Author Topic: Employer Won't Let Me Put $17.5K Into 401K?  (Read 11184 times)

oldtoyota

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Employer Won't Let Me Put $17.5K Into 401K?
« on: June 06, 2013, 01:24:23 PM »
How is the above even legal?

The company that manages the system where we can change 401K contributions only allows users to enter a percentage. I put in percentage X and come in UNDER $17.5K. If I put in one more percent, I come in HIGHER than $17.5K, which I am not allowed to do.

I called and the rep said they only accept percentages and not a dollar figure. As a result, I can't put in the full amount that I am allowed to put in.

Urgh.


mpbaker22

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #1 on: June 06, 2013, 01:32:12 PM »
How is the above even legal?

The company that manages the system where we can change 401K contributions only allows users to enter a percentage. I put in percentage X and come in UNDER $17.5K. If I put in one more percent, I come in HIGHER than $17.5K, which I am not allowed to do.

I called and the rep said they only accept percentages and not a dollar figure. As a result, I can't put in the full amount that I am allowed to put in.

Urgh.

Seems like a silly issue, but how much could you be off by?  A few hundred?

My employer only lets you contribute up to 25%, so you have to make $68K+ to max it out.  I don't even have the chance to put the full 17K in.

PathtoFIRE

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #2 on: June 06, 2013, 01:34:58 PM »
Are you sure you are not allowed to put in a higher percent? My employer also only allows me to enter a percent per paycheck, and once I hit the limit (17k last year) around my 25th paycheck, it automatically stops contributing for the last paycheck.

zinnie

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #3 on: June 06, 2013, 01:36:59 PM »
My plan lets you save a percentage that would result in contributing above the max, but they will only let you actually contribute $17,500. So, if my last paycheck of the year puts me over the amount it will only contribute exactly up to $17,500. Are you sure yours won't do that? If so, I'd just put in the higher percentage.

mpbaker22

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #4 on: June 06, 2013, 01:50:50 PM »
Quote
You may contribute up to 25% of your base pay. The Company matches 100% of 1st 4% and 50% of the next 4% of base pay you contribute with each paycheck.
That's directly from my plan.  I don't make enough to have 25% max me out.

Modified - Fixed Quote tag
« Last Edit: June 06, 2013, 02:03:27 PM by mpbaker22 »

ruthiegirl

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #5 on: June 06, 2013, 01:58:19 PM »
My husband's new job is the same way.  He had to use a whole number percentage and couldn't quite get the entire 17,500.  It irks me, too. 


Left

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #6 on: June 06, 2013, 02:00:46 PM »
The place I work for says the same thing about the %... but it lets me put in a dollar amount, so at a little under $800/paycheck (biweekly), I'll be able to max it out

matchewed

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #7 on: June 06, 2013, 02:10:59 PM »
Find out from your employer what happens if you over contribute.

oldtoyota

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #8 on: June 06, 2013, 02:17:44 PM »
Find out from your employer what happens if you over contribute.

It is more than a few hundred dollars difference. As we all know, even a few hundred is a lot when you look at the big picture long-term view. But, you know, if a few hundred were not a big deal, then--using that logic--I should be able to contribute a few hundred MORE and have it be no big deal.

Thanks all. To those who asked if my employer would shut it off at $17.5K, I will check. That would be great! The rep made it sound like no, but she might not have all the facts.

Joet

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #9 on: June 06, 2013, 02:21:34 PM »
not applicable here but if your employer fails the HCE (highly compensated employee) non-discrimination testing (laymens terms: not enough employees participate in your 401k) the HCE contributions will be limited, also

matchewed

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #10 on: June 06, 2013, 02:39:31 PM »
Find out from your employer what happens if you over contribute.

It is more than a few hundred dollars difference. As we all know, even a few hundred is a lot when you look at the big picture long-term view. But, you know, if a few hundred were not a big deal, then--using that logic--I should be able to contribute a few hundred MORE and have it be no big deal.

Thanks all. To those who asked if my employer would shut it off at $17.5K, I will check. That would be great! The rep made it sound like no, but she might not have all the facts.

That's what I mean by find out what happens with an over contribution. Some employers cut it off at the correct amount. Some will send it on to the company the 401k is with and they send back the cash. There are different rules and they're all dependent on what your employer and the company hashed out.

smalllife

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #11 on: June 06, 2013, 03:39:16 PM »
Any payroll program worth its salt will stop at the limit.  I'm not sure why they prevent you from going over 15% though, that just seems silly and arbitrary to me.

oldtoyota

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #12 on: June 07, 2013, 07:06:39 AM »
Thanks!

As I figured, I contacted them again and, this time, got a rep who knew what they were talking about.

Based on the response below, I'll increase the percentage at the end of the year to aim for the $17,500. By then, I will have all of the match.

Here is what they said:

...When your contributions reach $17,500 your contributions would be suspended. Please keep in mind that the sooner you reach that limit the sooner you stop receiving the 4PERCENT match. You will want to figure out which percentage will get you to the limit but take the longest amount of time so that you can maximize the company match.

« Last Edit: June 07, 2013, 07:17:47 AM by oldtoyota »

mpbaker22

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #13 on: June 07, 2013, 10:00:56 AM »
Does anyone else have the problem where they cut you off at a certain percent?  I did go in and try to contribute 26% yesterday just to see what it would do, and it definitely prevents that high of a contribution.  It does seem silly that they wouldn't even leave it as an option, but I wasn't going to contribute that much anyway, at least for now, so I'm ok with it.

I do get a total 9% match, so I won't complain too much.

TheDude

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #14 on: June 07, 2013, 10:11:54 AM »
That sucks but at least you have a 401k. We only have a simple IRA with a 12K limit :(

matchewed

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #15 on: June 07, 2013, 10:36:45 AM »
Yeah we have a percentage limit on contribution as well in our plan. I wonder about the reasons for such a thing.

Joet

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #16 on: June 07, 2013, 10:38:10 AM »
honestly the skeptic in me thinks it's a backended/simplistic way of not having to worry about a HCE audit

Zaga

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #17 on: June 07, 2013, 12:48:57 PM »
My company limits us to 20%, which gets me about halfway to the federal max.  Ticks me off!  Especially since my DH just switched jobs and no longer has a 401-K.  20% of my paycheck is woefully inadequate for our retirement savings needs.  Good thing we also have Roth IRA's that we can contribute to, that helps some.

I have hope though, my company was just bought out.  So with the new management I will broach the subject of the silly limit.

oldtoyota

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #18 on: June 29, 2013, 09:15:27 PM »
My company limits us to 20%, which gets me about halfway to the federal max.  Ticks me off!  Especially since my DH just switched jobs and no longer has a 401-K.  20% of my paycheck is woefully inadequate for our retirement savings needs.  Good thing we also have Roth IRA's that we can contribute to, that helps some.

I have hope though, my company was just bought out.  So with the new management I will broach the subject of the silly limit.

That is crazy. I had no idea a company could even do that!

matchewed

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #19 on: June 30, 2013, 04:51:15 AM »
Yeah unfortunately it is legal, and dick. Get organized and approach HR IMO.

Zaga

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #20 on: June 30, 2013, 05:59:40 AM »
Yeah unfortunately it is legal, and dick. Get organized and approach HR IMO.
That's definitely part of my plan, but as I said, my company was just bought out less than a month ago.  HR is crazy busy reorganizing things right now, and probably will be for several more months.  I'm concerned that anything I ask for now will just be lost in the shuffle, kwim?

mpbaker22

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #21 on: June 30, 2013, 08:23:52 AM »
Yeah unfortunately it is legal, and dick. Get organized and approach HR IMO.

And that's not really possible in a company with 100K employees, most of whom have no intention of putting 10K in their 401K, let alone 17K.
I just changed my contribution to the maximum 25% (~12.5K) FWIW.

BC_Goldman

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #22 on: June 30, 2013, 12:02:01 PM »
One of the contractors I worked for matched contributions at like 50% but there was a vesting schedule. 20% after two years and an additional 20%/yr until you were fully vested after six years. Problem is that I was 6 weeks short of my 2yr anniversary when they were replaced by a new contractor. So I got squat from them. New company had a similar deal and then laid me off after 9 months. :-(

Freeyourchains2

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #23 on: July 01, 2013, 07:55:24 AM »
What happens if you didn't pay in for half a year while saving that money, then  you contribute your entire monthly paychecks back to back up unto you max for that year? (Say your company get's acquired by another company and you are waiting for the benefits mention, and then after the mandatory month long 401k blackout between companies(WTF is with that btw, lol), you decide to contribute the max.

What "percentage of paycheck contribution" would that be? 100%? for 1--6 months? (dependent on income)

Would your company allow that?

jrhampt

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #24 on: July 01, 2013, 10:31:05 AM »
My husband is also cut off from contributing above 20%.  I guess it's not uncommon.

Zaga

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Re: Employer Won't Let Me Put $17.5K Into 401K?
« Reply #25 on: July 01, 2013, 10:38:59 AM »
What happens if you didn't pay in for half a year while saving that money, then  you contribute your entire monthly paychecks back to back up unto you max for that year? (Say your company get's acquired by another company and you are waiting for the benefits mention, and then after the mandatory month long 401k blackout between companies(WTF is with that btw, lol), you decide to contribute the max.

What "percentage of paycheck contribution" would that be? 100%? for 1--6 months? (dependent on income)

Would your company allow that?
My DH's old company would have allowed up to 99% contribution.  But really that's not possible, there are some things that need to be taken out of each check such as FICA taxes, medical withholding, state taxes, etc.  I think each situation would need to be looked at carefully to be sure you had enough remaining in your pay to cover those items.