Author Topic: 401k Matching Dollar for Dollar to Yearly Maximum  (Read 1074 times)

ColoradoSaving

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401k Matching Dollar for Dollar to Yearly Maximum
« on: May 15, 2019, 11:10:14 AM »
Hello!

This is my first post on the forums here.

I have a question regarding the most efficient way to get as much as possible in a 401k.

I am in my late 20s with no debt other than my house. I started maxing my 401k this year and a Roth.

I know most companies that have a 401k and a match they seem to match from 3%-8% total. Let's not talk about the annoying 50% or dollar for dollar up to their max of 5%. Most of us are probably looking at total dollars going into these accounts per year.

I am wondering if there are companies that match 100% dollar for dollar up to the yearly maximum contribution or more. So if I put in $19,000, they would put in $19,000 also.

What I am trying to do is get as close to the yearly combined total maximum of $55,000 or $56,000, so that my 401k acts more like a SEP IRA or Solo 401k. Right now even with my company's above average match, it only gets me into the mid $20,000 range. This is leaving about $30 on the table so to say.

So does anyone know any companies that do far better than having a maximum % match? I have heard some people talk about having 50% matches up to the yearly maximum, but there seems to be confusion surrounding the subject or the conversations are not quite explaining it the right way.

On another note, can one bargain with a company on upping their match so that I could max my 401k and then ask the company to pay me say $35,000 less and instead put it into my 401k? Obviously this would be a one off, and i am not sure if a company can make a one off deal with an employee if the company matches all of their employees a certain percentage.

I don't have a degree, but I have been in sales for a long time.

Cheers!

I'm a red panda

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #1 on: May 15, 2019, 11:17:09 AM »
Mine doesn't dollar for dollar match, but my 403b they out in 13% and require us to put in 2%. Since the 2% is required it doesn't count towards the contribution maximum.

Depending on your salary, you could approach a $18,500 contribution from the company, I suppose. I'm not there yet, but I'm pretty low on the totem pole.

My understanding is you can't negotiate 401k. It has to be the same for everyone

ColoradoSaving

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #2 on: May 15, 2019, 11:30:51 AM »
That's a good match! Their idea must be to get you to easily cget to the recommended 15% contribution for retirement by the employee just contributing 2% and being at 15%

So you would need to make about $350,000 a year to get to the maximum allowed contribution by you and your employer.

That is a really hard amount to get to, and that is with a far above average 401k match.

I figure there have to be some companies that would offer dollar for dollar up to atleast the yearly contribution limit. That would still only get one to $38,000, leaving room for another $18,000 of employer contributions. So their match would have to exceed $1 or have profit sharing or something that would cover the rest.

When I think about it, a dollar for dollar match wouldn't really be too crazy if they are a good employer with good wages. It is just another $19,000.

ysette9

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #3 on: May 15, 2019, 01:20:10 PM »
To get to the $55k total contribution limit for the year you need to be asking not about matching (which is great) but post tax contributions with (preferably) a Roth conversions option. This is called the mega backdoor Roth IRA or “in plan Roth conversion”. My company offers that option along with auto Roth conversions (SWEET) and my husband’s does as well. My old company had just opened up the in plan Roth conversion for post tax contributions but only allowed one conversion per year and they charged a fee for it. Bastards.

ginjaninja

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #4 on: May 15, 2019, 01:35:23 PM »
The best I have heard of is Microsoft matches 50% of everything you contribute.  If you put in $19k they will put in $9.5k. 

ysette9

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #5 on: May 15, 2019, 01:46:20 PM »
The best I have heard of is Microsoft matches 50% of everything you contribute.  If you put in $19k they will put in $9.5k.
I’ve heard of Google doing the same

datu925

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #6 on: May 15, 2019, 11:13:20 PM »
The best I have heard of is Microsoft matches 50% of everything you contribute.  If you put in $19k they will put in $9.5k.
I’ve heard of Google doing the same
I work at Google and can confirm this is true. They also make it really easy to do mega backdoor Roth.

ericbonabike

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #7 on: May 17, 2019, 12:14:24 PM »
My company does dollar for dollar matching up to 6% of salary, maxing out at 9k.
So, if you make 150k or more, and max out 401k, you get the full 9k.   

I find this a little odd.
If I make 60k, scrimp and save and manage to make out my 401k, I would only get a company match of $3600.
But, the super senior VP making $200k, only has to put $9k into the 401k, and he'll get another 9k from the company. 

kingxiaodi

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #8 on: May 17, 2019, 03:55:40 PM »
My company does dollar for dollar matching up to 6% of salary, maxing out at 9k.
So, if you make 150k or more, and max out 401k, you get the full 9k.   

I find this a little odd.
If I make 60k, scrimp and save and manage to make out my 401k, I would only get a company match of $3600.
But, the super senior VP making $200k, only has to put $9k into the 401k, and he'll get another 9k from the company.

Isn't there a rule restricting how much highly compensated employees can contribute to a 401k?

ColoradoSaving

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #9 on: May 17, 2019, 08:19:27 PM »
My company does dollar for dollar matching up to 6% of salary, maxing out at 9k.
So, if you make 150k or more, and max out 401k, you get the full 9k.   

I find this a little odd.
If I make 60k, scrimp and save and manage to make out my 401k, I would only get a company match of $3600.
But, the super senior VP making $200k, only has to put $9k into the 401k, and he'll get another 9k from the company.

You can both put in $19,000 per year

Your match would bring you up to $22,500 for the year, and his would bring him up to $28,000 per year.

It doesn’t seem too odd to me, he makes more, so it would make sense that his match is more. Keep in mind that the match does not count towards your yearly maximum contributions of $19,000.

This is sort of why I created this thread. I am trying to find the best bang for my buck without necessarily needing to make upwards of the $200,000 range at a company that has a 10% match. If I could just find a company that matches dollar for dollar or at least 50% on the dollar up to the yearly limit, it would give me the decision to maximize my contributions and matching. Instead of maxing anyway, but losing out on the match because they are capped out at a certain percentage, because I can max at $60-$70k and don’t necessarily need to secure a position that pays $200,000 or more a year to accomplish the same thing.

Sure I would love to make that much, but that is going to be difficult to do and likely won’t happen as quickly as I would like it to, if ever.

The goal of this is to utilize as much of the benefits of pre tax and match to close up as much of the $55,000 as possible and then mega backdoor Roth whatever else I can while maxing a regular Roth account.

ColoradoSaving

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #10 on: May 17, 2019, 08:24:29 PM »
Side question:

If I contribute $6,000 to a separate Roth IRA in a year, does that count towards the yearly 401k total maximum?

So if I contributed $19,000 to the 401k, the company adds 4K, this brings that to $23,000. Then if I put in $6,000 into a Roth, that brings it to $29,000. Can I Mega Backdoor Roth $26,000 or $31,000?

So the total of all of this would be $61,000 with the regular $6,000 Roth contribution. Would this be allowed? Or do I need to switch to a taxable account after $55,000 including all totals of the 401k, the match, the Roth, and Mega Backdoor?

ysette9

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #11 on: May 17, 2019, 09:34:19 PM »
Roth IRA contribution limits are completely separate from 401k contribution limits.

ColoradoSaving

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #12 on: May 17, 2019, 09:38:41 PM »
Cool, that is what I thought. I just wanted to make sure they weren’t wrapping in all of the tax advantaged account types.

FatFI2025

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #13 on: May 18, 2019, 10:46:05 AM »
You probably won't find a 401k plan where you make a $75K salary and the company contributes $37K ($19K individual + $37K company = $56K regulatory max). If a company has $112K for a position, they would be WAY more competitive in the hiring market offering $105K salary + $7K match.

I know of one company that contributes 25% of salary to 401K as part of discretionary profit sharing, so to reach the regulatory 401k limit you would need a base salary of  $148K there.

If you're not able to command $200K+ salaries, then the most feasible way to hit that $56K limit is to have self-employment income that goes to a solo 401k.

To get to the $55k total contribution limit for the year you need to be asking not about matching (which is great) but post tax contributions with (preferably) a Roth conversions option. This is called the mega backdoor Roth IRA or “in plan Roth conversion”. My company offers that option along with auto Roth conversions (SWEET) and my husband’s does as well. My old company had just opened up the in plan Roth conversion for post tax contributions but only allowed one conversion per year and they charged a fee for it. Bastards.
+1
« Last Edit: May 18, 2019, 10:51:42 AM by FatFI2025 »

use2betrix

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #14 on: May 18, 2019, 11:29:21 AM »
My company matches 5% that is fully vested from Day 1. My per diem I receive all year is not taxed, so that doesn’t have 401k contributions pulled.

At my income, my companies match will be around $12,000, give or take $500, depending how much I work.

thesis

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #15 on: May 18, 2019, 05:49:14 PM »
I think that if you're self-employed you can sign up for a solo 401k and put the full $56k in if you earn at least that much and as long as you're paying your taxes properly. I think?

Good luck if you're a W-2 employee. I'm actually really curious what the history is behind the *total* 401k number.

My company matches 50% up to $7k flat rate, which I've already reached, so I already have an extra $7k in my 401k. But this is very rare. A friend had a job where they matched up to 15% of salary total, and that is extremely rare. They were also a dying company, though, so that may have been less guaranteed then one might think.

Finding a job you enjoy that has an amazing 401k match is going to be very difficult. I'd be curious to know if you could negotiate your 401k match as part of the hiring process. Say the company doesn't want to pay you more but you negotiate a 50% match up to 10% total, as opposed to 3%, or something like that. Company contributions are tax deductible for the company if I'm not mistaken, so it's technically cheaper for them to pay less and give a greater contribution than the other way around. But policy and red tape might prevent it. And I'd probably not agree to it unless it vested per paycheck or per month.

ColoradoSaving

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #16 on: May 19, 2019, 12:12:52 AM »
You probably won't find a 401k plan where you make a $75K salary and the company contributes $37K ($19K individual + $37K company = $56K regulatory max). If a company has $112K for a position, they would be WAY more competitive in the hiring market offering $105K salary + $7K match.

I know of one company that contributes 25% of salary to 401K as part of discretionary profit sharing, so to reach the regulatory 401k limit you would need a base salary of  $148K there.

If you're not able to command $200K+ salaries, then the most feasible way to hit that $56K limit is to have self-employment income that goes to a solo 401k.

To get to the $55k total contribution limit for the year you need to be asking not about matching (which is great) but post tax contributions with (preferably) a Roth conversions option. This is called the mega backdoor Roth IRA or “in plan Roth conversion”. My company offers that option along with auto Roth conversions (SWEET) and my husband’s does as well. My old company had just opened up the in plan Roth conversion for post tax contributions but only allowed one conversion per year and they charged a fee for it. Bastards.
+1

That all makes a lot of sense. Thank you for your input.

Self Employment does seem like the most simple way to max out the tax advantaged accounts.

FatFI2025

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #17 on: May 19, 2019, 09:33:02 AM »
I'd be curious to know if you could negotiate your 401k match as part of the hiring process. Say the company doesn't want to pay you more but you negotiate a 50% match up to 10% total, as opposed to 3%, or something like that. Company contributions are tax deductible for the company if I'm not mistaken, so it's technically cheaper for them to pay less and give a greater contribution than the other way around. But policy and red tape might prevent it. And I'd probably not agree to it unless it vested per paycheck or per month.

Unfortunately companies generally can't negotiate 401k matching because their plans are setup to treat all employees equally in accordance with ERISA.

ColoradoSaving

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #18 on: May 19, 2019, 10:55:44 PM »
I'd be curious to know if you could negotiate your 401k match as part of the hiring process. Say the company doesn't want to pay you more but you negotiate a 50% match up to 10% total, as opposed to 3%, or something like that. Company contributions are tax deductible for the company if I'm not mistaken, so it's technically cheaper for them to pay less and give a greater contribution than the other way around. But policy and red tape might prevent it. And I'd probably not agree to it unless it vested per paycheck or per month.

Unfortunately companies generally can't negotiate 401k matching because their plans are setup to treat all employees equally in accordance with ERISA.

Good to know

thesis

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Re: 401k Matching Dollar for Dollar to Yearly Maximum
« Reply #19 on: May 20, 2019, 08:09:10 AM »
I'd be curious to know if you could negotiate your 401k match as part of the hiring process. Say the company doesn't want to pay you more but you negotiate a 50% match up to 10% total, as opposed to 3%, or something like that. Company contributions are tax deductible for the company if I'm not mistaken, so it's technically cheaper for them to pay less and give a greater contribution than the other way around. But policy and red tape might prevent it. And I'd probably not agree to it unless it vested per paycheck or per month.

Unfortunately companies generally can't negotiate 401k matching because their plans are setup to treat all employees equally in accordance with ERISA.

Good to know

Agreed, good to know. Bummer!