Final Vacation Payments for VSL Participants
March 12, 2021
Now that the March 16th pay advices are visible on the company’s website, we’re getting a number of questions resulting from the absence of 401(k) deductions the final vacation payments that were issued to those who took the VSL.
Historically, final vacation is normally paid either on the last day worked (CA) or after separation, and is not eligible for 401(k) deferral and matching contributions.
Under the United Flight Attendant 401(k) Plan, final vacation payments are not eligible for 401(k) withholding, either the defined or matching contributions. While we have today made an appeal to management to reconsider the withholding action and exclusion of 401(k) deductions from these final vacation payments, management has indicated the plan documents govern these payments and that no exception will be made.
As an additional consequence of not having 401(k) withholding, Flight Attendants are beginning to learn the result is considerably higher Federal Tax withholding based on the total dollar value of the payment. While perhaps a greater dollar amount for tax purposes was withheld from these payments, it is important to understand that the tax ultimately paid will be based on the employee’s individual final wages at the end of the 2021 year and may ultimately result in a tax refund.