401K contribution question

[ZapBrannigan]

If I exceed my max 401K contribution ($20500) this early in the year, should I turn off my automatic contributions for the remainder of the year?

Somebody told me I could be taxed twice on the excess and that confused me.

 

[Stone Cold]

If I exceed my max 401K contribution ($20500) this early in the year, should I turn off my automatic contributions for the remainder of the year?

Somebody told me I could be taxed twice on the excess and that confused me.

No, i believe you turned 50 this year, correct? If so, you get to put extra money in. I don’t know the exact amount, but if you’re over 50, you can contribute more.

Also, I believe they are supposed to stop at the limit. If my company can manage to turn it off, I’m ASSuming yours can too. I’d check with your HR department to confirm, though.

 

[ZapBrannigan]

No I’m 49

 

[Stone Cold]

No I’m 49

Ah ok. For some reason I thought you had turned 50. Sorry to age you. It should still automatically turn off contributions, but keep an eye on it. I know mine turns off, usually in Aug or Sep, but this year it’s continuing due to age 50.

 

[drunkenbeagle]

If I exceed my max 401K contribution ($20500) this early in the year, should I turn off my automatic contributions for the remainder of the year?

Somebody told me I could be taxed twice on the excess and that confused me.

Depending on your plan, you may be able to make after tax contributions up to $61,000 (my plan allows this for example).[1] While you don't get a tax break on those contributions now, they are tax free later at withdrawal. The way my 401k is set up, there is a regular 401k account, and a separate in-plan conversion account for the excess after tax contributions.

[1] Here's a retirement tax trick: the mega backdoor Roth IRA

 

[mikecweb]

Ours automatically shuts off.

 

[ZapBrannigan]

Thanks guys, made the phone call and you're right. It automatically shuts off.

Appreciate it. Now to read up on excess plans and top hat plans etc...

 

[mikecweb]

Thanks guys, made the phone call and you're right. It automatically shuts off.

Appreciate it. Now to read up on excess plans and top hat plans etc...

Not sure if you guys have an HSA option but that is another excellent way contribute to retirement.

 

[ZapBrannigan]

Not sure if you guys have an HSA option but that is another excellent way contribute to retirement.

We look into it. It's just hard to switch mental gears from our grandfathered plan (with $0 premiums) and paying for the HSA plan.

 

[drunkenbeagle]

We look into it. It's just hard to switch mental gears from our grandfathered plan (with $0 premiums) and paying for the HSA plan.

Certainly a very American system, where you have to worry about how the stock market is doing when you get get sick.

 

[mikecweb]

We look into it. It's just hard to switch mental gears from our grandfathered plan (with $0 premiums) and paying for the HSA plan.

How much does the company contribute?

 

[mikecweb]

Certainly a very American system, where you have to worry about how the stock market is doing when you get get sick.

That's only if you use the HSA for medical expenses.

 

[ZapBrannigan]

How much does the company contribute?

Only $375

 

[Roger Roger]

Only $375

Buck oh five?

 

[mikecweb]

Only $375

Per month?

 

[ZapBrannigan]

Per month?

No per year.

 

[mikecweb]

No per year.

Yikes yea I guess that makes the other option seem better.

 

[Stone Cold]

Only $375

No per year.

It’s more than we get, but we’re scum so, we’ve got that going for us.

 

[Crockrocket94]

Zap, I use the HSA, (No kids just a wife and a dog, dog is SOL though..) Its basically a 4th, 5th or 6th retirement vessels to dump tax free money into and pull later down the road.

I mean 7300-7600 a year, compounded/invested over 20 years adds up.

Also with the HSA, you pretty much pay out of pocket for the stuff, keep the medical receipts, then can pull it out TAX FREE down the road when we need or want it.

 

[drunkenbeagle]

Zap, I use the HSA, (No kids just a wife and a dog, dog is SOL though..) Its basically a 4th, 5th or 6th retirement vessels to dump tax free money into and pull later down the road.

I mean 7300-7600 a year, compounded/invested over 20 years adds up.

Also with the HSA, you pretty much pay out of pocket for the stuff, keep the medical receipts, then can pull it out TAX FREE down the road when we need or want it.

I would do that, but don't trust myself to remember the receipts 20 years from now.

The max out of pocket on my high deductible plan isn't much more than the other options, so it is kind of a no-brainer if you fully fund it every year.