The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Jtrey17 on April 25, 2017, 03:56:24 PM
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Hello friends, I need some help understanding the maximum 401k yearly contribution. Does the $18,500 include employer contributions?
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The employee can only contribute $18,000 per year. It does not include employer contributions or catch-up contributions for those age 50 or older.
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The maximum is $18K (not 18,500), and no it does not include employer matching.
EDITED TO ADD:
DOH! Joel beat me to it.
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The above responses are correct.
To add a little detail that many are not aware of: the $18,000 limit is for "elective deferrals" only. If your retirement plan has a mandatory contribution component (mine does, but it's a 403b so not sure if the same can apply to a 401k), that mandatory amount does not count against the elective deferral limit. As a result, I will end up contributing about $20,500 to my 403b this year, in addition to my employer's contributions of about $13,000.
Edit to add: The first comment here (https://www.reddit.com/r/financialindependence/comments/3dykxm/truefalse_mandatory_401k_contributions_do_not/) explains the details behind this nuance, in case anyone is curious.
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I will end up contributing about $20,500 to my 403b this year, in addition to my employer's contributions of about $13,000.
I'm not adding anything useful to the thread...just wanted to say WOW, that's fantastic.
I wish I could get that level of matching.