Author Topic: Can I max out my 403b/401k when leaving my job half way through the year?  (Read 5101 times)

webguy

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My wife is leaving her job at the end of this month to do some volunteer work instead. We've been contributing the max to her 403b each month ($17.5k/12) and so have only contributed about $7.5k for the year so far. So my questions are:

1) Is it possible for us to make a lump sum contribution of 10k to her 403b before she leaves to bring it up to the 17.5k limit for the year?
2) If so, then as this contribution would be from after-tax money (our savings) instead of a payroll deduction then I'm guessing that lump-sum is tax-deductible at the end of the year?

MDM

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It appears not: "Generally, only your employer can make contributions to your 403(b) account. However, some plans will allow you to make after-tax contributions (defined below)."  See http://www.irs.gov/publications/p571/ch01.html#en_US_2014_publink1000239623 for more details.

If the payroll department hasn't processed your wife's final check, however, she might be able to have them put as much as possible from that final check into the 403b.  Seems worth a call to find out....

seattlecyclone

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There's no law that says you can't contribute more than $17.5k/12 in a month. There's no reason you can't hit the annual limit in your first paycheck if your salary is high enough. Unfortunately there's no way to contribute outside money to the plan; the best you can do at this point is to increase your wife's contributions out of her last paycheck(s) to the point where she will get basically no pay after taxes and 403(b) contributions are taken out.

webguy

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Thanks for the replies guys. Had we known she would be leaving her job this month much earlier then we would have been able to take your advice and increase the contributions. As it stands, she only has one paycheck remaining and so it isn't really worth adjusting her contribution now as her paychecks are pretty low anyway.

Not the end of the world, just thought it would be neat if we could max it out for the year. Thanks again for both of your replies!

kite

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I've always had the max withheld to fund 401k and HSA from the first checks of the year.   Whatever happens later, I like knowing I won't miss out on getting the contributions made.  After those, I fund my Roth.  I'm taking"pay yourself first" to the extreme.

oldtoyota

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I've always had the max withheld to fund 401k and HSA from the first checks of the year.   Whatever happens later, I like knowing I won't miss out on getting the contributions made.  After those, I fund my Roth.  I'm taking"pay yourself first" to the extreme.

That works if your company doesn't have matching. My company matches bit by bit and told me I would not get the full amount from them if I did it that way.

kite

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I've always had the max withheld to fund 401k and HSA from the first checks of the year.   Whatever happens later, I like knowing I won't miss out on getting the contributions made.  After those, I fund my Roth.  I'm taking"pay yourself first" to the extreme.

That works if your company doesn't have matching. My company matches bit by bit and told me I would not get the full amount from them if I did it that way.

My company match is added in the following year as a lump sum.  So it doesn't matter one way or the other. 

oldtoyota

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I've always had the max withheld to fund 401k and HSA from the first checks of the year.   Whatever happens later, I like knowing I won't miss out on getting the contributions made.  After those, I fund my Roth.  I'm taking"pay yourself first" to the extreme.

That works if your company doesn't have matching. My company matches bit by bit and told me I would not get the full amount from them if I did it that way.

My company match is added in the following year as a lump sum.  So it doesn't matter one way or the other.

That is pretty cool. I've never worked for a company that did that.