Author Topic: 401k employee contribution limits  (Read 1560 times)

aprilm

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401k employee contribution limits
« on: June 16, 2016, 11:26:06 AM »
My employer has a 401k contribution limit of 20% of salary.  At my salary ($55k), this puts me well below the $18k IRS limit.

So, what can I do? What are the other options for investing in tax-deferred accounts?

dividendman

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Re: 401k employee contribution limits
« Reply #1 on: June 16, 2016, 11:32:13 AM »
I'm pretty sure the employer can't limit your contributions to your 401k.

Are you sure that the employer's matching isn't the thing being limited at 20%? i.e. your employer matches 50% of the first 20% of your salary that's contributed or something like that?

rubybeth

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Re: 401k employee contribution limits
« Reply #2 on: June 16, 2016, 11:56:21 AM »
I'm pretty sure the employer can't limit your contributions to your 401k.

Are you sure that the employer's matching isn't the thing being limited at 20%? i.e. your employer matches 50% of the first 20% of your salary that's contributed or something like that?

Yeah, clarify and re-clarify that if you aren't getting your answers. Send them the IRS rules and ask for an explanation if you still aren't getting the right answer. And then maybe contact the plan administrator to clarify, as well.

As for other tax-deferred savings, I present to you the IRA (Individual Retirement Account).

seattlecyclone

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Re: 401k employee contribution limits
« Reply #3 on: June 16, 2016, 12:06:48 PM »
My employer has a 401k contribution limit of 20% of salary.  At my salary ($55k), this puts me well below the $18k IRS limit.

So, what can I do? What are the other options for investing in tax-deferred accounts?

You can contribute $5,500 to a traditional IRA and $3,350 (single)/$6,750 (family) to an HSA if you have High Deductible health insurance. Those are the big ones. If you have some self-employment income you can also open up your own 401(k) for your side business.

I'm pretty sure the employer can't limit your contributions to your 401k.

Yes they can. The law provides a maximum, but the plan can set limits below the maximum if they feel like it. I suggest contacting your benefits people to see if that can be changed.

JLee

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Re: 401k employee contribution limits
« Reply #4 on: June 16, 2016, 12:26:29 PM »
Both of my last employers have had 401k contribution limits (40% and 50% of salary).

If you are able to max your IRA, HSA (if available) and still could put more into your 401k, it'd be worth talking with your HR/payroll/retirement representative to see if they can change anything.  They've probably never ran into a situation where an employee was putting in 20%, let alone more than that. :)

MDM

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Re: 401k employee contribution limits
« Reply #5 on: June 16, 2016, 12:28:55 PM »