Who else over saved in their 401K?

[Zedon]

The contribution limit only applies to employee deferrals, not to employer contributions.

Wow, I did not know that. If my employer didn't have a great pension I would look to moving to one that had a good match.

[corn18]

I get a 5% match and max out my contribution so my total going into my 401k each year is $30,500. In 2016, when I turn 50, it will be much higher because I can do the +$6,000 catchup and my employer will match that as well. So total contribution should be $41,000 / year.

[Like2Plan]

Wait a minute I thought the $17,500 was the combined employee and employer contributions.

Oh--you might be okay, then. The 17,500 limit (for 2014) is only your contributions. And, you can contribute another 5,500 (for 2014) starting in the year you turn 50. The annual limit (your contributions and employer contributions) for 2014 is 52,000.

[rennigade]

That's not how it works. Employers only match up to 4% of each pay period. If you contribute 25%, they don't match that, they just match up to 4% each pay period.


Tom

Thanks! I didnt know that...this could be useful to a lot of people.

I need to adjust mine then because Ill max about 3 pay periods too soon. My match sucks compared to most but I still want as much as I can get.

[feh]

Are you allowed to pick a dollar amount or does it have to be a percentage? Can you change your election amount during the year--or is it only done during the open enrollment? Gosh--if you aren't allowed to change that makes it pretty tricky to make an election.

Yeah, this drives me nuts. Over the last 20 years I've probably had 5 or 6 different payroll processors, and only 1 of them allowed me to set a monthly amount versus a percentage. As L2P points out, specifying an amount each paycheck avoids this problem.

I think I may have over-contributed once in my life. I follow the total pretty closely throughout the year and make adjustments if necessary.

[Like2Plan]

Thanks! I didnt know that...this could be useful to a lot of people.

I need to adjust mine then because Ill max about 3 pay periods too soon. My match sucks compared to most but I still want as much as I can get.

rennigade,
It is important to note that what tomhole was describing is the way that many (or maybe even most) of the 401K plans work. However, you should check your plan rules because that is not the way that all plans work. It is always a good idea to read through your own plan literature.

[corn18]

rennigade,
It is important to note that what tomhole was describing is the way that many (or maybe even most) of the 401K plans work. However, you should check your plan rules because that is not the way that all plans work. It is always a good idea to read through your own plan literature.

This is very true. There are some plans that allow you to withhold at a higher rate and will true things up at the end of the year. So if you contribute @ 25% and are max'd out after 7 pay periods, they will match the full $13,200 from the example above. That is a very nice feature. Takes all the guesswork out. But it only benefits the employee so many plans do not incorporate it.

[Like2Plan]

There are some plans that allow you to withhold at a higher rate and will true things up at the end of the year.

Right. My DH's plan matches 25% of whatever contribution he makes (up to 17,500). He is allowed to defer up to 75% of his pay per pay period. So he could front load his 401K at the beginning of the year and still get his entire match--the company deposits the match each pay-period, so DH doesn't have to wait 'til to the end of the year to true up. But, the match is capped at $4375 (25% of 17500). It is not based as a percentage of income--every employee is able to get the same match (provided they contribute 17,500). The match you get as a percentage of your income is very, very good!

[corn18]

I just read my plan literature and I can defer both he base $18,000 and the catch up $6,000 at the same time and they match 5% of BOTH. That is great news. I guess turning 50 isn't all bad, right?

[Like2Plan]

I just read my plan literature and I can defer both he base $18,000 and the catch up $6,000 at the same time and they match 5% of BOTH. That is great news. I guess turning 50 isn't all bad, right?

That is awesome!