Congratulations! You’ve just landed a new job. At Allegacy Federal Credit Union, we believe in doing the right thing for your wellbeing through all of the phases of your life. Starting a new or first job is just one of them.
As you embark on a new career journey, there are some important things to be aware of before you receive your first paycheck.
When will I receive my paycheck?
How often will you be paid? Typically, your payday will depend on the company you work for and which state you work in. You might be paid on a weekly, bi-weekly, bi-monthly, or monthly basis. Be sure to allot for the difference in your current pay cycle and your new one.
Bear in mind that state law requires your employer to pay you in a timely manner. Employers cannot pay less often than required, but they are allowed to pay more frequently.
How will I be paid?
You should expect to receive your money either by direct deposit or check. Direct deposit automatically puts your paycheck into your checking or savings account. This payment method is paperless, but you’ll still have access to a printed or electronic statement that shows information similar to what is on a physical pay stub attached to a check.
Your statement or pay stub will display important information relating to the money you’ve earned. You’ll see the date of payment, the pay period dates, how many hours you’ve worked, wages earned (both before and after taxes), and any other deductions.
Direct deposit may or may not be required by your employer, depending on which state you work in. You might find that the advantages of signing up for direct deposit, such as not having to worry about your check getting lost or stolen and accessing funds quickly, make it more favorable than receiving a physical paycheck. Think about which payment method works best for you and helps you the most in managing your money.
What does the information on my pay stub mean?
Whether you opt for a check or direct deposit, you’ll receive a summary of tax information each pay period. You might be tempted to ignore this information, but you should understand what it means and why it’s important.
The following terms and acronyms commonly appear on pay stubs. If you know what the abbreviations stand for, you’ll have an easier time decoding your statement.
Gross Pay — The amount of money you’ve earned during a given pay period before deductions and taxes.
Net Pay — Your total income after deductions and taxes are taken into account.
Year to date (YTD) — The amount of money you’ve earned since the first day of the calendar year. You may notice year-to-date information in both the deductions section and the pay section.
Federal Income Tax (FIT, FT, FWT) — Remember the W-4 form you had to fill out when you were hired by your employer? The information you provided on the W-4 is used to determine the amount that will be withheld from your paycheck for taxes. The more allowances you claim, the less money will be withheld.
State Income Tax (ST, SWT) — The amount of state income tax withheld from your paycheck, which will vary depending on where you live.
Social Security Tax (SS, SSWT) — Employers are required to withhold Social Security taxes from employees’ paychecks.
Medicare Tax (MWT, Med) — The federal government requires your employer to withhold a certain amount of your paycheck to fund Medicare.
Social Security and Medicare taxes are also known as Federal Insurance Contribution Act (FICA) taxes or payroll taxes. Your employer is required to withhold 6.2% of your gross income for Social Security taxes (up to a certain annual limit) and 1.45% for Medicare taxes. Your employer also matches these FICA taxes.
What other information might appear on my pay stub or statement?
Depending on the company and your employment status, you might notice some additional deductions appearing on your pay stub or statement.
This may include pretax and after-tax deductions. Pretax deductions (such as for medical insurance and 401(k) or 403(b) retirement plan contributions) are taken out before taxes and reduce your taxable income. After-tax deductions (such as for Roth 401(k) contributions) don’t affect your taxable income.
Contact your human resources department for further explanations of the information on your pay stub or statement. If you think there is a miscalculation on your paycheck, don’t hesitate to reach out to them.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Allegacy Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Before deciding whether to retain assets in an employer sponsored plan or roll over to an IRA an investor should consider various factors including, but not limited to: investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016
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