Author Topic: 401k question  (Read 7555 times)

greenmimama

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401k question
« on: September 12, 2014, 08:58:59 AM »
Is the $17,500 to total that we can contribute, can the match from the company go over that, or does the total need to be no more than $17.5k?

I am trying to figure it out so we get our max in there and I'm trying to get it as close as possible while guessing how much more my DH will make this year, he is on 100% commission.

Any help would be appreciated, thanks

Jellyfish

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Re: 401k question
« Reply #1 on: September 12, 2014, 09:01:09 AM »
The $17,500 is your individual contribution. The employer match can be on top of it. If you are age 50 and over you can also contribute an additional $5,500 "catch up" contribution on top of the $17,500.

greenmimama

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Re: 401k question
« Reply #2 on: September 12, 2014, 09:05:40 AM »
Thank you, wow, that means we could contribute a ton more, not sure if we can actually afford to fill it up, if it continues on the same path at the end of this year our contribution should be $8,226.

But he will also be paid a bonus, I think he is in line for meeting those goals and getting a bonus, last years bonus was about $17k, it came out to exactly 10k after taxes and everything was taken out. so that is a large chunk.

Anyone have any suggestions for what to up it to?

I am looking to max it out this year, we may be looking at a major job change within a year. Meaning probably self employed with a much smaller income, so we might not be able to contribute much to retirement while we ramp up a new business.

Cheddar Stacker

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Re: 401k question
« Reply #3 on: September 12, 2014, 09:13:50 AM »
If you don't have plans for the bonus and it will be paid in 2014 you can just use that to top it off.

Jellyfish

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Re: 401k question
« Reply #4 on: September 12, 2014, 10:03:50 AM »
Agree with Cheddar Stacker, if you don't have the bonus earmarked for other purposes it might be a great way to fund the 401(k).  Find out if his employer will let him tweak his 401(k) contributions and how much time it takes to do that.  At my employer I can simply go online and do it, and it will be effective the next pay cycle.  Assuming it's easy for your DH, you could up the 401K contribution percentage dramatically right before the bonus payout.

greenmimama

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Re: 401k question
« Reply #5 on: September 12, 2014, 11:12:54 AM »
No specific plans for the bonus except FU money, so we could certainly do that, thanks for the idea.

retired?

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Re: 401k question
« Reply #6 on: September 12, 2014, 11:47:36 AM »
There is an actual limit on total contributions.  At my old firm, one could keep contributing beyond the 17.5 limit and the employer continued to match.  But, the contributions above 17.5 were classified as after-tax and the match was put into an "excess compensation" account.

That said, I think the limit for total contributions is around 52-53k (yours plus match).  Cannot recall the name of this limit.

Jellyfish

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Re: 401k question
« Reply #7 on: September 12, 2014, 12:17:13 PM »
Yes, there is a combined contribution limit of $52,000 for the employer and employee contributions in 2014.  Unless your employer match is crazy crazy good, shouldn't be an issue for most people.


greenmimama

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Re: 401k question
« Reply #8 on: September 12, 2014, 01:43:53 PM »
Yes, there is a combined contribution limit of $52,000 for the employer and employee contributions in 2014.  Unless your employer match is crazy crazy good, shouldn't be an issue for most people.

Well we do have a nice match, I'm not sure of the exact numbers, because it's a full match up to a certain point and then they match a % up to another point, but right now we have contributed $5,545 and their match has been $4,454  so a pretty great match, not enough to get to $52k though :)

greenmimama

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Re: 401k question
« Reply #9 on: October 23, 2014, 08:46:02 AM »
Update, he did hit his bonus and I talked to his HR, we can up our % of contributions to 48% then we should hit the max of $17,500

I think that number is pretty funny, but I'm glad we can do this, thanks for all your advice.

We have some savings built up if we need it, since we aren't at a savings rate yet like most of you ;) We'll get there.


Cheddar Stacker

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Re: 401k question
« Reply #10 on: October 23, 2014, 09:03:30 AM »
Congrats! You just saved a bunch of money in taxes as well.

The $17,500 limit was set a long time ago and is adjusted for inflation. It used to be much lower, and it will continue to go up. I'd like it to be $52K just like the limit on self employed plans, but I don't make the rules unfortunately.

greenmimama

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Re: 401k question
« Reply #11 on: October 23, 2014, 12:11:01 PM »
Congrats! You just saved a bunch of money in taxes as well.

The $17,500 limit was set a long time ago and is adjusted for inflation. It used to be much lower, and it will continue to go up. I'd like it to be $52K just like the limit on self employed plans, but I don't make the rules unfortunately.

That would be so cool!

greenmimama

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Re: 401k question
« Reply #12 on: December 09, 2014, 12:40:52 PM »
We hit it, maxed out, thanks for your help!

pzxc

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Re: 401k question
« Reply #13 on: December 09, 2014, 01:01:33 PM »
The $17,500 limit was set a long time ago and is adjusted for inflation. It used to be much lower, and it will continue to go up.

FYI, they already announced that for 2015 the limit will be $18,000.

Cheddar Stacker

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Re: 401k question
« Reply #14 on: December 09, 2014, 02:03:30 PM »
We hit it, maxed out, thanks for your help!

Woot! Those big wins are the best.

The $17,500 limit was set a long time ago and is adjusted for inflation. It used to be much lower, and it will continue to go up.

FYI, they already announced that for 2015 the limit will be $18,000.

Very true. More on discussion that here and here. Funny enough, both of those threads were started about 2 hours after the post you quoted above. And just like most threads around here, eventually someone hijacked it and turned it into a politically driven rant about congress and government crap. Oh well, there's still some good discussion in there anyway.

G-dog

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Re: 401k question
« Reply #15 on: December 09, 2014, 05:04:19 PM »
Depending on how you structure your self-employment, you could still contrinpbute to an account as both employer and employee. This was mentioned on another thread by someone who had the option to move out as a contractor for his/her current employer.
Maybe someone else more knowledgable can provide the details to help you on this option.

greenmimama

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Re: 401k question
« Reply #16 on: December 09, 2014, 07:46:13 PM »
The $17,500 limit was set a long time ago and is adjusted for inflation. It used to be much lower, and it will continue to go up.

FYI, they already announced that for 2015 the limit will be $18,000.

Nice, I guess every little bit helps