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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: bbqbonelesswing on August 06, 2020, 10:14:23 AM

Title: Custom Employer 401k Contribution
Post by: bbqbonelesswing on August 06, 2020, 10:14:23 AM
Has anyone negotiated a custom 401k contribution?

I already contribute the individual max ($19,500), but realized today that I am still far below the combined employer and employee contribution limit ($57,000).

My employer has a standard contribution for all employees (3%). If I had the option, I think it would make sense to adjust my compensation to receive less base salary and have more put into my 401k. For instance, take a $10k pay cut with the understanding that money will be contributed to my retirement account throughout the year instead.

Is this possible? Anything to consider or watch out for?
Title: Re: Custom Employer 401k Contribution
Post by: ixtap on August 06, 2020, 10:25:00 AM
Unfeasible in most plans, due to fairness testing.

Does your plan offer after tax contributions? These can be converted to Roth (search mega backdoor Roth, if you are interested).

Title: Re: Custom Employer 401k Contribution
Post by: bbqbonelesswing on August 06, 2020, 01:57:21 PM
Unfeasible in most plans, due to fairness testing.

Does your plan offer after tax contributions? These can be converted to Roth (search mega backdoor Roth, if you are interested).

Thanks, I'll look into this. I've never heard of fairness testing. Learn something new every day :)
Title: Re: Custom Employer 401k Contribution
Post by: MissPeach on August 07, 2020, 02:13:38 PM
401Ks are usually governed by plan documents which apply to the whole group so you probably can't unless they're willing to amend the plan for everyone. It's worth talking to your benefits people though. Some employers will add in after tax contributions, a roth 401K option, etc. if they know there's interest.