How do we get to 18K in our 401k?

[mrpaseo]

Our current scheduled investments will get us right around the magic number but we will be off a bit. Is there a way that we can do a contribution to ensure we make the 18k limit?

[Tabs]

You can have it run over. A little bit won't kill you. It's likely they will just send you a check back at the end of the year for the overage, and you'll just pay income tax on it like normal.

[Goldy]

If you can make adjustments to your contribution amount you should be able to do the math and zero in pretty close to the 18,000 mark by changing you last months contribution. This is what I do and I always make sure that I over estimate a bit which just goes into an after tax 401k account. I would rather get a larger check but I guess that isn't an option.

[Like2Plan]

Whoops duplicate post

[Like2Plan]

Our current scheduled investments will get us right around the magic number but we will be off a bit. Is there a way that we can do a contribution to ensure we make the 18k limit?

Do you have the option to specify a dollar amount or do you have to specify a percentage? Can you change the amount taken out through out the year?

We pick an amount that is over, but the amount taken out magically stops when the maximum limit is reached.

It would be a good idea to check with your HR dept to see how the plan handles this so you are not surprised.

[mrpaseo]

You can have it run over. A little bit won't kill you. It's likely they will just send you a check back at the end of the year for the overage, and you'll just pay income tax on it like normal.

We called and this is what they said, if we pay too much, we will receive a check for the amount that is over.

My question, will there be a penalty or other tax ramifications other than regular taxes? The person on the phone was not helpful with this question.

[mrpaseo]

At this point we are planning on doing the math and getting it within a few dollars without going over.

Our plan next year is to be a little more aggressive and get to the max amount sooner. If we still have the job by then...lol.

[rennigade]

Your company should have a policy in place that will not allow you to go over the $18,000 limit. If your company does not have this in place they are a bunch of idiots.

[corn18]

Be careful when you pick how much you are going to increase your contribution. The ideal situation is to hit $18,000 on your last paycheck for the year. This maximizes your company match. Unless you make more than $265,000, then there are other issues.

Tom

[bjl584]

Talk to HR. They should have a system in place to get you to the magic $18K.

[BuckyBadger]

There are a few things you need to know - hopefully your HR department can help you!

First is how you designate your contribution - is it a percentage or is it a dollar amount. My job does a dollar amount so it's easy - I contribute 1/12th of the maximum every month. My husbands job has him do a percentage, and it's a integer number, so we have to pick a number that ends up maxing it out, which he does a few pay periods before the end of the year/

This brings up the second point - does your employer "true up" or not.

Nice employers don't punish their employees for maxing out their 401k early and will give you a "true up" match at the end of the year, so it doesn't matter if you max out a little early. If your company is a jerk and only matches on each contribution, you'll have to play with the numbers to try to hit it dead on with your last pay periods contribution.

Most places won't let you contribute more than the maximum so that shouldn't be an issue. The only issue is if you change jobs in the middle of the year. The second job doesn't know how much you already contributed so be careful unless you want to have to deal with getting some refunded which is a pain in the butt.

[usedn190]

thats good

[jIM_Ohio]

You can have it run over. A little bit won't kill you. It's likely they will just send you a check back at the end of the year for the overage, and you'll just pay income tax on it like normal.

+1

for starters, contribute $1500/mo, not a percentage of your paycheck
it is OK to contribute more (like $1600/mo), then your last month will just be a lower contribution. The payroll software likely calculates this. It shouldn't be a check refund, it should just be a lower contribution in December.

The tough part is when you work two jobs with a 401k in same year, as one payroll software does not know about the prior employers contributions.

[jIM_Ohio]

There are a few things you need to know - hopefully your HR department can help you!

First is how you designate your contribution - is it a percentage or is it a dollar amount. My job does a dollar amount so it's easy - I contribute 1/12th of the maximum every month. My husbands job has him do a percentage, and it's a integer number, so we have to pick a number that ends up maxing it out, which he does a few pay periods before the end of the year/

This brings up the second point - does your employer "true up" or not.

Nice employers don't punish their employees for maxing out their 401k early and will give you a "true up" match at the end of the year, so it doesn't matter if you max out a little early. If your company is a jerk and only matches on each contribution, you'll have to play with the numbers to try to hit it dead on with your last pay periods contribution.

Most places won't let you contribute more than the maximum so that shouldn't be an issue. The only issue is if you change jobs in the middle of the year. The second job doesn't know how much you already contributed so be careful unless you want to have to deal with getting some refunded which is a pain in the butt.

+1
If you don't think your employer lets you contribute a dollar amount, check the 401k website, then doublecheck with HR. I had one 401k website which would NOT do whole dollar amount, but the HR person had payroll software which allowed that.

[jIM_Ohio]

At this point we are planning on doing the math and getting it within a few dollars without going over.

Our plan next year is to be a little more aggressive and get to the max amount sooner. If we still have the job by then...lol.

why max out sooner? Investing works best if you regularly contribute the same amount, set it, and forget it.