Additonal incentive for working overtime?

[Exile]

When I was working, I was enrolled in my employer's 401(k) plan. All my earnings--including overtime--were subject to the percentage of my wages that I had selected to set aside for this savings plan.

So the more hours that I put in, the more I was automatically increasing my contribution. With time-and-a-half, this really added up.

If you are in a 401(k) plan, consult your company benefits department regarding their policy in this area. If they base your contributions on your total gross pay, even mandatory overtime might go down a little smoother. If your employer matches your contribution, that's even more gravy on your mashed potatos.

[kiddiesaver101]

I'm sorry, could fully understand the benefit here, could you ellab a bit more. thanks, i'm a bit slow.

[Exile]

Well, basically, the more hours that you work, the more you earn (especially with time and half or greater). And if your employer bases your contribution to your 401(k) on your gross earnings, then the amount going into your 401k account will grow faster than from working just regular hours. This extra amount in turns means that there's more available to invest. So potentially you could wind up with a much bigger nest egg when you retire.

[simpleyme]

o'yea in high over time months our 401K just gets the bucks pumped into it ;-)

[ealimbuyao]

Overtime or not, the max/ year is still the same - $15k.

[Exile]

Overtime or not, the max/ year is still the same - $15k.

Good point, ealimbuyao, and not many workers in the lower ranks will reach that limit. Nevertheless, even if one manages to put away $1,500 per year into a 401(k) over several years, it will definitely add up over the long haul.

[rooskers]

This will be the first year I will have to be careful we do not contribute to much to my wife's 403b. She has been working on average 10 hours a week overtime. Yes it does add up quickly but I will be glad when she doesn't have to do the overtime so much.

[Hedy]

My overtime isn't counted in my 401K contribution-drives me nuts.

[disneysteve]

My overtime isn't counted in my 401K contribution-drives me nuts.

If you routinely do the OT, you could adjust your 401K contribution upward to account for that. If the OT is just a once in a while thing, that might not work, though.

[flatrock]

overtime

My 401K includes overtime as well. I get very close to the 15K annual imit with the overtime. Does anyone know what happens if you exceed the 15K contibution in a year? I had heard if you do that restrict your contributions to 10% max the next year.

[Fred333]

I know there is restrictions with how much you can go over. I thnk ours is like 5% or something. I will have to look into that.