriaF]

I hope this does not apply to pensions. I receive two pensions and if either one is paid 13 times in 2020, I'll exceed the IRMAA limit.

Victoria

[sailaway]

Now y'all have me pretty excited about getting one more full paycheck before 401k contributions restart. We plan on spending a lot of money next year, so the extra cash will come in handy.

[dratkinson]

I hope this does not apply to pensions. I receive two pensions and if either one is paid 13 times in 2020, I'll exceed the IRMAA limit.

Victoria

Good catch. I was planning a TGH to rebalance, had computed my tax bracket and IRMMA ceilings, but forgot about the possibility of extra pension payments. Looked:
--DFAS pays on 31 Dec.
--My SS mid-month payment should not be affected.

Oh well, maybe the market will crash and I'll rebalance then.

[lstone19]

I hope this does not apply to pensions. I receive two pensions and if either one is paid 13 times in 2020, I'll exceed the IRMAA limit.

This issue does not apply to things that always are scheduled to pay on the first day of the month as 1/1 is always a holiday. So long as your pension is consistent from year to year (always pay 12/31 due to 1/1 being a holiday or always pay the first business day after 1/1), you'll only have 12 payments per year.

I receive two small pensions. Both pay early when the scheduled date is a weekend or holiday except for January when it's always the first business day after (1/4 this year).

OTOH, my MIL receives SS on the 3rd of each month and according to SSA's website, with 1/3 being a Sunday, she'll receive it on 12/31 causing a 13th payment for 2020.

[Katietsu]

I get paid every two weeks. For unknown reason, our last pay date is Dec. 11. The Dec 25th check will be in 2021. I have never noticed that until today. I have to increase my 401k contribution for the remaining three pay dates as we have one less this year. My mega corp is a Fortune 100 company.

That's odd. How many paychecks will you get in 2020? Did your late-December 2019 paycheck get moved to 2020?

This scenario, unfortunately, appears to be shenanigans. If you are paid every two weeks, then you must be paid every two weeks, or your employer will have missed a payroll, unless they are bunching what would be the 12/25 check into the 12/11 check and paying it in advance. I would hope there is more to this story because otherwise this seems a blatant, willful disregard of federal and many state regulations (for example, states like Arizona have laws that dictate the maximum number of days between regular pay dates as 16, which obviously your scenario violates).

I think there is something missing from this or some misunderstanding. No way a fortune 100 would do this.

[rkhusky]

I hope this does not apply to pensions. I receive two pensions and if either one is paid 13 times in 2020, I'll exceed the IRMAA limit.

Victoria

Good catch. I was planning a TGH to rebalance, had computed my tax bracket and IRMMA ceilings, but forgot about the possibility of extra pension payments. Looked:
--DFAS pays on 31 Dec.
--My SS mid-month payment should not be affected.

Oh well, maybe the market will crash and I'll rebalance then.

Fed pensions pay on the 1st and if the 1st is a holiday or weekend, officially pay on the first business day after, no matter when they show up at your bank.

Fed paychecks are different and move the pay date earlier, if the pay date is a holiday.

You won’t get a 13th Fed pension check.

[dratkinson]

I hope this does not apply to pensions. I receive two pensions and if either one is paid 13 times in 2020, I'll exceed the IRMAA limit.

Victoria

Good catch. I was planning a TGH to rebalance, had computed my tax bracket and IRMMA ceilings, but forgot about the possibility of extra pension payments. Looked:
--DFAS pays on 31 Dec.
--My SS mid-month payment should not be affected.

Oh well, maybe the market will crash and I'll rebalance then.

Fed pensions pay on the 1st and if the 1st is a holiday or weekend, officially pay on the first business day after, no matter when they show up at your bank.

Fed paychecks are different and move the pay date earlier, if the pay date is a holiday.

You won’t get a 13th Fed pension check.

Thanks. First world problem.

[2cents2]

DH had a conversation with his HR department about this situation. HR seemed to indicate that payday was being moved to 12/31/2020. But, when DH asked if there were 27 pay periods this year he was told no. (But, with a pay day on 12/31 there would be 27 pay periods).

ok, so the way I understand this is the way it worked for me above. The day you get the money is 12/31. The paystub / pay period / pay date doesn't change. They just give you the check or deposit one day earlier to avoir the holiday.

So, the employer is post-dating the checks? That may be illegal.

No. They can pay you whenever they want for a given pay period. In my example, our pay periods would always end on Sunday, but we would get the deposit on Friday. If Friday was a holiday, then on Thursday. They're paying EARLIER so there is no post dating of anything. Pay period and "pay day" are two different concepts.

I don't know--everyone seems to be putting their own inflection on this. Just for the record--the number of paydays you have in a given year drives the number of pay periods you have. The reason for having 27 pay periods (every 11 or 12 years or so) has been explained up thread. I don't know where post dating the checks came in and my example, the employer said they are moving the pay date to one day earlier and that date is what I expect to see on the pay stub. The first pay date of 2020 (for DH) was on 1/3/2020. Unless my spread sheet is not counting correctly, one more pay check on 12/31/2020 will make 27 for the year. I think DH's HR is just giving out bad info about the number of pay periods, so I am going to do conversions assuming that is the case (and there are 27)--and error on the side of caution.

Yesterday, DH received a note similar to the one that the OP received regarding the fact that there are 27 pay periods this year and noting which deductions will be taken (and which ones won't be taken) from this pay check. The company does a true up on the 401k match, so that will not be a factor.

[2cents2]

I hope this does not apply to pensions. I receive two pensions and if either one is paid 13 times in 2020, I'll exceed the IRMAA limit.

Victoria

Good catch. I was planning a TGH to rebalance, had computed my tax bracket and IRMMA ceilings, but forgot about the possibility of extra pension payments. Looked:
--DFAS pays on 31 Dec.
--My SS mid-month payment should not be affected.

Oh well, maybe the market will crash and I'll rebalance then.

DFAS should have paid on 31 Dec last year, too. I think the 1099R's may have posted for 2020 on mypay--so, you might be able to check that out before the end of the year. (I haven't actually looked, but I saw an email saying the electronic 1099Rs are now available on mypay)

[N1CKV]

The only difference you are seeing is that the 27 pay period year will be 2020 instead of 2021 (I just sat and looked at the 2021 calendar and if you were paid 1/1 it would be 27). The only benefit is that in a 3 check month you typically do not pay the "extra" deductions like insurance premiums that are typically split up to 24 payments.
They wouldn't be able to pay you on 1/1, the banks will be closed. It is typical to pay the day before when payday falls on a bank holiday.

[livesoft]

A few years ago my spouse's employer moved a paycheck up into the current year in order to avoid an expected tax increase in the following year. It created a hefty tax increase for my family. As I recall the expected tax increase in the following year didn't really happen and the company executives kind of shot themselves in the mouth.

[6bquick]

I have a question about this, with a twist:

Large chunk of HH income is 1099, paid via snail mail 2x month, on the 15th-ish and 30th-ish. for my own personal tax purposes, I would love to file the 12/30-ish check on my 2021 return, and, if history is any indication, there is a VERY good chance I will not physically receive this check until 2021.

my pseudo-hypothetical question is: what do I do, tax-wise, if I a) want to file on 2021 tax return, b) receive the check in 2021, and c) the company shows this check on my 2020 1099 because that is when they 'issued' it?

[tev9876]

The only difference you are seeing is that the 27 pay period year will be 2020 instead of 2021 (I just sat and looked at the 2021 calendar and if you were paid 1/1 it would be 27). The only benefit is that in a 3 check month you typically do not pay the "extra" deductions like insurance premiums that are typically split up to 24 payments.
They wouldn't be able to pay you on 1/1, the banks will be closed. It is typical to pay the day before when payday falls on a bank holiday.

Just looked at the same. If you started bi-weekly paychecks on 1/1/21 there would be 27 paychecks in 2021. All they are doing is moving one to 2020 but not taking deductions. 2020 had 26 checks with deductions plus one without. 2021 will now have 26 checks, all with deductions.

As for pay, even though I am salary and exempt, my check stub shows an hourly rate which is my annual salary divided by 2080 hours (52 weeks x 40 hours). My bi-weekly gross is 80 x this hourly rate. Since the year is actually 52 weeks + 1.25 days (averaged for leap year), I'm shorted 1.25/7 X 40 hours, or 7.14 hours, of pay a year. Last time there were 27 paychecks in a year would be 2010 (for a 1/1 start date). The 27th check in 2020 is making up for 10 years of these shortages, or 71.4 hours of pay. Call the extra 8.6 hours on that extra check interest on your pay deferral.

As long as the company does not take any benefit deductions or contribute to 401K match on that 27th check it shouldn't affect your calculations - just divide by 26 for any year. I do see how it could affect tax planning for things outside of payroll deductions.

[AnEngineer]

As for pay, even though I am salary and exempt, my check stub shows an hourly rate which is my annual salary divided by 2080 hours (52 weeks x 40 hours). My bi-weekly gross is 80 x this hourly rate. Since the year is actually 52 weeks + 1.25 days (averaged for leap year), I'm shorted 1.25/7 X 40 hours, or 7.14 hours, of pay a year. Last time there were 27 paychecks in a year would be 2010 (for a 1/1 start date). The 27th check in 2020 is making up for 10 years of these shortages, or 71.4 hours of pay. Call the extra 8.6 hours on that extra check interest on your pay deferral.

This actually means that you're getting a bonus of 1.25 days of pay per year. If you expect to get $X/year, and they base your bi-weekly pay on 52 weeks in a year, then you actually get paid $X/52 weeks.

As long as the company does not take any benefit deductions or contribute to 401K match on that 27th check it shouldn't affect your calculations - just divide by 26 for any year. I do see how it could affect tax planning for things outside of payroll deductions.

There continues to be a lot of discussion on 27 paycheck years vs. 26 paycheck years, which to me really misses the point. It matters which year each pay comes in. My company calendar says I'll get paid on 1/1, but when I asked based on this thread, I was told it'll actually be on the 31st. This matters because I need to make sure that I don't over contribute to my 401(k), as the company match is done at the end of each quarter.

Also, I'm surprised so many assume there's some special month based accounting for benefits deductions etc. Mine are all based on biweekly periods.

[rkhusky]

my pseudo-hypothetical question is: what do I do, tax-wise, if I a) want to file on 2021 tax return, b) receive the check in 2021, and c) the company shows this check on my 2020 1099 because that is when they 'issued' it?

Go with what is on your W2/1099 unless you want to explain the difference to the IRS.

[adestefan]

My payroll office sent out something about this last December so people could plan for the year.

Our benefits are always calculated on 24 pay periods. So we usually end up with 2 pays without benefit reductions, but this year it’s 3. However, 403b withdrawals are done every pay so they let us know they’d be dividing by 27 instead of 26.

They followed up with reminders in June and one this month.

[Raraculus]

Got the email from my HR today.

The tax planning I did earlier this year? Going to the shredder.

Hello, 22% tax bracket! 1st world problem, I know...

[lazynovice]

For my employer who is self-insured for most benefits, the benefits are the same every pay period- they are swept into a trust and claims are paid with them. For items that are not self-insured and are paid to a third party, the monthly bill is the monthly bill regardless of the number of pay periods. So for those items, there are two deductions per month and in the third pay period, there is no deduction for them.

[dratkinson]

I have a question about this, with a twist:

Large chunk of HH income is 1099, paid via snail mail 2x month, on the 15th-ish and 30th-ish. for my own personal tax purposes, I would love to file the 12/30-ish check on my 2021 return, and, if history is any indication, there is a VERY good chance I will not physically receive this check until 2021.

my pseudo-hypothetical question is: what do I do, tax-wise, if I a) want to file on 2021 tax return, b) receive the check in 2021, and c) the company shows this check on my 2020 1099 because that is when they 'issued' it?

Search: https://www.google.com/search?&q=when+i ... recognized

See: https://en.wikipedia.org/wiki/Revenue_recognition

When should revenue be recognized? Accrual accounting vs cash accounting.

"According to the [accrual accounting] principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services are sold."


See "Accounting Methods" : https://www.irs.gov/publications/p538#i ... 8000694880

"Hybrid method. Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly reflects your income and you use it consistently. However, the following restrictions apply.
--If an inventory is necessary to account for your income, you must use an accrual method for purchases and sales. See Exceptions under Inventories, later. Generally, you can use the cash method for all other items of income and expenses. See Inventories, later.
--If you use the cash method for reporting your income, you must use the cash method for reporting your expenses.
--If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income.
--Any combination that includes the cash method is treated as the cash method for purposes of section 448 of the Internal Revenue Code."


So it does look like you can sometimes switch between methods (accrual/cash accounting).

Squaring an employer's 2020 1099 with your 2021 reporting... I don't know how that is done. But believe you must be ready to answer the IRS question.

[6bquick]

I have a question about this, with a twist:

Large chunk of HH income is 1099, paid via snail mail 2x month, on the 15th-ish and 30th-ish. for my own personal tax purposes, I would love to file the 12/30-ish check on my 2021 return, and, if history is any indication, there is a VERY good chance I will not physically receive this check until 2021.

my pseudo-hypothetical question is: what do I do, tax-wise, if I a) want to file on 2021 tax return, b) receive the check in 2021, and c) the company shows this check on my 2020 1099 because that is when they 'issued' it?

Search: https://www.google.com/search?&q=when+i ... recognized

See: https://en.wikipedia.org/wiki/Revenue_recognition

When should revenue be recognized? Accrual accounting vs cash accounting.

"According to the [accrual accounting] principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services are sold."


See "Accounting Methods" : https://www.irs.gov/publications/p538#i ... 8000694880

...

Squaring an employer's 2020 1099 with your 2021 reporting... I don't know how that is done. But believe you must be ready to answer the IRS question.

Thank you for the thorough response!!!

I do use cash method of both accounting and expenses.

But, I think husky may be right.

Go with what is on your W2/1099 unless you want to explain the difference to the IRS.

It can be done and may not even be wrong! It'll just potentially draw unwanted attention from the IRS, which may not be worth the modest tax deferral and less-modest tax savings.

Poop. not the answer I wanted ha.

[Spirit Rider]

The IRS is very good at spitting out CP2000s due to tax return/tax form mismatching. If getting a CP2000 freaks you out, it may not be worth it. For the uninitiated, the notice does not say; "hey, we found a discrepancy", is says; "send us the money or else."

However over the years, I have averaged one CP2000 a decade. It doesn't phase me. When the described situation occured, I filed contrary to the 1099-MISC. Like clockwork, I got a CP2000 the next fall. I replied; "constructive receipt", case closed.