Am I understanding this correctly? I just saw something about this in a very old forum post, and started doing research. If so, this is really neat way to get more money into tax advantaged accounts, assuming your 401k offers it.
There seems to be a way to put more than the $18k limit into your 401k annually, and still have it tax advantaged. I haven't figured out all the details yet. But for 2015, it would basically raise the limit from $18k (the 401k Elective Deferral Limit) to $53k (Annual Defined Contribution Limit).
The 401k Elective Deferral Limit is the amount individuals can directly put into their 401k tax advantaged (Traditional or Roth) account.
If you didn't know already, there are three types of IRA and therefore 401k accounts: Traditional, Roth, and something called post-tax or after-tax or nondeductible IRA. The Traditional and Roth are tax advantaged. The after-tax is not. If you put money into a after-tax you still pay taxes on any profits similar to a normal brokerage account. The one thing that's different is that you pay income taxes on the profits in a after-tax account, where as you pay taxes on dividends and capital gains. Usually income taxes are higher, so typically after-tax accounts are ignored, and rarely discussed except for backdoor Roth IRA's. Also beware, a lot of people use Roth and after-tax interchangeably, so make sure they distinguish between the two.
The Annual Defined Contribution Limit is the sum of your 401k tax advantage contributions, plus employer match, plus anything you put in the after-tax account.
The cool thing about the after-tax account (either IRA or 401k) is that the contributions can be rolled over into a Roth IRA, and any profits can be rolled into a Traditional IRA. The problem was, up until September, if you had multiple sources (roth, traditional, after-tax contributions, after-tax interest), it got really complicated on how you do this. And actually for IRA to IRA, it is still complicated. But for 401k after-tax to Roth and Traditional IRA, they made it relatively simple.
So this year, you could theoretically put $18k into your Traditional/Roth 401k, get your company match, say $2k for this purpose, then put the rest, up to $33k into an after-tax 401k. And then convert the $33k into a Roth IRA and any profits from the $33k into a Traditional IRA.
First thing is not all companies offer this, but my company does. The other thing is that you can actually do the conversion before you quit, if your company offers in-service distributions. And this is nice, if you quickly convert, it will allow all the interest to be tax free.
So basically, the $18k limit is only a suggestion, as long as you don't mind putting the rest into a Roth. I'm going to keep digging and make sure this is all accurate, but from what I've found, it is.
Sources:
http://fairmark.com/retirement/roth-accounts/roth-conversions/isolating-basis-for-roth-conversion/http://fairmark.com/retirement/roth-accounts/roth-conversions/isolating-basis-for-roth-conversion/using-new-basis-isolation-rules/http://www.forbes.com/sites/ashleaebeling/2014/10/15/aftertax-401k-rollovers-advanced-version/