ROTH Conversion 1/99, est. 1999 AGI $100,700 - can my Employer Defer m

[Guest cjgaddy]

I converted my Traditional IRA to a ROTH in January, 1999, thinking my Adjusted Gross for 1999 would be less than $100K.

After a Big bonus in 3/99 (s/b so lucky!!@#$$#%), even after a $3,000 Capital Gains loss, my proforma 1999 AGI looks like about $100,700 if all stays “as is” for the rest of 1999.

QUESTION: Is it legal for my Employer to “defer” $1,000 of December, 1999 pay until January, 2000, so that my AGI would come in at below $100K? Ie, I would like my 12/15/99 pay check reduced by $1,000 and my 1/15/2000 pay check increased by $1,000 as a way to defer 1999 earnings into 2000. Would this be a violation of any law? Could this action in any way be a problem for my employer? If OK, how can I prove this to my Employer, who's worried that it's legal?

[John G]

I can't directly answer your question, but I have some ideas. You can start a business and write off the initial start up costs. The losses pass straight though to the front page of your 1040. You might be able to arrange a leave of absence for one week with your employer. You may see if you last paycheck will actually be dated in Dec....my wife is a teacher and the district always posts the last paycheck in early January.

Anyway you look at it, you are cutting it very close. Things that could push you over the top again are Sub-s corp K1s (which show up a few months into the next year) , December posting of capital gains in mutual funds, misc interest payments, etc.

Others will have to comment on the deferal of income issue.

Did you consider telling your employer that they made a mistake and you really didn't deserve that bonus? Just kidding.