403b Maxing Problem

[spicykissa]

I have a nice, Mustachian problem that I'm hoping someone has a suggestion for.

I just opened my employer-sponsored 403b. It is through Prudential, and has a Vanguard index fund option. Yay! However, I can only contribute in percentages. Specifically, it says "Contributions from 1%-80% of your before-tax salary may be made to the [Employer] Voluntary 403(b) Plan. For [my site] and [other site], contribution rates may be made in whole percentages. For [yet another site, of which I am jealous], whole percentages or flat dollar may be selected."

I picked 25%, as that gets me close to maxing it out based on last year's total gross pay. However, I'm a nurse. I self-schedule shifts on a 4-week rolling basis, and am paid differentials for nights and weekends. There is often a lot of overtime available, depending on how many patients we have, how sick they are, etc, etc. A biweekly paycheck can range from $2100 at the low end (i.e. straight days) to $4000 at the very high ($1000 bonus + 4x overtime shifts, on weekend nights). Right now we're short-staffed, and I'm pulling in more money, but it's really variable.

How do I make sure I don't accidentally overfund it and owe tax penalties? Or underfund it and miss out on that sweet tax-free savings? Maxing my HSA was easy, because I just picked a dollar amount per paycheck that added up to $3350. There seems to be a 4 to 6 week lag when making any changes through the Prudential website that makes me nervous. I guess I can just check it often, but I'm trying to automate my savings, and not panic if the market goes down (I've never invested before!).

Should I ask about getting the rule changed? It looks like they offer flat dollar contributions at the other site. My employer is a very large hospital, not sure how feasible this is. It's a nice problem to have, and I imagine it doesn't come up very much, especially among non-salaried employees like me. How else can I optimize this?

[protostache]

Part of a plan administers job is making sure people don't overconfribute. I would check to make sure, but I believe they have to cut off contributions once you hit the limit.

[teen persuasion]

Part of a plan administers job is making sure people don't overconfribute. I would check to make sure, but I believe they have to cut off contributions once you hit the limit.

*If this is your only employer.  If you switched jobs mid-year, and contributed to more than one plan, your new employer has no way of knowing about the contributions to the other plan.  DH had to self-monitor his contributions to a new employer at year end last year.  He only had a percentage option, too, but had pretty quick response time for changes to allocation rate online.  I could change the % before the last paycheck to get it as close to max without going over.

[mrteacher]

I asked this same question to the head of the business office at my school. She said that there is an automatic cut-off.

Now, that's just my employer, perhaps, but you may have something like this, too - ask!

[cacaoheart]

I'm a new nurse at a hospital with a similar setup, a 403b where we contribute a % vs a set $ amount. I emailed the retirement planner for my hospital this morning and they wrote back saying they do monitor this and automatically stop deductions as needed.

If/when I get a 2nd job elsewhere I'll have have to be more mindful of contribution limits, but in the mean time it may be a nonissue.

[spicykissa]

Thanks, everyone! This is great. It makes sense they would cut it off, but I couldn't find anything in the plan documents about it. I will double check with the Prudential guy next time I'm at work during his office hours.

[slugsworth]

My employer had a percentage thing, and when I asked my HR person he just said "cross that out and type in the $ you want to contribute" . . .so there may be flexibility to update the form.

[Zoot Allures]

Yep...I usually hit $18k before the end of the year, and the contributions are automatically halted after that. And whatever's left over from the contribution that got me to the $18k mark just goes into my regular paycheck.