Author Topic: 401K Match question  (Read 2214 times)

Lski'stash

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401K Match question
« on: January 28, 2017, 06:20:21 PM »
My husband has a 401K through his work that we are planning on maxing out in the near future. He also gets a 4% match through his work. My question is if the work's match donations go into the max amount that we are allowed to invest every year? Say we put in 18,000 (the max) and his work put in another 4% of my husband's income, is that allowed?

Thanks so much! I am a teacher and don't know much about the corporate world side of things...
« Last Edit: January 29, 2017, 09:41:00 AM by Lski'stash »

tralfamadorian

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Re: 401K Match question
« Reply #1 on: January 28, 2017, 06:31:45 PM »
Yes, that's allowed.  $18k is the employee max contribution amount.  The employer can contribute up to 25% of the W2 income.  The two combined cannot exceed $53k for 2016.  These numbers presume an age <50. 

DailyGrindFree

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Re: 401K Match question
« Reply #2 on: January 28, 2017, 06:37:14 PM »
Yes, that's allowed.  $18k is the employee max contribution amount.  The employer can contribute up to 25% of the W2 income.  The two combined cannot exceed $53k for 2016.  These numbers presume an age <50.

+1

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Re: 401K Match question
« Reply #3 on: January 28, 2017, 07:46:59 PM »
My husband has a 401K through his work that we are planning on maxing out in the near future. He also gets a 4% match through his work. My question is if the works match donations go into the max amount that we are allowed to invest every year? So like, say we put in 18,000 (the max) and his work put in another 4% of my husband's income, is that allowed?

Thanks so much! I am a teacher and don't know much about the corporate world side of things...

Once you get the 401k maxed out, if you have cash left over, you would probably qualify for both of you to put up to $5,500 each into a traditional IRA that has essentially the same tax benefits as a 401k.

Metric Mouse

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Re: 401K Match question
« Reply #4 on: January 28, 2017, 10:55:30 PM »
My husband has a 401K through his work that we are planning on maxing out in the near future. He also gets a 4% match through his work. My question is if the works match donations go into the max amount that we are allowed to invest every year? So like, say we put in 18,000 (the max) and his work put in another 4% of my husband's income, is that allowed?

Thanks so much! I am a teacher and don't know much about the corporate world side of things...

Once you get the 401k maxed out, if you have cash left over, you would probably qualify for both of you to put up to $5,500 each into a traditional IRA that has essentially the same tax benefits as a 401k.
Just be aware that the deduction is reduced or eliminated if the MAGI of the household is over $99K.

https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

Lski'stash

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Re: 401K Match question
« Reply #5 on: January 29, 2017, 09:20:17 AM »
My husband has a 401K through his work that we are planning on maxing out in the near future. He also gets a 4% match through his work. My question is if the works match donations go into the max amount that we are allowed to invest every year? So like, say we put in 18,000 (the max) and his work put in another 4% of my husband's income, is that allowed?

Thanks so much! I am a teacher and don't know much about the corporate world side of things...

Once you get the 401k maxed out, if you have cash left over, you would probably qualify for both of you to put up to $5,500 each into a traditional IRA that has essentially the same tax benefits as a 401k.
Just be aware that the deduction is reduced or eliminated if the MAGI of the household is over $99K.

https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

We file separately. As long as our pre-tax deductions do not count into MAGI, we should be more than set. I also have a 403b account to tap into, along with my 457.

Lski'stash

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Re: 401K Match question
« Reply #6 on: January 29, 2017, 09:21:53 AM »
Thank you, guys! This was very helpful. Right now, we are almost maxing out my 457. We are then going to max out my husband's 401K, and then my 403B. After that, we will work on traditional IRA's.

Dicey

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Re: 401K Match question
« Reply #7 on: January 29, 2017, 09:25:07 AM »
Thank you, guys! This was very helpful. Right now, we are almost maxing out my 457. We are then going to max out my husband's 401K, and then my 403B. After that, we will work on traditional IRA's.
Hooray for you!! Smart.

seattlecyclone

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Re: 401K Match question
« Reply #8 on: January 29, 2017, 09:31:36 AM »
We file separately. As long as our pre-tax deductions do not count into MAGI, we should be more than set. I also have a 403b account to tap into, along with my 457.

If you file separately and earn more than $10k, you won't be able to deduct any of your traditional IRA contributions. Best to file jointly once you max out the workplace retirement accounts and move on to IRAs. And in general, filing jointly should be the default unless you have a pretty compelling reason not to. There are too many other provisions like this where separate filers are treated worse than joint filers.

Lski'stash

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Re: 401K Match question
« Reply #9 on: January 29, 2017, 09:47:38 AM »
We file separately. As long as our pre-tax deductions do not count into MAGI, we should be more than set. I also have a 403b account to tap into, along with my 457.

If you file separately and earn more than $10k, you won't be able to deduct any of your traditional IRA contributions. Best to file jointly once you max out the workplace retirement accounts and move on to IRAs. And in general, filing jointly should be the default unless you have a pretty compelling reason not to. There are too many other provisions like this where separate filers are treated worse than joint filers.

We do. I am on PSLF. My payments when we file separately are $168.79 a month, vs. $780.25 if we file together. This may change once all of the accounts are maxed out, as you point out.

Metric Mouse

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Re: 401K Match question
« Reply #10 on: January 29, 2017, 06:51:04 PM »
Thank you, guys! This was very helpful. Right now, we are almost maxing out my 457. We are then going to max out my husband's 401K, and then my 403B. After that, we will work on traditional IRA's.

Great work!