Author Topic: 401K Question  (Read 2723 times)

paige

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401K Question
« on: June 26, 2015, 02:58:44 PM »
Today I tried to adjust my contribution level to max out my 401K ($18,000) by the last pay period of the year. To do this, I need to increase my contribution to a specific amount instead of a percentage. My 401K company requires contribution levels to be set as a percentage of salary and only whole numbers (no decimals). So I rounded up but this will put me $32.92 over at the end of the year. What happens if you over contribute to your 401K?

I know I can re-adjust before the last pay period but then it will have be under. My husband says i shouldn't care about a few dollars but how does everyone else do it?

GGNoob

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Re: 401K Question
« Reply #1 on: June 26, 2015, 03:27:33 PM »
You may have to ask your employer or the 401k company, but I believe most employers adjust your paycheck so that you won't go over. So your your case, your last paycheck's contributions would be adjusted so you hit $18k exactly.

seattlecyclone

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Re: 401K Question
« Reply #2 on: June 26, 2015, 03:31:27 PM »
Yes, ask your company. My employers have always cut me off when I hit the limit, but it's possible that some won't.

slugline

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Re: 401K Question
« Reply #3 on: June 26, 2015, 03:33:23 PM »
Let us know (1) what answer you get and (2) whether they tell you "this is the first time anyone's ever asked that." Way to save!

Baron235

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Re: 401K Question
« Reply #4 on: June 26, 2015, 03:43:01 PM »
They will cut it off.  I hit my total by the middle of the year and I never adjust the contribution rate and never go over the max amount. 

grsing

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Re: 401K Question
« Reply #5 on: June 26, 2015, 03:43:23 PM »
Some places will let you make contributions over $18k, but any amount over $18k is non-deductible (possibility of a Roth rollover later if you're interested in that option). That's pretty rare, though; most employers will just cap you at $18k and stop deductions when you hit it. The potential "gotcha" is with employer matching; if you max out early and contributing in excess of the match, you may get less of a match than if you hit $18k exactly.

GGNoob

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Re: 401K Question
« Reply #6 on: June 26, 2015, 04:10:14 PM »
Let us know (1) what answer you get and (2) whether they tell you "this is the first time anyone's ever asked that." Way to save!

I wouldn't be surprised if that was the result. I was questioned multiple times when I updated my 401k AND 457 to $1500 a month.

MDM

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Re: 401K Question
« Reply #7 on: June 26, 2015, 04:30:26 PM »
Some places will let you make contributions over $18k, but any amount over $18k is non-deductible (possibility of a Roth rollover later if you're interested in that option). That's pretty rare, though; most employers will just cap you at $18k and stop deductions when you hit it. The potential "gotcha" is with employer matching; if you max out early and contributing in excess of the match, you may get less of a match than if you hit $18k exactly.

Yes, ask about this potential gotcha also.  But your company may do a "401k true-up" (you can google that) and if so you'll be ok on the employer match.

wienerdog

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Re: 401K Question
« Reply #8 on: June 27, 2015, 07:48:16 AM »
I just asked this question last month at my new employer as they used whole percentage numbers also.  They said round up and they limit the amount on the last contribution if that is the one that puts you over the limit just as GGNoob explained.  I would ask just to be sure.