Author Topic: 401k's  (Read 2814 times)

gobius

  • Stubble
  • **
  • Posts: 167
401k's
« on: July 18, 2014, 08:14:25 PM »
Please forgive me if this has been asked before:

I am going to max out my 401k this year at $17,500.  My wife likely won't be able to.  We will be "married filing jointly" on our taxes.  Can I put in more than $17,500 if she isn't able to?  For example, if she can only put in $10K, can I put in $25K?  When I read about it on the IRS website it doesn't specify being able to do this, so I'm assuming not.  If I can, I will keep putting in extra contributions.  If I can't I'll back it down.

Also, my parents are 53 and 60.  One of them is old enough to withdraw without penalty but the other isn't.  If they put in the max combined (I believe $23K/person or so if over 50), can the 60-year old withdraw all of it without penalty?  For example, if the 53-year-old has $50K in his/her 401k account and they want to get it, can they withdraw it under the 60-year-old's name without penalty?  I'm not familiar with it; I told them to talk to a professional about it but was curious myself.  I know there are other options such as the Roth pipeline but was curious about this particular scenario.

clarkm04

  • Stubble
  • **
  • Posts: 182
Re: 401k's
« Reply #1 on: July 18, 2014, 08:21:41 PM »
Simple answer, no.

17,500 is the cap under 50 years old.

Jags4186

  • Pencil Stache
  • ****
  • Posts: 595
Re: 401k's
« Reply #2 on: July 18, 2014, 08:25:20 PM »
Please forgive me if this has been asked before:

I am going to max out my 401k this year at $17,500.  My wife likely won't be able to.  We will be "married filing jointly" on our taxes.  Can I put in more than $17,500 if she isn't able to?  For example, if she can only put in $10K, can I put in $25K?  When I read about it on the IRS website it doesn't specify being able to do this, so I'm assuming not.  If I can, I will keep putting in extra contributions.  If I can't I'll back it down.

Also, my parents are 53 and 60.  One of them is old enough to withdraw without penalty but the other isn't.  If they put in the max combined (I believe $23K/person or so if over 50), can the 60-year old withdraw all of it without penalty?  For example, if the 53-year-old has $50K in his/her 401k account and they want to get it, can they withdraw it under the 60-year-old's name without penalty?  I'm not familiar with it; I told them to talk to a professional about it but was curious myself.  I know there are other options such as the Roth pipeline but was curious about this particular scenario.

Q1:  17.5k per account/not 35k per couple.  Is there a reason your wife can't contribute the 17.5k?  Does her employer restrict the % she can contribute?  I can theoretically contribute 100% of my paycheck to my 401k until 17.5k is achieved.

Q2:  IRA's and 401ks can only be in 1 person's name...they aren't like checking accounts where you can have two people on the account.  Your 60yo parent won't be able to withdraw from the 53yo's parents account to avoid penalty.  Even if he could, you'd be paying taxes on that entire sum at once vs taking out what you need.

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 3190
  • Age: 82
  • Location: The laboratory
  • Ghouls Just Wanna Have Funds!
Re: 401k's
« Reply #3 on: July 18, 2014, 08:26:25 PM »
Short answer to both - no.

401Ks and IRAs and most other investment accounts are individually owned. Even if you are a married couple, each person owns their accounts solely and can't be accessed for any purpose to count for someone else's use. So you would not be able to put in more than the $17,500 of your own contributions unless you were over the age of 50; your wife's account has nothing to do at all with yours. If you did somehow put in more (like your HR department wasn't on the ball and cut off your contributions once you maxed it and let the contributions continue) you'd have to take the money back out before the next year or count it on your taxes: http://www.401khelpcenter.com/faq/faq_27.html#.U8nXEKhFw0w

Same basic thing with your parents. The parent that is younger would not be able to withdraw from their spouse's account; it would be seen as a withdrawal by the account holder as far as the IRS is concerned.

MikeBear

  • Bristles
  • ***
  • Posts: 390
  • Age: 61
  • Location: Michigan
Re: 401k's
« Reply #4 on: July 18, 2014, 08:59:48 PM »
If your wife needs to spend enough of her paycheck (for bills or whatever) so she can't contribute more to her 401k, why not simply have her put more into the 401k from her paycheck to the $17.5k limit, and YOU give her the money to pay her bills?

That will accomplish the same thing, and is doable if something of that sort is the reason you feel she can't put more in the 401k.

gobius

  • Stubble
  • **
  • Posts: 167
Re: 401k's
« Reply #5 on: July 18, 2014, 09:48:59 PM »
Thanks everyone for your responses.

I've considered taking a larger portion of the bills so she can put more into the 401k.  One thing we need to look at is her contribution limit.  Mine is 50%, and since she hasn't put a lot in this year, if she could put in 50% she wouldn't make it to $17,500.  In fact it would probably take 100% to get her there.  But then again, the more she puts in, the better, even if it doesn't reach $17,500.  I may just go that route.

I also procrastinated looking at her 401k until this week, so admittedly it is our own fault.  I have mine through Vanguard and hers isn't, so I was assuming she didn't have as many Vanguard funds.  Turns out she gets some Vanguard funds I don't and vice versa.  I thought hers would have higher costs so I figured I could put more in mine to keep our overall costs down, but found out that wasn't true.

Thanks for the responses on my parents as well.  I suspected the truth and told my parents that was the most likely but to ask a professional.