Quick 401K Question

[wkumtrider]

I am contributing the max to my 401K ($18,000) distributed throughout the year.  I will reach max before December.  Once I hit the max, will the deductions from payroll stop automatically, or will I have to stop them?  Or does the employer dictate whether the deductions stop or not?

Thanks for the help!

[boarder42]

typically they are stopped automatically.

what you'll want to look into is if you get any match how your company handles that.

[Neo]

At my work they stop automatically, but you'll need to ask your HR department.

[dandarc]

Depends on the employer, but most will stop it automatically once you hit $18K.

Do you get a match?  If so, you might want to double-check that you're not losing any money by not having December contributions.  Some employers will "true-up" if you hit your max early.  Some don't.  For some it doesn't matter - a guy today said his plan offers 25% match with no limit - a perfect 401K situation to front-load.  So just know the rules.

[wkumtrider]

Great, thanks for the replies.  I'll ask HR.

[boarder42]

yeah at my company you dont lose match by funding early but it is delayed going into your account til april the follwoing year.  so i try to hit that on the nose every time.  but thats been hard b/c over 20% of my salary comes in 2 weeks before the end of the year and it can be bigger or smaller than expected and thats really hard to guage.

[seattlecyclone]

It's generally in the employer's best interest not to allow employees to contribute too much. I've never heard of a case where that was allowed by the payroll systems except for the case of an employee who joined the company mid-year and went over the limit between the previous and current 401(k) plans combined. It's still worth checking in to be sure, I guess.

The question of any matching funds will differ between employers. Many employers do a "true-up" at the end of the year to make sure you get the same match from front-loading as you would get if you contributed evenly throughout the year. Many do not. That aspect really does vary.