Author Topic: Excess 401k contrutions to get employer match?  (Read 2885 times)

Norioch

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Excess 401k contrutions to get employer match?
« on: August 15, 2014, 09:30:54 AM »
I'm in the United States, and I'm about to switch jobs. My new employer will match 401k contributions. To maximize the employer match at my new job for calendar year 2014, I would have to contribute a full $17,500 through my new employer. The problem is, this would put me over the total contribution limit for the year since I've already contributed a lot through my previous job.

Is there any legal way to game this situation? Is it possible to contribute more than $17,500 for the year but have the excess amount not be tax deferred, and if so, how do I report that on my taxes?

solon

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Re: Excess 401k contrutions to get employer match?
« Reply #1 on: August 15, 2014, 09:33:50 AM »
I think you're out of luck here. The 401k limits are set by the feds, not by your employers.

HOWEVER - why not use this as a bargaining chip? Since you won't be able to get the max match this year, how about a sign-on bonus equal to the difference? Or something like that.

ZiziPB

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Re: Excess 401k contrutions to get employer match?
« Reply #2 on: August 15, 2014, 10:19:36 AM »
Does the plan at your new employer allow after-tax contributions?  Are they matched?  There are a lot of plans where that is the case (mine is one of them).  If so, consider contributing on after-tax basis in order to maximize the match for this year (I believe the total limit of all employer and employee contributions is $52K per year).

Aphalite

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Re: Excess 401k contrutions to get employer match?
« Reply #3 on: August 15, 2014, 10:36:49 AM »
Roth 401ks don't work that way. You can only contribute a combined max of 17.5k (both deferred and roth) to 401k

Depending on what the match is, you might just want to consider over contributing anyway to get the match, then withdrawing it prior to April 15, 2015.

Read here: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---What-Happens-When-an-Employee-has-Elective-Deferrals-in-Excess-of-the-Limits%3F

ZiziPB

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Re: Excess 401k contrutions to get employer match?
« Reply #4 on: August 15, 2014, 10:47:45 AM »
I am not talking about Roth, just plain after-tax contributions.  My plan allows them and a lot of others do as well.  They are different from Roth in that you have to pay tax on the earnings when you get distributions.  But in order to get the match, they are well worth it (assuming the OP can afford to make contributions in excess of the limit).
« Last Edit: August 15, 2014, 10:50:00 AM by ZiziPB »

Norioch

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Re: Excess 401k contrutions to get employer match?
« Reply #5 on: August 15, 2014, 11:11:22 AM »
After-tax contributions are exactly what I'm looking for, thanks! I thought an option like this was available, but I was using the wrong search terms and couldn't find any info on the subject.

kaizen soze

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Re: Excess 401k contrutions to get employer match?
« Reply #6 on: August 15, 2014, 12:42:32 PM »
I know of no way to game it.  But are you sure you can begin contributing to your new employer's 401k right away, or that they begin matching right away?