Author Topic: 401k Participation  (Read 11432 times)

BuzzardsBay

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401k Participation
« on: May 06, 2014, 08:31:20 AM »
I currently contribute 5% because the company matches up to 5%.  The rest I put into a Roth IRA and then some other investments.  Our 401k plan has ridiculously high expenses.  The funds average about 1 1/2 percent.  I asked about reducing them during the annual review with the 401k company.  (As Office Manager, I get to sit in on that.)  Apparently, once the total plan assets hit one million, then the expenses will go down some.  That should take another year or two.

Anyway, does anyone not want to contribute 15% to their 401k because they wonder if the owners of the company will think "wow, she must be doing really well" and then not give you a raise?    Or maybe give you a smaller raise?  They know I'm single and I own a home and support myself.  Our company is really small, 15 - 20 people, and no one seems to contribute more than the 5%.  15% would be a much larger number than the average here and would kind of stick out on reports that I give the owners.  I know it wouldn't be right, but sometimes info effects people's way of thinking without them even realizing it.

I know it shouldn't matter, but don't I don't want people to know how much more than the average employee I'm saving for retirement.

hoodedfalcon

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Re: 401k Participation
« Reply #1 on: May 06, 2014, 08:36:43 AM »
I have wondered the exact same thing. I received two raises last year totally 7K....So I increased my 403B contributions to absorb the raise. My boss knows I have extensive student loan debt, and I went out of my way to request part of the above raise (it was not part of my annual review). I wonder if she thinks I was lying about my debt, need for raise, etc...? It's none of her business how I choose to spend my money, but it does make me slightly uncomfortable.

Curious to see what other people have to say about this....

MissStache

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Re: 401k Participation
« Reply #2 on: May 06, 2014, 08:42:23 AM »
I'm surprised that your bosses know how much you contribute to your 401K.  That seems like an invasion of privacy to me.  I work in HR Compensation, so I could easily see exactly what everyone is putting in, but I would never look it up because it isn't my business.  I don't think my boss would, either.

Perhaps it is different because I work for a huge company (30,000+ employees), but is this really something that happens at your work?  Why are they even looking at reports that show what people are contributing?

welliamwallace

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Re: 401k Participation
« Reply #3 on: May 06, 2014, 08:45:58 AM »
I've always heard "even an expensive 401(k) fund is better than cheap taxable accounts." The tax advantages probably more than make up for a 1% or 1.5% expense ratio when compared to taxable accounts.

BuzzardsBay

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Re: 401k Participation
« Reply #4 on: May 06, 2014, 08:54:52 AM »
My boss is the Owner and President of the company.  I do all of the accounting and produce monthly financial statements for him.  Of course he sees everything.  It's his company.

The 401k match is an expense and the reporting shows employee and employer contributions.
« Last Edit: May 06, 2014, 08:57:13 AM by BuzzardsBay »

hoodedfalcon

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Re: 401k Participation
« Reply #5 on: May 06, 2014, 08:56:48 AM »
I'm surprised that your bosses know how much you contribute to your 401K.  That seems like an invasion of privacy to me.  I work in HR Compensation, so I could easily see exactly what everyone is putting in, but I would never look it up because it isn't my business.  I don't think my boss would, either.

Perhaps it is different because I work for a huge company (30,000+ employees), but is this really something that happens at your work?  Why are they even looking at reports that show what people are contributing?

I don't have any direct evidence that they are checking up behind me, but my contributions are listed on my pay stub (which my boss signs). The information is easy to find....

BuzzardsBay

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Re: 401k Participation
« Reply #6 on: May 06, 2014, 09:26:09 AM »
Don't want to go some place else.  I love my job.

I was just wondering if anyone else wonders about this too and, if so, what do they do about it.
« Last Edit: May 06, 2014, 09:30:29 AM by BuzzardsBay »

Cheddar Stacker

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Re: 401k Participation
« Reply #7 on: May 06, 2014, 10:15:00 AM »
I'm a boss. I sit in on all the 401k meetings for our office (20 employees). We receive a lot of data about contribution rates, but it's not employee specific. The data is stuff like:

- Average contribution rate for highly compensated employees = 15%
- Average contribution rate for non-highly compensated employees = 7%
- Average contribution rate for employees age 30-40 = 9%
- Average contribution rate for employees age 40-50 = 12%

If I wanted the data I'm sure I could obtain it, but I don't want it. I would never decide a raise based on my perception of whether or not an employee needs it, my decision would always be based on merit. However, I'm a reasonable person, and a frequent reader of this website so I might not be your 'average' boss.

Another point - your boss might directly benefit from you contributing more. If the match is not a 'safe harbor' match, your boss and any other highly compensated employees have limited contribution rates. As a rough example - If the average contribution rate is 5%, they can likely only contribute 8%. When you bring up the average by contributing 15%, they can now contribute 9-10% of their own wage.

BuzzardsBay

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Re: 401k Participation
« Reply #8 on: May 06, 2014, 10:43:47 AM »
It is a Safe Harbor Match. 

I think some people are missing the point. This is about how, when you work for a small company, the perception of you may change if you contribute the max when no one else does. 

« Last Edit: May 06, 2014, 10:47:26 AM by BuzzardsBay »

Cromacster

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Re: 401k Participation
« Reply #9 on: May 06, 2014, 10:54:15 AM »
It is a Safe Harbor Match. 

I think some people are missing the point. This is about how, when you work for a small company, the perception of you may change if you contribute the max when no one else does.

They should think "wow, what a badass!"

If they are using this to determine your raise....they would probably have other micro management/bad boss issues and you should get a job elsewhere.

Cheddar Stacker

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Re: 401k Participation
« Reply #10 on: May 06, 2014, 11:16:30 AM »
It is a Safe Harbor Match. 

I think some people are missing the point. This is about how, when you work for a small company, the perception of you may change if you contribute the max when no one else does.

Again, I work for/at a small company. The exact same size as yours in fact. I would be impressed if someone maxed out. As a matter of fact, I was shocked to learn that none of the non-highly compensated employees max out their 401K when I asked a few weeks ago - Posted About It Here. We have some seriously smart people here, and at least one that I know is an extreme saver, so I guess he's just saving elsewhere.

It boils down to this - you know your boss and we don't. The fact that you are asking this question leads me to believe he/she is the type of person that will have a different perception of you if you max out.

If you are that worried about this, have a conversation with the boss. Give them a reason why you are saving so much right now, even if it's not the 100% truth. Tell them you've seen elderly family members who ran out of money in retirement and you don't want that to happen to you. Tell them you hate the government and want to pay as little tax as possible. Tell them whatever it is you think they would want to hear in this situation that makes them think you are being smart, rather than "wow, she must be doing really well" so let's not give her a raise this year.

Good luck!

rugorak

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Re: 401k Participation
« Reply #11 on: May 06, 2014, 11:19:38 AM »
I think if that was the case the company could potentially have a discrimination case on their hand. They would be discriminating based on marital status.

Agreed with Cheddar that if you really love it there and are worried just talk to your boss. Even fib a bit and say you want to save as much as you can now so down the road if you start a family you can not have to worry about retirement as much. And I also agree that any good boss should think you are just being smart and that smart people like you probably are worth keeping around.

BuzzardsBay

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Re: 401k Participation
« Reply #12 on: May 06, 2014, 12:25:59 PM »
I'm not worried about it at all.  I was just wondering if anyone else here has ever wondered about this or had any experience with anything like this happening.  And, whether or not they have, do they find themselves saving more privately because of it.  I know I'm a very private person and don't discuss finances with anyone at work. 

Wow.  I'm really surprised at how many people's first responses are to get another job or take legal action.  This turned out to be really interesting.

hoodedfalcon

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Re: 401k Participation
« Reply #13 on: May 06, 2014, 12:50:38 PM »
I am also surprised... BuzzardsBay, I am with you. I have concerns about maxing out my 403b (not that I won't do it) and whether it will impact the amount of my yearly raise. I understand that it shouldn't, etc....but when you work for a small office, a small non-profit in my case, it certainly stands out, especially when you are contributing more than the people making 40K more than you....

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Re: 401k Participation
« Reply #14 on: May 06, 2014, 01:00:51 PM »
I own a small company, have in place a safe harbour plan and I know what everybody puts in. Bottom line for whatever reason they get a raise or make more money I look at the ones that dont contribute as idiots and the ones that put more in as doing the right thing. If your boss is smart enough to run a profitable business I am sure he is smart enough to realize if you can contribute more despite your need for a raise he is looking at you as a intelligent person more than anything.

Cheddar Stacker

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Re: 401k Participation
« Reply #15 on: May 06, 2014, 01:11:32 PM »
I'm not worried about it at all.  I was just wondering if anyone else here has ever wondered about this or had any experience with anything like this happening.  And, whether or not they have, do they find themselves saving more privately because of it.  I know I'm a very private person and don't discuss finances with anyone at work

Wow.  I'm really surprised at how many people's first responses are to get another job or take legal action.  This turned out to be really interesting.

I guess the thing you have going for you is your boss already knows a lot about your finances, and vice versa. Hopefully that fact will allow you to do as you please.

I would not consider a new job or legal action, I would consider a slight change in your "state of mind". You are limiting yourself because of your perception of what you think someone else might think about you.

I am also surprised... BuzzardsBay, I am with you. I have concerns about maxing out my 403b (not that I won't do it) and whether it will impact the amount of my yearly raise. I understand that it shouldn't, etc....but when you work for a small office, a small non-profit in my case, it certainly stands out, especially when you are contributing more than the people making 40K more than you....

If we all do what everyone else does, we will never be able to retire. Buck the trend. Maybe you can start a new trend in your office and your boss will increase his/her contribution.


I mean no offense at all, so I'm sorry if I'm coming across as pushy in any way, but I'm just a little surprised members of this forum are this concerned about what others think about them. Are we really willing to drive 15 year old cars and buy our clothes at thrift shops, but we don't want our bosses to know we can "afford" maxing out retirement contributions? I see your point about this impacting future raises (although I don't think it should) since your bosses are in the unique position to control this, I just think you should care less about what others might think.

HAULIN3

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Re: 401k Participation
« Reply #16 on: May 06, 2014, 01:22:44 PM »
I have so totally wondered this too...  I asked about our insurance premiums for the new year, and said I needed to budget for them if they were going to increase.. My boss said "I dont think people budget anymore"  .... uh

I DO!!!

BUT, I do payroll for my employer and I know for a FACT neither my boss or his wife (the vice president) have asked or looked to see what people are contributing.. (That's a good thing) for the reasons you stated.

BuzzardsBay

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Re: 401k Participation
« Reply #17 on: May 06, 2014, 01:44:47 PM »
I wonder if my thoughts are clouded by the fact that I've always been single, own my own home, and have heard a lot of comments from people over the years about how I must have so much money because I don't have the expense of kids.  Or how I must have so much money because I don't have to put kids through college or buy them braces or whatever the person was dealing with.  I always tried to remind them that I am also a one income household but still have a mortgage, utilities, home and car insurance, etc.  Doesn't seem to make a difference though.  Of course, these are the same people who spend every cent they get and have to get their kid the latest IPad or IPhone and care about what kind of car they have parked in the driveway and how it compares to the neighbors.

Eric

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Re: 401k Participation
« Reply #18 on: May 06, 2014, 01:50:05 PM »
Since when do people get raises based on how much they need the money?

BuzzardsBay

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Re: 401k Participation
« Reply #19 on: May 06, 2014, 01:54:17 PM »
I agree.  But I guarantee you that if a guy has a wife, mortgage and three kids and does the same job as a single guy you will be able to find instances where the family man ends up making more.  Especially if he works for men who are married with a family.  There have been studies done that show it happens.

Eric

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Re: 401k Participation
« Reply #20 on: May 06, 2014, 01:55:45 PM »
I wonder if my thoughts are clouded by the fact that I've always been single, own my own home, and have heard a lot of comments from people over the years about how I must have so much money because I don't have the expense of kids.  Or how I must have so much money because I don't have to put kids through college or buy them braces or whatever the person was dealing with.  I always tried to remind them that I am also a one income household but still have a mortgage, utilities, home and car insurance, etc.  Doesn't seem to make a difference though.  Of course, these are the same people who spend every cent they get and have to get their kid the latest IPad or IPhone and care about what kind of car they have parked in the driveway and how it compares to the neighbors.

You should respond to this line of questioning with a joke, like, "Yeah, it's great not having kids.  You should get rid of yours ASAP." and not resort to actual discussion of your finances.  These people are just complaining about their lives.  They are not looking for a financial discussion.

Cheddar Stacker

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Re: 401k Participation
« Reply #21 on: May 06, 2014, 01:59:15 PM »
Since when do people get raises based on how much they need the money?

I'm one person on a committee who decides pay raises at my company and I agree with Eric completely. However, one of the other members brings up a certain employee every year stating how much she really needs the money due to x, y, and z. Every year I tell him we all have needs and this is not a reason for a raise, so her raise is always based on merit. If he had his way, he would give need based raises, but he's not a very logical person.

I agree.  But I guarantee you that if a guy has a wife, mortgage and three kids and does the same job as a single guy you will be able to find instances where the family man ends up making more.  Especially if he works for men who are married with a family.  There have been studies done that show it happens.

Agreed. I'm sure it happens, but if it's out of someone's circle of control it shouldn't affect their decisions IMO. On the flip side, sometimes the single guy will make more and advance quicker due to his availability to give the company more of his energy/efforts/overtime/networking/etc.

hoodedfalcon

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Re: 401k Participation
« Reply #22 on: May 06, 2014, 02:00:57 PM »
I am also surprised... BuzzardsBay, I am with you. I have concerns about maxing out my 403b (not that I won't do it) and whether it will impact the amount of my yearly raise. I understand that it shouldn't, etc....but when you work for a small office, a small non-profit in my case, it certainly stands out, especially when you are contributing more than the people making 40K more than you....

If we all do what everyone else does, we will never be able to retire. Buck the trend. Maybe you can start a new trend in your office and your boss will increase his/her contribution.


I mean no offense at all, so I'm sorry if I'm coming across as pushy in any way, but I'm just a little surprised members of this forum are this concerned about what others think about them. Are we really willing to drive 15 year old cars and buy our clothes at thrift shops, but we don't want our bosses to know we can "afford" maxing out retirement contributions? I see your point about this impacting future raises (although I don't think it should) since your bosses are in the unique position to control this, I just think you should care less about what others might think.

Obviously I have bucked the trend! And my office manager (who does our payroll) has increased her contributions after I increased mine, so I guess I have started a trend! But it's not really about what other people thing of me exactly...it whether they think this means I don't need the money. And yes, some employers do pay people based on who needs the money (and many many other factors). Not everyone works for a robot. Folks are influenced by a variety of factors, and I will never know exactly what factors my boss considers when considering folks for a raise. I don't think my contributions have influenced her decision, but I don't know that they haven't, or won't in the future....Just saying...

Cheddar Stacker

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Re: 401k Participation
« Reply #23 on: May 06, 2014, 02:05:56 PM »
Obviously I have bucked the trend! And my office manager (who does our payroll) has increased her contributions after I increased mine, so I guess I have started a trend! But it's not really about what other people thing of me exactly...it whether they think this means I don't need the money. And yes, some employers do pay people based on who needs the money (and many many other factors). Not everyone works for a robot. Folks are influenced by a variety of factors, and I will never know exactly what factors my boss considers when considering folks for a raise. I don't think my contributions have influenced her decision, but I don't know that they haven't, or won't in the future....Just saying...

Understood. Good on you for starting a trend.

BuzzardsBay

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Re: 401k Participation
« Reply #24 on: May 06, 2014, 02:12:30 PM »
"Not everyone works for a robot. Folks are influenced by a variety of factors, and I will never know exactly what factors my boss considers when considering folks for a raise. I don't think my contributions have influenced her decision, but I don't know that they haven't, or won't in the future....Just saying..."

hoodedfalcon you are so right!  I couldn't have said it better.

And Eric, I love what you said about telling people it's great not having kids and they should get rid of theirs.  I'm definitely going to do that next time!

payitoff

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Re: 401k Participation
« Reply #25 on: May 06, 2014, 02:43:46 PM »
Cheddar Stacker,

Do you think it will raise a flag if you see an employee contributing 20%? i am in the administrative too, not executive level.

Cheddar Stacker

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Re: 401k Participation
« Reply #26 on: May 06, 2014, 02:56:07 PM »
Cheddar Stacker,

Do you think it will raise a flag if you see an employee contributing 20%? i am in the administrative too, not executive level.

Not for me. We don't get individual employee contribution info unless specifically requested. Our office manager maintains the info but I never see it.

If I was aware of someone maxing out, I would offer an additional safe harbor contribution to them in lieu of wages allowing them greater tax deferral (I mentioned this in the link above). That would be the only "flag" it would raise for me.

payitoff

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Re: 401k Participation
« Reply #27 on: May 06, 2014, 03:12:41 PM »
Cheddar Stacker,

Do you think it will raise a flag if you see an employee contributing 20%? i am in the administrative too, not executive level.

Not for me. We don't get individual employee contribution info unless specifically requested. Our office manager maintains the info but I never see it.

If I was aware of someone maxing out, I would offer an additional safe harbor contribution to them in lieu of wages allowing them greater tax deferral (I mentioned this in the link above). That would be the only "flag" it would raise for me.

good to know. thanks!

Cheddar Stacker

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Re: 401k Participation
« Reply #28 on: May 06, 2014, 03:35:10 PM »
Cheddar Stacker,

Do you think it will raise a flag if you see an employee contributing 20%? i am in the administrative too, not executive level.

Not for me. We don't get individual employee contribution info unless specifically requested. Our office manager maintains the info but I never see it.

If I was aware of someone maxing out, I would offer an additional safe harbor contribution to them in lieu of wages allowing them greater tax deferral (I mentioned this in the link above). That would be the only "flag" it would raise for me.

good to know. thanks!

My wife works for a large employer, so they would never notice and it would never affect her pay. We decided should would contribute the maximum allowed (75%) of her small salary to reduce our taxes as much as possible. She only works about 1 day/week.

teen persuasion

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Re: 401k Participation
« Reply #29 on: May 06, 2014, 07:51:41 PM »
DH is contributing 52% of his pay to max his 401k (yeah, he isn't paid very much).  I've wondered what his superiors think about that, and how many others max theirs.  When DH recently got a notice that he had to remove some from his 401k due to a complication in plan year, he got the distinct impression from the CFO that he was the only employee maxing!  I did some research about the issue, since DH had not gone over the annual limit, and contacted the CFO with the details.  He dropped the request.

HR definitely was not up to speed on details in the first year he maxed - they thought that DH would have to be the one to stop contributions at the correct amount, while the CFO correctly told him that the payroll company would handle it automatically.

I can't decide if they love DH (for boosting participation numbers), or hate him for triggering edge conditions.

iwasjustwondering

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Re: 401k Participation
« Reply #30 on: May 06, 2014, 08:41:10 PM »
I'm a boss. I sit in on all the 401k meetings for our office (20 employees). We receive a lot of data about contribution rates, but it's not employee specific. The data is stuff like:

- Average contribution rate for highly compensated employees = 15%
- Average contribution rate for non-highly compensated employees = 7%
- Average contribution rate for employees age 30-40 = 9%
- Average contribution rate for employees age 40-50 = 12%

If I wanted the data I'm sure I could obtain it, but I don't want it. I would never decide a raise based on my perception of whether or not an employee needs it, my decision would always be based on merit. However, I'm a reasonable person, and a frequent reader of this website so I might not be your 'average' boss.

Another point - your boss might directly benefit from you contributing more. If the match is not a 'safe harbor' match, your boss and any other highly compensated employees have limited contribution rates. As a rough example - If the average contribution rate is 5%, they can likely only contribute 8%. When you bring up the average by contributing 15%, they can now contribute 9-10% of their own wage.

How highly compensated could the highly compensated employees be if they can contribute 15% without hitting the max tax-deductible 401K contribution?

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Re: 401k Participation
« Reply #31 on: May 06, 2014, 08:50:20 PM »
Although I'm sure I shouldn't, I notice employees that sock more away in their 403b and 457. That brings them up a notch as far as trusting them with increased financial responsibilities.  I can't imagine why I would use that against them-particularly since I want people to be able to retire within a reasonable timeframe. It's the people who are terrible with money and burnt out that are a complete drain.

Cheddar Stacker

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Re: 401k Participation
« Reply #32 on: May 06, 2014, 09:03:29 PM »

How highly compensated could the highly compensated employees be if they can contribute 15% without hitting the max tax-deductible 401K contribution?

Those were not real #'s, just an example. The definition of HCE's is the social security wage base, so at least $117K. Others do max out, just not any non-HCE's.

Rural

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Re: 401k Participation
« Reply #33 on: May 07, 2014, 05:43:23 AM »
I'm maxing out, but it's not going to affect me one way or the other, because HR is entirely separate from my chain of command or anything that would affect raises. Those are merit-based, if they ever happen again. There's never been any raise given to anyone since I was first employed, so it's not a big concern of mine. But, working for a larger employer does mean there's significant separation between the two areas.

ZiziPB

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Re: 401k Participation
« Reply #34 on: May 07, 2014, 02:35:44 PM »
Quote
How highly compensated could the highly compensated employees be if they can contribute 15% without hitting the max tax-deductible 401K contribution?

I think the IRS definition is $115K for a highly compensated employee.  So not very high ;-)  People also sometimes contribute on after tax basis if their plans allow. 

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Re: 401k Participation
« Reply #35 on: May 07, 2014, 03:12:49 PM »
Quote
How highly compensated could the highly compensated employees be if they can contribute 15% without hitting the max tax-deductible 401K contribution?

I think the IRS definition is $115K for a highly compensated employee.  So not very high ;-)  People also sometimes contribute on after tax basis if their plans allow. 

Shit. That seems high to me. Always nice to hang around here and get a dose of reality. I was ecstatic to get a job that paid over $60K three years ago.

MissStache

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Re: 401k Participation
« Reply #36 on: May 08, 2014, 07:22:31 AM »
Quote
How highly compensated could the highly compensated employees be if they can contribute 15% without hitting the max tax-deductible 401K contribution?

I think the IRS definition is $115K for a highly compensated employee.  So not very high ;-)  People also sometimes contribute on after tax basis if their plans allow. 

Shit. That seems high to me. Always nice to hang around here and get a dose of reality. I was ecstatic to get a job that paid over $60K three years ago.

If you're still in Mississippi, 60K there is a LOT of money.  Not so much in other parts of the country (like where I live), though I'm still very happy to have my 53K/year job!