In addition to my salary, i receive quarterly commission checks. My commission checks get taxed at a considerably higher rate than my salary checks.
I can easily adjust my 401k contributions using an online portal.
Would there be tax saving advantage to increasing my 401k contributions just before the commission check and then reducing it right after?
In other words, if i am putting 10k annually into my 401k now by contributing 10% of all my income to the 401k, would i receive more after-tax money if i contributed 10k annually into my 401k by contributing 25% of my commission checks and 5% of my salary pay?
If you are an employee (which you most likely are since you have access to a 401(k) plan) your taxes are based on the total amount of your income. Income from salary or commission is ordinary income and taxed as such. What you may be seeing is that your commissions are withheld at a higher rate.
So, bottom line, to my knowledge there would be no difference in the "end-game" tax treatment of the income. Therefore, I don't think you would benefit from your plan.
Federal withholding for bonus income is higher than for normal paychecks. However, this all evens out when you do your taxes April 15th. You owe taxes based on your income from the year and bonuses count the same way as regular earnings.
Do you get a big tax refund when you do your taxes? If so, maybe you are having too much tax withheld from all your paychecks. You should talk to your tax advisor to see if you should lower your withholding. That would give you more take-home pay each paycheck, but you would get a lower refund or maybe no refund when you do your taxes April 15th.
Bonuses always provide an opportunity for increased savings or contributions to your retirement plan due to the uncertainty surrounding bonuses. Will I get one or not? How much will it be?
While from a tax perspective what you do is neutral, from a wealth building perspective, increasing the amount you save will provide you with an additional tax deduction but more importantly get you closer to achieving your wealth goal.