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

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Here are some things for Teradyne 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
Teradyne 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 Teradyne employee, doing so may enable you to postpone payment of tax on the income until next year.

2. Accelerate deductions
Teradyne 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 Teradyne 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 Teradyne 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 Teradyne employees to request a Form W-4 change and for their employers from Teradyne 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 Teradyne 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 Teradyne-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, Teradyne 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 Teradyne-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 Teradyne employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and Teradyne-sponsored retirement plans (special rules apply if you're still working and participating in Teradyne'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
Teradyne 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 Teradyne 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 is Teradyne's 401(k) plan?

Teradyne's 401(k) plan is a retirement savings plan that allows employees to save a portion of their salary on a tax-deferred basis.

How does Teradyne match employee contributions to the 401(k) plan?

Teradyne offers a company match on employee contributions, typically matching a percentage of the employee's contributions up to a certain limit.

What are the eligibility requirements for Teradyne's 401(k) plan?

Employees of Teradyne are generally eligible to participate in the 401(k) plan after completing a specific period of service, usually within the first year of employment.

Can Teradyne employees change their contribution amounts to the 401(k) plan?

Yes, Teradyne employees can change their contribution amounts to the 401(k) plan at designated times throughout the year.

What investment options are available in Teradyne's 401(k) plan?

Teradyne's 401(k) plan typically offers a range of investment options, including mutual funds, target-date funds, and company stock.

When can Teradyne employees start withdrawing from their 401(k) plan?

Teradyne employees can generally start withdrawing from their 401(k) plan without penalties at age 59½, although specific rules apply.

Does Teradyne offer a loan option through its 401(k) plan?

Yes, Teradyne allows employees to take loans against their 401(k) balances under certain conditions.

How can Teradyne employees access their 401(k) account information?

Teradyne employees can access their 401(k) account information through the company’s benefits portal or by contacting the plan administrator.

What happens to my Teradyne 401(k) if I leave the company?

If you leave Teradyne, you have several options for your 401(k), including rolling it over to an IRA, transferring it to a new employer's plan, or cashing it out (subject to taxes and penalties).

Are there any fees associated with Teradyne's 401(k) plan?

Yes, there may be administrative fees and investment fees associated with Teradyne's 401(k) plan, which are disclosed in the plan documents.