Author Topic: Quick Question about 401ks  (Read 2072 times)

stlbrah

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Quick Question about 401ks
« on: October 29, 2015, 03:10:38 PM »
I always thought it worked this way:

You can put in up to 18k of your own money, and the percentage the company matches (3% in my case, + 5% profit sharing) is in addition to that 18k.

However, someone recently told me that the 18k is a limit for the combination of your contributions AND the employer's.

I am hoping that I was right, as my auto contributions added up to about 18k.

Thanks

zolotiyeruki

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Re: Quick Question about 401ks
« Reply #1 on: October 29, 2015, 03:34:14 PM »
The *combined* contribution is limited to $53k or 100% of your salary, whichever is less.  So if you're maxing out your contribution at $18k, your employer can contribute $35k before you (collectively) hit the limit.

seattlecyclone

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Re: Quick Question about 401ks
« Reply #2 on: October 29, 2015, 03:45:29 PM »
Yes, employer contributions are in addition to the $18k limit. If your plan allows it, you can go above and beyond the $18k and employer match to contribute traditional after-tax dollars up to a total of $53k from all sources.

nereo

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Re: Quick Question about 401ks
« Reply #3 on: October 29, 2015, 03:50:49 PM »
... adding one more thing.  The $53k total limit is correct.  However, only the first $18k of your contributions are tax-advantaged (i.e. they will reduce your AGI on your tax return).  The remainder are after-tax contributions, but you can conver those into a ROTH IRA later.

stlbrah

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Re: Quick Question about 401ks
« Reply #4 on: October 29, 2015, 03:54:10 PM »
Thanks so much!

AmandaS1989

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Re: Quick Question about 401ks
« Reply #5 on: October 30, 2015, 07:17:20 AM »
Can you have more than one 401k at a time? I have a 401k through work where I contribute 4% and my employer contributes 4% (that's as high as it goes) with Symetra. The investments available aren't very good and have high fees. So if I keep contributing up to the employer match, can I open another 401k with maybe Vanguard once I get the minimum saved up? Or is there some rule against having two 40lks you're actively contributing to at the same time?

seattlecyclone

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Re: Quick Question about 401ks
« Reply #6 on: October 30, 2015, 09:57:04 AM »
Can you have more than one 401k at a time? I have a 401k through work where I contribute 4% and my employer contributes 4% (that's as high as it goes) with Symetra. The investments available aren't very good and have high fees. So if I keep contributing up to the employer match, can I open another 401k with maybe Vanguard once I get the minimum saved up? Or is there some rule against having two 40lks you're actively contributing to at the same time?

You can have as many active 401(k) accounts as you want. The $18k number limits the sum total of pre-tax and Roth contributions you can make across all 401(k), 403(b), and some other account types. However the $53k number is per plan. So if there's employer matching up to a point at both of your jobs, you can split your $18k across both accounts to maximize your match, and you can also make after-tax contributions to both accounts up to $53k each if the plans allow that type of contribution.

terran

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Re: Quick Question about 401ks
« Reply #7 on: October 30, 2015, 11:40:21 AM »
Can you have more than one 401k at a time? I have a 401k through work where I contribute 4% and my employer contributes 4% (that's as high as it goes) with Symetra. The investments available aren't very good and have high fees. So if I keep contributing up to the employer match, can I open another 401k with maybe Vanguard once I get the minimum saved up? Or is there some rule against having two 40lks you're actively contributing to at the same time?

You can have as many active 401(k) accounts as you want. The $18k number limits the sum total of pre-tax and Roth contributions you can make across all 401(k), 403(b), and some other account types. However the $53k number is per plan. So if there's employer matching up to a point at both of your jobs, you can split your $18k across both accounts to maximize your match, and you can also make after-tax contributions to both accounts up to $53k each if the plans allow that type of contribution.

The caveat to this being that 401k's are employer sponsored accounts and you can only contribute up to 100% of your compensation from that employer. So if you have another job that offers a 401k you can contribute to that or if you have self employed income you can open a solo 401k.