The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Vwjedi76 on June 23, 2015, 08:31:38 PM
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I am currently a full time college student/SAHM, but my hubby has a 401K through his employer. The 401k company website (John Hancock) states that we can contribute up to 60% of his salary. I know the 2015 IRS max is somewhere in the ballpark of $18,000. So can we contribute OVER $18000 as long as we don't contribute over 60% of the salary? I'm confused.
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I am currently a full time college student/SAHM, but my hubby has a 401K through his employer. The 401k company website (John Hancock) states that we can contribute up to 60% of his salary. I know the 2015 IRS max is somewhere in the ballpark of $18,000. So can we contribute OVER $18000 as long as we don't contribute over 60% of the salary? I'm confused.
It's this: he can contribute up to $18000 or up to 60% of the salary, whichever limit is lower. The first is the IRS limit, the second is the company's own limit. Can't go over either limit, because that's what a limit is.
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I am currently a full time college student/SAHM, but my hubby has a 401K through his employer. The 401k company website (John Hancock) states that we can contribute up to 60% of his salary. I know the 2015 IRS max is somewhere in the ballpark of $18,000. So can we contribute OVER $18000 as long as we don't contribute over 60% of the salary? I'm confused.
It's this: he can contribute up to $18000 or up to 60% of the salary, whichever limit is lower. The first is the IRS limit, the second is the company's own limit. Can't go over either limit, because that's what a limit is.
sorta. The maximum pre-tax amount the IRS allows you to contribute is $18k in 2015. However, the total limit is $53k, with anything you contribute after $18k will be post-tax dollars. In your case it will be whatever is lower, $53k or 60% of his salary.
Most people won't bother maxing after-tax contributions since there are better vehicles (IRAs, HSAs) - but it does create the possibility of the so-called mega-backdoor ROTH.
http://www.madfientist.com/after-tax-contributions/ (http://www.madfientist.com/after-tax-contributions/)
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I am currently a full time college student/SAHM, but my hubby has a 401K through his employer. The 401k company website (John Hancock) states that we can contribute up to 60% of his salary. I know the 2015 IRS max is somewhere in the ballpark of $18,000. So can we contribute OVER $18000 as long as we don't contribute over 60% of the salary? I'm confused.
It's this: he can contribute up to $18000 or up to 60% of the salary, whichever limit is lower. The first is the IRS limit, the second is the company's own limit. Can't go over either limit, because that's what a limit is.
sorta. The maximum pre-tax amount the IRS allows you to contribute is $18k in 2015. However, the total limit is $53k, with anything you contribute after $18k will be post-tax dollars. In your case it will be whatever is lower, $53k or 60% of his salary.
Most people won't bother maxing after-tax contributions since there are better vehicles (IRAs, HSAs) - but it does create the possibility of the so-called mega-backdoor ROTH.
http://www.madfientist.com/after-tax-contributions/ (http://www.madfientist.com/after-tax-contributions/)
I believe that after tax contributions aren't allowed by all 401k plans so check with your provider. If not, then 18k would be the limit.
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...and if we're going down that path, $53K is the total of employee + employer contributions allowed, so the employee's contribution limit per the IRS would be $53K minus whatever the employer has contributed.
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...and if we're going down that path, $53K is the total of employee + employer contributions allowed, so the employee's contribution limit per the IRS would be $53K minus whatever the employer has contributed.
see how simple it all is? :-) There's the easy, mostly correct answer. Then the slightly more complicated answer. And then the slightly more complicated answer which depends on an individual's actual 401(k) plan.
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I am currently a full time college student/SAHM, but my hubby has a 401K through his employer. The 401k company website (John Hancock) states that we can contribute up to 60% of his salary. I know the 2015 IRS max is somewhere in the ballpark of $18,000. So can we contribute OVER $18000 as long as we don't contribute over 60% of the salary? I'm confused.
It's this: he can contribute up to $18000 or up to 60% of the salary, whichever limit is lower. The first is the IRS limit, the second is the company's own limit. Can't go over either limit, because that's what a limit is.
^ This is the answer.
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I am currently a full time college student/SAHM, but my hubby has a 401K through his employer. The 401k company website (John Hancock) states that we can contribute up to 60% of his salary. I know the 2015 IRS max is somewhere in the ballpark of $18,000. So can we contribute OVER $18000 as long as we don't contribute over 60% of the salary? I'm confused.
It's this: he can contribute up to $18000 or up to 60% of the salary, whichever limit is lower. The first is the IRS limit, the second is the company's own limit. Can't go over either limit, because that's what a limit is.
^ This is the answer.
unless you want to contribute more, and your 401(k) plan allows you to do so. Then, up to $53k total.
see "Overall Limit Contributions" section here: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-401k-and-Profit-Sharing-Plan-Contribution-Limits (http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-401k-and-Profit-Sharing-Plan-Contribution-Limits)