The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Cervelo123 on November 23, 2014, 11:14:57 AM
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I was reading my benefits information again and just realized that my employer not only matches pre-tax contributions, but ALSO post tax spillover contributions. They contribute $2 for my $1, up to 3% of base pay - for both pre AND post tax. I already max out my 401K yearly pre tax contribution, but now I'm considering upping my contribution so I at least get their matching dollars for the 3% post tax.
I currently dump all my contributions into the Vanguard VTSAX option they provide us, and all my contributions are immediately vested.
I also already max out my yearly ROTH contribution as well into VTSAX.
3% Post tax, I would be looking at ~$208/monthly contribution and then my employer kicking in another ~$416/month.
Is this a wise move to add the post tax contribution so I get the employer 3% match? Is it as straight forward as I think it is?
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I was reading my benefits information again and just realized that my employer not only matches pre-tax contributions, but ALSO post tax spillover contributions. They contribute $2 for my $1, up to 3% of base pay - for both pre AND post tax. I already max out my 401K yearly pre tax contribution, but now I'm considering upping my contribution so I at least get their matching dollars for the 3% post tax.
I currently dump all my contributions into the Vanguard VTSAX option they provide us, and all my contributions are immediately vested.
I also already max out my yearly ROTH contribution as well into VTSAX.
3% Post tax, I would be looking at ~$208/monthly contribution and then my employer kicking in another ~$416/month.
Is this a wise move to add the post tax contribution so I get the employer 3% match? Is it as straight forward as I think it is?
Do they really match 3% of after-tax contributions IN ADDITION to 3% of pre-tax? And if so, why are you even asking if it's a wise move? Of course it is! Free money is free money.
I just keep feeling like they mean they match 3% of one or the other, not both. But obviously you have the benefits information in front of you, I don't :)
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You may be misreading the matching info. My employer also matches both pre-tax and post-tax contributions but the overall match limit applies. My match is dollar for dollar up to 6%. So in my case, I get the match equal to 6% of my base (salary plus bonus) each pay period as long as I contribute at least 6% of my own salary (on a pre- or post-tax basis) during that pay period. In my case I reached the IRS max of $17,500 a while ago but I continue to contribute on a post-tax basis through the end of the year. My employer continues the matching 6% contributions as long as I continue to contribute at least 6%.
I suspect your program works the same with the 3% limit being the aggregate annual cap.
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Agree with zizipb. Also note that even when the match applies to both Roth and traditional 401ks, the employer match goes into a traditional 401k fund, regardless. This is not well known.