New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Essential Year-End Tax Strategies for Paychex Employees: What You Need to Know Before 2023

Healthcare Provider Update: Healthcare Provider for Paychex Paychex partners with various healthcare providers to offer employee health insurance options, including plans through the Affordable Care Act (ACA) marketplace and group health insurance solutions. Their offerings typically feature comprehensive coverage options to align with the diverse needs of their employees. Potential Healthcare Cost Increases in 2026 In 2026, Paychex employees may face significant healthcare cost increases as ACA marketplace premiums are projected to rise sharply, with some insurers estimating hikes exceeding 60%. This surge results from a combination of expiring federal premium subsidies, escalating medical costs, and aggressive rate increases from major insurers. With projections indicating that over 22 million marketplace enrollees could experience average out-of-pocket premium increases of 75% or more, it's crucial for Paychex workers to strategize their healthcare choices to mitigate these potential financial pressures. Click here to learn more

Here are some things for Paychex employees and retirees to consider as they weigh potential tax moves between now and the end of the year.

1. Defer income to next year
Paychex employees must consider opportunities to defer income to 2023, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rent, and payments for services. As a Paychex employee, doing so may enable you to postpone payment of tax on the income until next year.

2. Accelerate deductions
Paychex employees and retirees should also look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2023) could make a difference on your 2022 return.

3. Make deductible charitable contributions
As a Paychex employee, if you itemize deductions on your federal income tax return, you can generally deduct charitable contributions, but the deduction is limited to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you give and the type of organization to which you contribute. (Excess amounts can be carried over for up to five years.)

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4. Bump up withholding to cover a tax shortfall
As a Paychex employee, if it looks as though you will owe federal income tax for the year, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for Paychex employees to request a Form W-4 change and for their employers from Paychex to implement it in time for 2022. The biggest advantage in doing so is that withholding is considered as having been paid evenly throughout the year instead of when the dollars are actually taken from your paycheck. This strategy can be implemented by Paychex employees to make up for low or missing quarterly estimated tax payments.

5. Save more for retirement
Deductible contributions to a traditional IRA and pre-tax contributions to a Paychex-sponsored retirement plan such as a 401(k) can reduce your 2022 taxable income. As a fortune 500 employee, if you haven't already contributed up to the maximum amount allowed, consider doing so. For 2022, Paychex employees can contribute up to $20,500 to a 401(k) plan ($27,000 if you're age 50 or older) and up to $6,000 to traditional and Roth IRAs combined ($7,000 if you're age 50 or older).* The window to make 2022 contributions to a Paychex-sponsored plan generally closes at the end of the year, while you have until April 18, 2023, to make 2022 IRA contributions.

*Roth contributions are not deductible, but Roth-qualified distributions are not taxable.

6. Take the required minimum distributions
If you are a Paychex employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and Paychex-sponsored retirement plans (special rules apply if you're still working and participating in Paychex's retirement plan). You have to make the withdrawals by the date required — the end of the year for most individuals. The penalty for failing to do so is substantial: 50% of the amount that wasn't distributed on time. As a fortune 500 employee, making these distributions in a timely manner is essential as to avoid the late penalty.

7. Weigh year-end investment moves
Paychex employees and retirees shouldn't let tax considerations drive investment decisions. However, it's worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by selling losing positions. As a Paychex employee, any losses over and above the number of your gains can be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your taxes in future years.

Tags: Financial Planning , Tax , Retirement , 2022

What type of retirement plan does Paychex offer to its employees?

Paychex offers a 401(k) retirement plan to its employees to help them save for retirement.

How can employees at Paychex enroll in the 401(k) plan?

Employees at Paychex can enroll in the 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

Does Paychex offer any matching contributions for the 401(k) plan?

Yes, Paychex provides a matching contribution for employees who participate in the 401(k) plan, subject to certain terms and conditions.

What is the maximum contribution limit for the Paychex 401(k) plan?

The maximum contribution limit for the Paychex 401(k) plan is determined by the IRS and may change annually; employees should check the latest guidelines for specifics.

Are there any fees associated with the Paychex 401(k) plan?

Yes, like many retirement plans, the Paychex 401(k) plan may have administrative fees, which are disclosed in the plan documents provided to employees.

Can employees at Paychex take loans against their 401(k) savings?

Yes, Paychex allows employees to take loans against their 401(k) savings, subject to the plan's rules and limits.

What investment options are available in the Paychex 401(k) plan?

The Paychex 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to diversify their portfolios.

How often can employees change their contribution amounts in the Paychex 401(k) plan?

Employees at Paychex can typically change their contribution amounts at any time, but changes may take effect in the next payroll cycle.

What happens to the Paychex 401(k) plan if an employee leaves the company?

If an employee leaves Paychex, they can roll over their 401(k) balance to another retirement account, cash out, or leave the funds in the Paychex plan, depending on the plan’s rules.

Is there a vesting schedule for the Paychex 401(k) plan?

Yes, Paychex has a vesting schedule for employer contributions, which means employees must work for a certain period to fully own those contributions.