Who contributes max to 401k?

[sweeps]

Originally Posted by illinigamer

This is not true in all cases. Our company has a 50% match plus a year end "discretionary" match to bring the match up to 6% of salary (this has been done every single year). In this sort of arrangement, even if you max before year end, you still get a full 6% eventually. I am not sure how common an a plan like this is, however.

That's definitely a nice feature, but I don't think it's very common. At most companies you have to be very careful to hit the max at the end of the year.

It's kinda like The Price is Right where you need to be the closest without going over.

[KellyB]

My partner and I both max out our 401ks ($15500 each) and Roth IRAs ($5000 each). It's a lot of $$, but by "paying ourselves first" and having it automatically deducted from the paychecks, we haven't really missed it. We started around 6% and increased it year after year, we've maxed out the last 2 years and will continue to do so hopefully. Next year she'll get to start adding the additional "catch up" contribution of another $5000, so we'll have to tighten our belts again and increase her contributions to max. We'll do it, I've found that if I just make the savings automatic somehow I manage to find a way to live on the rest.

[feh]

Yes, we're contributing the dollar amount max, as well as maximums into IRAs.

[RedHotLama]

I can only put in 20% at my plan, that got me close for 2007, but i will likely have a grand to go at the end of this year that i won't be able to put in because of the 20% rule.

Then i also get an extra 3.2% match.

[Keen]

I max mine out @ $15,500 and now my new company matches 110% of my contribution so that is a $17,050 match per year.

No rules about when I hit the max @ this company...so if I wanted to do 50% of my pay for the first few months of the year and hit the max right away that is fine...

Seems like a good plan so far, its a factor in why I took this new job.

[moneybags]

I max out my Simple ($10,500) and Dh maxes out his 401K.

[Daylily]

Wow, great to see so many people are contributing the max. It inspires me to go ahead and try to do it this year even though DH is not working.

I have the option of splitting between regular and Roth 401k. Currently, my contribution is completely directed to the regular 401k. When I up to the max, I think I might do the Roth for the rest of my contribution.

[Tree0164]

My husband contributes 15% and that works out to be 14-15k each year depending. I also contribute to a ROTH IRA

[DebbieL]

Wow, your rules are sure different in the US. You would be allowed to contribute up to $15,500 even if you only make $31,000? Here in Canada we are limited to 18% of our income up to a maximum of $20,000 (this year). A person earning only $31,000 couldn't contribute more than $5,580 for that year (unless they have unused contribution room from previous years).

[sweeps]

Debbie, that got me thinking... Contributing to a pre-tax savings plan must be a slam dunk in Canada with taxes being so high. I'm assuming a post-tax plan like a Roth IRA wouldn't be very popular in Canada?

[DebbieL]

They are starting the Canadian version of a ROTH next year actually. It will be the TFSA (tax free savings account) and will be limited to $5000/year (for now). You will be able to withdraw any of that money for any reason (penalty free) and the contribution room will be there for you to recontribute (eg. you take out $10000 for whatever reason - there is $10000 contribution room made available in the account). I personally think it is a great tool for those that are maxing out on their RRSP contributions already (few and far between btw).

I cannot say why, but RRSPs are severely underutilized here in Canada. The majority don't seem to even contribute, and those that do are not usually maxing out. Yes, you would think that it must be a slam dunk considering our taxes, but it isn't. Most people are not planning very well for retirement.

[KellyB]

I cannot say why, but RRSPs are severely underutilized here in Canada. The majority don't seem to even contribute, and those that do are not usually maxing out. Yes, you would think that it must be a slam dunk considering our taxes, but it isn't. Most people are not planning very well for retirement.[/quote]

So then "not saving enough" is not just an American thing I guess! Good to kno, but sad also.

[disneysteve]

Originally Posted by KellyB

I cannot say why, but RRSPs are severely underutilized here in Canada. The majority don't seem to even contribute, and those that do are not usually maxing out.

Same reason that 401k, 403b and Roths are underutilized in the US. People don't educate themselves on the tremendous benefits of participation. They live for today and don't worry about tomorrow.

[Merch]

I contribute the max to the 401(k) and actually make too much to add to Roth.

I am debating on adding to my IRA or just putting the savings in my taxable accounts. I'll probably just put it in taxable in low expense and turnover funds.

[Daylily]

I just took the plunge. I adjusted my payroll deduction tonight so that I'll hit the max this year. I may have to tweak the percent slightly at the end of the year so that I don't go over or under the $15500 (depends on what my bonus will be). I set it for 40% of the contribution going to regular 401(k) and 60% to the Roth 401(k).

Thanks everyone for responding - it really inspired me to go for the max.

[Broken Arrow]

Congrats Daylily!

And welcome aboard, Merch.

[danwas44]

I just turned 50 this past year and I now max out at $20,500 per year ($15,500 + $5000 catchup). The 20,500 is the amount I personally contribute. My company is very generous too, and they match my first 7% of my salary, and they also give me profit sharing of 10% of my salary. The 7% match and profit sharing is ABOVE the $20,500. You should know that the IRS limits the total I can put in my 401k to $50,500 per year (it's in Section 415 of the Internal Revenue Service Codes. If you are less than 50 years old, the max limit is $45,500.

My advice is max out your personal contributions in your 401k and then contribute to either a Roth or a traditional IRA.

Dan

[disneysteve]

Originally Posted by Daylily

I just took the plunge. I adjusted my payroll deduction tonight so that I'll hit the max this year. I may have to tweak the percent slightly at the end of the year so that I don't go over or under the $15500

Won't the plan automatically stop the contributions so you don't exceed the max allowed. Seems like the system should somehow be set up to avoid that happening.

Congrats on maxing your plan!

[danwas44]

Yes, the plan will stop you from going beyond the $15,500 or the $20,500 depending on your age. It will also stop your from going over the $45,500 or $50,500 too. If you are in danger of going over the $45,500 limit before the end of the year (which is unlikely, but higer salaried employees may), they need to be careful not to hit the $45,500 limit before their last pay checks of the year (cause they risk losing company match).
Dan

[Merch]

Thanks BA.

I saw your post on a blog about a forum. I didn't even know this site had one.