Author Topic: Dumb question regarding exceeding pre-tax 401k limit  (Read 1323 times)

ardrum

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Dumb question regarding exceeding pre-tax 401k limit
« on: January 18, 2018, 05:22:24 PM »
My 401k is at Merrill Lynch, and the contribution rates are such that you must choose a round percentage point (22%, 23%, etc.).

If I wanted to max out my 401k, and 25% put me slightly below the $18.5k limit while 26% put me over the limit, can I still use 26%?  Is the excess invested like the rest but simply won't be taken out pre-tax?  Are there any other limits I should be concerned about?  My goal is simply to get the full pre-tax limit so that my excess savings can go toward student loans, so I'd probably only end up $50 over the limit or something.
« Last Edit: January 18, 2018, 05:23:58 PM by ardrum »

Heywood57

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Re: Dumb question regarding exceeding pre-tax 401k limit
« Reply #1 on: January 18, 2018, 05:34:11 PM »
Most payroll systems stop contributions when you hit the $ max

If you change jobs part way thru the year the new employer
can be informed of year to date contributions at the old employer so
they can cap contributions at the $ max

ixtap

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Re: Dumb question regarding exceeding pre-tax 401k limit
« Reply #2 on: January 18, 2018, 10:34:47 PM »
It really depends on your payroll administrator. Sometimes contributions stop at the pre-tax/Roth max, others put the excess into after tax. Some dont't stop, even though they don't offer after tax, which is where things get really sticky.

RaymondG

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Re: Dumb question regarding exceeding pre-tax 401k limit
« Reply #3 on: January 21, 2018, 09:29:33 PM »
I had contributed a little more than the pre-tax max one year in the 401k plan with my prior employer.  They were recorded as after-tax contribution.  When I left the prior company, I was allowed to rollover the *earning* of the after-tax contribution to my Roth IRA, and deposit the check of the after-tax contribution amount to my bank ( I could rollover it to Roth too).  I remember somewhere it was mentioned as a back door to contribute to Roth IRA when you are not eligible to contribute to it normally. But check your payroll administrator first.
« Last Edit: January 21, 2018, 09:31:29 PM by RaymondG »

alanB

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Re: Dumb question regarding exceeding pre-tax 401k limit
« Reply #4 on: January 22, 2018, 09:19:45 AM »
Where I work now, if you hit the limit they stop contributions for the year.  Unfortunately, this means that you stop getting the company match as well.  They will fix it, but not until much later, like the next year.

At my wife's job the excess goes post-tax and they still get the match.