Author Topic: 401(k) maximum - $17,500 AND employer contribution?  (Read 4993 times)

kodokan

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401(k) maximum - $17,500 AND employer contribution?
« on: October 25, 2013, 10:44:50 AM »
Apologies for what's probably a very basic question - I'm relatively new to the US, and think I may have been misunderstanding how 401(k) contributions work for the last 2 years.

I know the limit for 2013 is $17,500, but I've been assuming that's the absolute max, comprised of both what hubby puts in and his employer's matching contributions. But I've read a couple of things recently that suggested that no, the $17,500 is just what he puts in, and the employer can then add thousands more with their matching.

I did go and read through the IRS guidelines - several times, slowly, and with increasing irritation, as per usual for IRS guidelines - which I think say that it's $17,500 for the employee, and then the employer can make it up to either $51k (or 100% the employee's salary if lower).

I'm about 98% sure that we can now go online and bust another few thou into the 401(k) for 2013 to max it out, but just wanted to double check my reasoning first; I thought you guys would be most likely to know out of all the finance websites I read. We accidentally overpaid the HSA last year due to the employer's $1k 'have a fitness check up' bung not being factored in their online withholding calc, and it was a world of pain to work out the rules and back it out before filing.

Thank a lot.

Eric

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #1 on: October 25, 2013, 10:49:11 AM »
which I think say that it's $17,500 for the employee, and then the employer can make it up to either $51k (or 100% the employee's salary if lower).

You got it.  $17,500 is the maximum employee contribution, independent of employer contributions.

kodokan

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #2 on: October 25, 2013, 11:10:31 AM »
Thank you! *scuttles off to remove several thousand more dollars from this year's taxable income*

geekette

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #3 on: October 25, 2013, 12:18:30 PM »
If your husband is over 50, there's a "catch up" contribution allowed as well.

kodokan

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #4 on: October 25, 2013, 12:31:51 PM »
If your husband is over 50, there's a "catch up" contribution allowed as well.

Thank you - this one I did know about, but since he's some years off that, it had mentally slipped my mind when doing my retirement investment calcs. I've had quite an exciting morning with my lifetime spreadsheet since posting here earlier :)

umterp1999

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #5 on: October 25, 2013, 12:39:28 PM »
What happens if you are maxing out througout the year, get an unexpected bump in pay, thus causing your contributions to exceed 17, 500? 

msilenus

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #6 on: October 25, 2013, 12:53:49 PM »
What happens if you are maxing out througout the year, get an unexpected bump in pay, thus causing your contributions to exceed 17, 500?

Depends on your plan and/or payroll departments.  Mine prevents any problem.  I know some others don't.  I don't know how to unscrew it if you get screwed.  But you're probably best off getting in touch with your HR first to determine if there's any potential issue.

Eric

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #7 on: October 25, 2013, 01:14:45 PM »
What happens if you are maxing out througout the year, get an unexpected bump in pay, thus causing your contributions to exceed 17, 500?

Generally, once you hit that threshold, there's a trigger in the payroll system that stops your contributions.  At least that's how it's supposed to work. (results not guaranteed)

seattlecyclone

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #8 on: October 25, 2013, 02:34:52 PM »
Yeah, you'll have to ask your payroll department to be sure. My employer stops the contributions right when you hit the maximum, but others might not. I do know that when I switched jobs mid-year the payroll person at my current employer said their systems didn't have a way to take my contributions from my previous employer into account, so I would have to make sure on my own not to over-contribute for that year.

chasesfish

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #9 on: October 25, 2013, 03:59:45 PM »
My company stops right when I hit the maximum.  My wife's did not and it was a pain.  Be sure to ask HR.

Yes, total contribution is your portion, plus employer match.  I get 7k-8k on top of my 17.5/year courtesy of the employer

lentilman

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Re: 401(k) maximum - $17,500 AND employer contribution?
« Reply #10 on: October 26, 2013, 10:36:08 PM »
My company used to top-off (meet the match if contribution limit was reached prior to the end of the year) but was aquired by another company that changed to stopping any matching contribution when limit was reached.  Best to check with HR to verify what your rules are.