Author Topic: Easy way to max out 401k?  (Read 2186 times)

Allen

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Easy way to max out 401k?
« on: December 10, 2013, 03:03:31 PM »
So I can only choose whole percentages for my 401k contribution.  Of course, those don't exactly map to fill out a $17,500 yearly contribution.  I know I can change my contribution percentage, but that is only guaranteed to take effect '1 to 2 pay periods after entry' so that seems unreliable.

How do I make sure I contribute exactly $17,500, without over contributing, without under contributing, and without missing on any company match or potential tax deduction by not contributing in every period more or less equally?

It would be easier if I could contribute "21.216647%" or something.  (For what it's worth, my income is $82,428.40 as implied by the example without holding).

That reminds me: I'll get a raise of somewhere between 0-5%, likely around 3%.  It will be effective November 30, 2014.

How would you plan for this to maximize everything? 

Argyle

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Re: Easy way to max out 401k?
« Reply #1 on: December 10, 2013, 03:07:17 PM »
The way my employer does it, we say what percentage we want taken out, and if the maximum is taken out before the end of the year, they just stop taking it.  In other words if we want $17,000 taken out, and we say "Take out 20%," and taking out 20% means that the $17,000 is reached in September, from October on the payroll people stop taking any money out of the check.  Call up your payroll folks and see if they do it that way.

Numbers Man

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Re: Easy way to max out 401k?
« Reply #2 on: December 10, 2013, 03:13:19 PM »
Take $17,500 and divide by your current annual salary. Then take the percentage you calculate and round up. For example, $17,500 divided by $82,000 equals 21.34%. Use 22% for your calculation. The 401k deduction will automatically stop out at $17,500.

ZiziPB

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Re: Easy way to max out 401k?
« Reply #3 on: December 10, 2013, 03:13:46 PM »
What kind of a match are you getting?  Unless it's 100% of your contributions, it's not that difficult to set it right.  Here is what I would do:  I would round up to the next full percentage.  So if it takes 16.325% to arrive at exactly $17,500, I would set my contributions at 17%.  That means your very last contribution will be a bit smaller, but would still allow you to get your match (assuming a standard 6% match).  Also make sure to opt out of any after tax contributions (if your plan has that option), unless you are fine with making after tax contributions.  That means that the payroll dept will adjust your last contribution of the year so that the total contributed is $17.5K