Who contributes max to 401k?

[Broken Arrow]

Originally Posted by Merch

Thanks BA.

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

I didn't realize that you didn't realize! Otherwise, I would've mentioned sooner! You've been missing out. Although something tells me things are about to get a bit more interesting since I believe you're into the er more active side of investing and trading.

[Daylily]

Originally Posted by disneysteve

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!

Yes the plan will stop taking the deduction from my payroll when I hit the IRS max. However, suppose I hit the max early - say in October. Technically, I wouldn't be contributing in November and December. In that case, I wouldn't get the 3% of salary contribution from the employer for those months.

I have my contribution percent set high right now so that that percent will come out of my upcoming bonus. After that, I'll adjust the percent downward to even it out for the rest of the year and so that I hit the IRS max on my last paycheck for the year.

[FrugalTexan75]

I'd love to max out my 401 k contributions . . . but like someone else said up thread, maxing out my 401k would leave me with barely enough money to pay rent and eat!

Right now I contribute 4%, and get my employer's match of 4%. I also contribute $75/mo to my Roth. I'd like to up both of those contributions, but I also want to finish out a number of savings goals - EF, Car replacement and house downpayment. Once those goals are acheived, then I will be looking at upping my contributions.

[MonkeyMama]

Originally Posted by sweeps

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.

It's actually quite common with small employers. Like under 100 employees.

Small employers are such a different ballgame.

Likewise, I wanted to add, that small employers don't have the means or knowledge usually to keep an eagle eye on your contributions. Likewise, small employers are less likely to notice very timely if you over contribute.

[sweeps]

Originally Posted by MonkeyMama

It's actually quite common with small employers. Like under 100 employees.

Small employers are such a different ballgame.

Likewise, I wanted to add, that small employers don't have the means or knowledge usually to keep an eagle eye on your contributions. Likewise, small employers are less likely to notice very timely if you over contribute.

Hmm, good to know. I've only worked for large employers so I'd never heard of such a thing. It surprises me actually because I would think small employers wouldn't have the time to deal with 401k stuff on their own. I would think they would be using a 3rd-party 401k administrator -- and such a company would have the technology to automate contribution matching.

[tabbycat31]

I'm not eligible for mine until May. But barring a substantial salary increase, there's no way I can contribute to the max (half my income)