Correction on CA SDI

Yesterday's post contained some wrong information regarding the CA SDI withholding. I realized my company actually withholds part of my paycheck towards CA VPDI instead of CA SDI. What's the difference? VPDI is Voluntary Plan Disability Insurance run by private companies. Private plans are required to match the California State Disability Insurance benefits, and may surpass them. For example, some private plans may pay more than 55% of earnings, with no cap. Another difference is CA SDI is a federal itemized deduction while CA VPDI is NOT! However, watch out for being penny wise and pound foolish. Opting for CA SDI so you can deduct the cost will at most save you around $400/year (assuming you are in the 39% federal tax bracket). However, if you ever have a disability, CA SDI would only pay you up to $1075/week while your companies plan COULD have no weekly maximum. Please also note that this is talking about Disability Insurance and not Paid Family Leave. Check your plan documents and make an informed decision yourself if it is worth it. If your company gives you a choice, keep in mind that going with the California plan may require you to fill out paperwork yourself.

California SDI Tax

According to this page, the tax is 1% per year, up to $1008.80 per employee.

The 2013 SDI tax rate is 1.0 percent (.010) of SDI taxable wages per employee, per year. SDI is set by the California State Legislature and may change yearly. This includes the rate for PFL. The maximum tax is $1,008.80 per employee, per year ($100,880 x .010).

In other words, if you work approximately 6 years, and then have only 1 child, you are merely "earning" back the SDI tax you paid in when you take the 6 weeks of paid leave. (This is ignoring any other possible disability claim.) Hopefully, everyone is healthy and has no other need for paid family leave.

Assuming a flat income, and X years of work,  0.01XY of yearly income Y would be paid into the system. Then, when you have a claim, you would get the minimum of (6/52*0.55Y,1075*6) = minimum(0.06346153846154Y, 6450).

0.01XY = 0.06346153846154Y

0.01X = 0.06346153846154

X = 6.346 years

If you are paying the max every year (LUCKY YOU!)

1008.80X = 6450

X = 6.393 years

In conclusion, if you have a child more often than every 6.3 years, you come out ahead! (This ignores taxability aspect of the pay. This is an exercise in theoretical terms and is not meant to be used as advice in planning for child birth.)

California Paid Family Leave : Newborn Bonding

Having just come back from 4 weeks of paid family leave, I thought I would write a post with some details about this paternity leave. Males, in the great state of California, in most circumstances, you get paid for 6 weeks of bonding time with a newborn baby! Here are some details, caveats, and pointers.

• Six weeks of paid leave, must begin with 1 week of unpaid leave. 
• Max of 55% of salary, up to a max cap of $1075/week (per CA EDD pdf) This means if you earn more than $101,000 a year, you still earn at most $1075/week. 
• Do NOT have to use it all in one go. For example, I took 3 weeks when the baby was born, and then 4 weeks just prior to my child's 1st birthday. 
• Use it or lose it by 1st birthday of the child 
• Federally taxable 
• CA state tax-free 
• Note: You funded this benefit through paycheck deductions already. Look for CA SDI. Sad, there is no free lunch. More on this below. 
• Some companies fill out the forms for you and can even direct deposit to your usual checking account, while others will require you to fill out the forms and give you a loaded debit card. Currently, the funds are placed in Bank of America (BoA) branded debit card. Note that without an account at BoA, we were limited to withdrawing $1000 at a time at a BoA branch. However, we were able to withdraw and deposit the entire amount at a Wells Fargo branch. 
• Check the CA EDD website here. 
• Check the EDD debit card website here. 

New Blog

Here is my blog. What motivates me to write this? I want to write down my reviews/ideas. If the ideas are interesting or original, maybe I will get a following. I wonder how blogs are advertised? That will be a topic to revisit. I plan to write about the following topics, with more to come.

• Being a dad
• Personal finance
• Technology
• Things I buy

Some upcoming posts include: 

• California Bonding Time with Newborn for Dads (also known as Paternity Leave)
• Travel tips in the San Francisco Bay Area