Author Topic: Tax Effect of 100% 401K Contribution  (Read 4678 times)

dhbike01

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Tax Effect of 100% 401K Contribution
« on: December 31, 2014, 02:54:52 PM »
My employer allows a 100% pre-tax 401K contribution.  This applies to regluar pay and/or bonus pay.  However, if you always have to pay Social Security and Medicare tax which I believe is 7.65%, what does your check look like if you contribute 100%?  Does anyone have any experience with doing this?  I'm considering contributing 100% of a bonus but don't want to dip into my regular pay to make up for the payroll taxes.

dandarc

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Re: Tax Effect of 100% 401K Contribution
« Reply #1 on: December 31, 2014, 03:01:20 PM »
Talk to HR, but it seems it should be treated similarly to if you were to go over the $17,500 cap - reduce your contribution by SS / Medicare / any health insurance premiums and such that may be due.

Gone Fishing

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Re: Tax Effect of 100% 401K Contribution
« Reply #2 on: December 31, 2014, 03:03:19 PM »
Just call HR and ask how it will work.

I had my wife set her's at 80% one time on a ROTH 401(k) (can't remember what the max was).  HR called her and said there was not enough for taxes so we revised downward.  In retrospect I should have had her contribute to a regular 401(k) instead which would have allowed her to use more of her income.

LadyStache

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Re: Tax Effect of 100% 401K Contribution
« Reply #3 on: December 31, 2014, 03:48:59 PM »
I contributed 100% of a bonus. They took out a small amount of the bonus and applied it to the taxes and the remainder of the bonus went into my 401k.

wtjbatman

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Re: Tax Effect of 100% 401K Contribution
« Reply #4 on: December 31, 2014, 03:57:07 PM »
I contributed 100% of a bonus. They took out a small amount of the bonus and applied it to the taxes and the remainder of the bonus went into my 401k.

Ditto. Signed a form saying I wanted 100% of a bonus put into my 401k, they took out FICA, and contributed the rest.

Rural

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Re: Tax Effect of 100% 401K Contribution
« Reply #5 on: December 31, 2014, 04:38:08 PM »
Talk to HR. I had to work mine out carefully with dollar amounts and a payroll estimator (contributing 100% of my salary to 403b, 457k and HSA. We actually left me getting a check for $75 a month rather than risk going over.