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.