Author Topic: Pre tax and Roth limits for 2016  (Read 2459 times)

Tester

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Pre tax and Roth limits for 2016
« on: November 03, 2016, 10:16:29 PM »
I have the following question:

Vanguard says the following:

You've done it!
Because you're a strong saver, you've already contributed the maximum pre-tax and/or Roth amount to your plan this year. Visit this page again in January to make sure you're on track to hit the limit next year.

EMPLOYEE PRE-TAX DEFERRAL
$16,202.96
EMPLOYEE ROTH DEFERRAL
$3,079.56



I think I can still contribute to the pre tax 401k?

Please let me know how do I read this, as I am still confused about 401k, roth 401k, tIRA.....

seattlecyclone

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Re: Pre tax and Roth limits for 2016
« Reply #1 on: November 03, 2016, 10:33:17 PM »
Hmm...are those the amounts you've contributed this year? Unless you're over 50, they probably shouldn't be letting you contribute more than $18,000 total.

LeRainDrop

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Re: Pre tax and Roth limits for 2016
« Reply #2 on: November 03, 2016, 10:50:51 PM »
I'm assuming you're talking about your 401(k) and that those amounts are from contributions from 2016 alone.  For employees under age 50, the maximum annual contribution amount for the Traditional 401(k) and Roth 401(k) COMBINED is $18,000.

An IRA, which can also be of the Traditional or Roth varieties, is a completely separate type of retirement account.  You wouldn't contribute to your IRA through your employer.  Rather, you would open an IRA account with the broker of your choosing, such as Vanguard or Fidelity.  For 2016, if you're under age 50, the maximum amount you could contribute for tax year 2016, is $5,500.  You actually have through April 15, 2017, in order to make your 2016 IRA contributions.

Tester

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Re: Pre tax and Roth limits for 2016
« Reply #3 on: November 04, 2016, 10:30:57 PM »
Ok, then it means I did a mistake? :)

I mean, as I contributed to Roth I won't be able to max the pre tax 401k...
Not to mention that my employer is matching based on the pre tax part, not on the Roth part...
I had the impression that I can contribute 18,000 USD to pre tax 401(k) and some additional money to Roth 401(k)....
Well, I will put the contributions to 0 for the next two months to not have interesting things to do at tax time.
I am sad I will be missing the max pre tax contribution part.

In conclusion: should I stop contributing this year?

dunhamjr

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Re: Pre tax and Roth limits for 2016
« Reply #4 on: November 04, 2016, 11:32:13 PM »
It appears so, yes. I am not sure how though. If this is a 401k through an employer, I am very surprised that the company didn't stop pulling contributions for you at the IRS limit.

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use2betrix

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Re: Pre tax and Roth limits for 2016
« Reply #5 on: November 05, 2016, 05:23:48 AM »
Is that only if they are through employers?

My employer offers a 401k which I am near maxing out, but I also planned to max out the Roth for myself and my wife if we end up under the income limit.

LeRainDrop

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Re: Pre tax and Roth limits for 2016
« Reply #6 on: November 05, 2016, 07:54:11 AM »
It's possible that Vanguard did put a stop at exactly $18,000 of combined contributions.  That is exactly what my 401(k) holder, Charles Schwab, did at the time I hit my max each year.  It is conceivable that the dollar amounts Vanguard emailed to the OP are the current balances, as in, perhaps he contributed exactly $18,000 and the overage is actually growth and dividends earned over the course of the year.  I think this is the most likely explanation, but OP should call Vanguard to confirm.  Oh, also, the employer match is allowed to put you over the $18,000 -- that $18,000 cap is specifically for the employee's own contributions.

OP, you could still open an IRA with Vanguard and contribute your money to that, if you'd like.  This would not be done through payroll deduction, but would be that you get paid the money from your employer into your regular bank account and then you do an online deposit from there into your Vanguard IRA.
« Last Edit: November 05, 2016, 07:56:01 AM by LeRainDrop »

Tester

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Re: Pre tax and Roth limits for 2016
« Reply #7 on: November 05, 2016, 05:54:56 PM »
Thank you.
I think I can't do the tIRA as I am over the limit...

Well, lesson learned, next year I will go for only pre tax for the beginning and read more to finally understand how these things work :).