Author Topic: Changed Contributions  (Read 4104 times)

jexy103

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Changed Contributions
« on: February 03, 2014, 05:00:24 PM »
Today, I changed my TSP (401(k) equivalent) to max it out for 2014! Last year, I maxed out my 2012 and 2013 Roth IRAs, but I only contributed about $8,000 to my TSP. This year, I have monthly automatic contributions already set up to max out my IRA and I just changed TSP to max it out also. The TSP contributions are now about 40% of my gross pay (I make about $40,000 a year). However, I also have about $2,000 a month of non-taxable income from veteran's benefits, so I've calculated that I'll have enough to live on, max out my 2014 IRA, and start my first taxable account. I anticipate a total savings rate of about 46% of net income for the year. I'm looking forward to watching my retirement accounts really grow this year! :-D

Fireman

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Re: Changed Contributions
« Reply #1 on: February 04, 2014, 08:06:51 AM »
That's awesome!  It's nice to sit back and let the dollars work for you!

I increased my 403b from 6 to 10 percent last month and plan to max my 2013 and 2014 T-IRA this year.  Later this year and depending on my job status (staying or going to a new one), I will continue to increase my 403b withholding.  Now if I could just convince that pesky stock market to start coming back up!

Good luck!

Edit:  added text.
« Last Edit: February 04, 2014, 08:08:38 AM by Fireman »

schimt

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Re: Changed Contributions
« Reply #2 on: February 04, 2014, 08:12:52 AM »
I upped my 401K to 50% at the end of last year to make my max and haven't switched it back yet. I believe i have to cut back before i hit the max or i won't get my employer match for the rest of the year. But i figure if i can get used to living on half my pay check, then i adjust my contribution back, i should be used to living on half and just invest the rest in my IRA and taxable stuff.

Congrats on the change and goodluck

Fireman

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Re: Changed Contributions
« Reply #3 on: February 04, 2014, 08:34:55 AM »
What happens if I hit the max on my 403b before the end of the year?  Will my employer stop deducting the contribution from my paycheck or do I need to manually change back to zero?

soccerluvof4

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Re: Changed Contributions
« Reply #4 on: February 04, 2014, 09:06:01 AM »
I raised mine too another 5% last week.

schimt

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Re: Changed Contributions
« Reply #5 on: February 04, 2014, 10:02:32 AM »
What happens if I hit the max on my 403b before the end of the year?  Will my employer stop deducting the contribution from my paycheck or do I need to manually change back to zero?

I searched for 401K specifically, but Iím sure it is similar for 403b, it seems that it is possible to max out early and miss out on future company contributions, but there is a "true up" provision that some companies implement to fix this issue, and the link below from a Morningstar article advises to contact your benefits department to find out.

It is hard for me to hit my max on my last pay period because I work in a manufacturing company (Steel) and we have an incentive program that provides a monthly bonus based on the plant's performance. varying between 0 and 70% And at the end of last year I was trying to adjust my contribution amount, but when I make the change, it took 2 weeks to change, needless to say, I missed my max last year, so I hope we have this little clause and I can just max out early!

http://news.morningstar.com/articlenet/article.aspx?id=631927

Fireman

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Re: Changed Contributions
« Reply #6 on: February 04, 2014, 10:29:45 AM »
Oops, I meant 457b.  I was thinking of the 403c that I had at my last employer.  At any rate, my current employer doesn't match so the main point of the article is not an issue.  Thanks for the info, though, as i'm looking at a side gig with a 401k that's employer matched!

I ended up calling human resources and found out that they will automatically stop contributions at the $17,500 mark.  Unfortunately, and I feel like this is probably common knowledge that I didn't have, I also found out that I can only contribute $17,500 total to any pretax retirement plan.  I was thinking I could have two plans at two separate employers and max both!  And I was right!!

I feel like i'm in a Geico commercial and didn't know I could save 15% (or more) on my car insurance!

After reviewing the IRS rules, a government 457b plan participant can contribute $17,500 to the 457b and $17,500 to a 401k for a total of $35,000 pretax contribution!!

http://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You%E2%80%99re-Eligible-for-More-than-One-Retirement-Plan%3F
« Last Edit: February 04, 2014, 10:43:35 AM by Fireman »

schimt

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Re: Changed Contributions
« Reply #7 on: February 04, 2014, 10:40:29 AM »
I also found out that I can only contribute $17,500 total to any pretax retirement plan.  I was thinking I could have two plans at two separate employers and max both!

Depending on your income and marital status, you can make your $17,500 contribution and $5500 pretax Traditional IRA contribution. But if you are going to be working 2 jobs, you probably will not qualify, but it's worth looking into.

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2014--IRA-Contribution-and-Deduction-Limits---Effect-of-Modified-AGI-on-Deductible-Contributions-If-You-ARE-Covered-by-a-Retirement-Plan-at-Work

Kriegsspiel

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Re: Changed Contributions
« Reply #8 on: February 04, 2014, 05:50:01 PM »
Very timely thread, I just adjusted my 401k contrib also! Previously, I just had it set to max it out over 12 months. Now I'm going to try maxing it out within the next few months, basically just leaving out my average monthly expenses. I had just read jacob's post at ERE about doing it and it just makes a lot of sense for me.

schimt

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Re: Changed Contributions
« Reply #9 on: February 05, 2014, 07:43:34 AM »

I searched for 401K specifically, but Iím sure it is similar for 403b, it seems that it is possible to max out early and miss out on future company contributions, but there is a "true up" provision that some companies implement to fix this issue, and the link below from a Morningstar article advises to contact your benefits department to find out.

It is hard for me to hit my max on my last pay period because I work in a manufacturing company (Steel) and we have an incentive program that provides a monthly bonus based on the plant's performance. varying between 0 and 70% And at the end of last year I was trying to adjust my contribution amount, but when I make the change, it took 2 weeks to change, needless to say, I missed my max last year, so I hope we have this little clause and I can just max out early!

http://news.morningstar.com/articlenet/article.aspx?id=631927

I just got an answer from my benifits department, and we do have a true up provision, but the true up amount is evaluated in March of the following year and added to my 401K then, which means i would lose out slightly on potential gains if that money was in my 401K earlier, but at least I still get the match.