Retro Pay Taxed as a Bonus?

IAPE members checking their pay stubs in advance of tomorrow’s deposits of new salaries and lump sum payments have reported a much larger-than-expected withholding from 2023-24 retroactive pay.

And after checking our own pay statements, we can confirm: looks like Dow Jones screwed up.

As every IAPE member who joined open bargaining sessions, specifically, the meeting between IAPE and Dow Jones on April 11, will recall, Dow Jones representatives confirmed that lump sum payments representing retroactive pay would be treated as “wages” and not bonuses, which are subject to federal tax withholdings of over 20%.

Yikes.

Medicare, Social Security and State Income Tax withholdings are also inflated on these retro payments. In addition, it appears the company has made 401(k) withholdings—as well as corresponding fixed and matching contributions—from ratification bonus payments. That was not part of the negotiated agreement between IAPE and Dow Jones.

IAPE will immediately seek an explanation and any possible remedies from the company.