401(k) contribution limits

So I just got to know that my limit of 17K has been reached for the year for retirement accounts. That means I can no longer contribute towards 401K and roth - which also means i wont get the 5% company match.

Im pissed that just because i contributed more in the initial months (that too because of bonus contribution which i can’t predict at the starting of the year when we choose our allocations %)

Do you guys have similar restrictions at your firms as well?

Yup, that’s why I contribute a relatively small amount and stop all contributions two weeks before my bonus. I’m just glad my company sold the division that was killing us from compliance standpoint, resulting in me getting taxable “refunds” every year.

I’m confused, shouldn’t you get the 5% match on the cash you contribute to your 401(k) whether you put all $17k in January or spread it out over the course of the year?

Yes. I made the same mistake in my early years. Now, I just set the percentage of my compensation that goes to the 401k such that it is equal to the company match percentage. Incidentally, the maximum allowed total 401k compensation of you and your employer is something like $50k. You can reach this number if you have employer match and other sorts of bonuses. I do not understand why compensation is not structured such that you always hit that number, since this would reduce the collective tax rate of you and your employer. Perhaps there is some regulation that prevents this.

None of this makes sense to me. How can the timing of your contributions impact what your employer will contribute? If you max out won’t you get your full employer match?

I can only speak for my employer, but they match 50% of my contribution upto 6%, meaning if I contribute 6% of my pay in a particular pay period they contribute 3% of my pay. If I contribute 15% of my pay, they still only contribute 3%. So, if I hit my limit before the end of year I miss out on some of their match.

We’re definitely missing a few key numbers here. If you already contributed at least 5% of your annual salary by contributing your 17k, you’ve maxed out your match anyway. If 17k is <5% of your salary meaning there’s still potential match money, which means your salary is at least 340k, I don’t feel that bad. No offense.

My company matches 5% up to a ceiling, so I just divide the maximum match by # of pay periods and that’s my contribution.

Also, you should be able to change your allocation %'s whenever and however many times you want.

Wait a second, you maxed out your 401k this early and still qualify for a Roth? That’s some impressive savings right there.

^ Roth in a 401K doesn’t have income limitation. Of course I’m assuming he means a Roth option within the 401k.

I misread his post. I thought he was talking about his 401k and a Roth IRA. But I guess that wouldn’t really make any sense in the context of his post.

I’m not very good at reading comprehension when sober.

^ I suspect it’s because your mind is full of images of your wife and krnyc together.

no these are separate 401k and roth ira. i contribute 15% on each. and another 15% from bonus figure. I know thats too much saving but i feel better this way because it is hard to estimate monthly expenses (if there is money in account, i will always think of ways to spend it) so it is better to save max and then use up whatever is left.

I was told the max i can contribute towards 401k and roth ira is 17K… as you can see above, i contribute much more than 5% (that the company matches)

Ohai, where did you get the 50K number from?

Does the employer match count towards the 17,500 limit? If my employer matches 100%, should I be aiming to only withhold $8,750 over the year?

I’ve never been clear on this, but then again, I’ve never set aside that much.

^ so much mis-information… SMH.

Roth IRA maximum contribution is $5,500. Max. Subject to income limitations.

Maximum deductable contribution to a 401k is $17,500. Your employer match does not count toward this, note how I say deductable. That’s the most you, the employee, can contribute.

Maximum that can be contributed to a 401k - from all sources: you and the employer is $52,000. This is you, any matching, any bonus, any additional employer contribution, etc.

Just google “maximum 401k contribution 2014” The first result is IRS.gov which states this quite clearly.

All I do is max out the company match which is 5% of salary. They also make an additional year end contribution that is about 5% of salary.

A lot of plans have a “true-up” provision which ensures that you get max possible match even if you max out early. I would even venture to say most. I think there has been litagation on the subject.

Thanks KK.

bro you seem to be on top of this, so could you clarify this for me - what does “all sources” mean here? Say I max the deductible personal contribution of $17,500. Say my company matches 50% of that, so I am at $26,250. How do I get to this $52,000 limit - can I still contribute more beyond the $17,500 (nondeductible), or does it have to come from some other source like additional company contributions?

so here is what i found out after multiple calls to the retirement provider and googling:

maximum employee contribution towards retirement is indeed 17,500.

The 50K or so limit is reached when you have additional bonuses, commissions, ESOPs etc.

My company (as well as most firms - what ghibli noted) do offer a true up match - so that i will eventually get their 5% of my salary match (hopefully!!) by the year end.

It has to come from additional company contributions, like I mentioned my company gives us an extra 5% at the end of the year. That’s given even if you didn’t contribute $1 to our 401k. I don’t belive you can make nondeductible contributions, and even if you could, I don’t know why you’d want to.

I’m still confused. If you’re contributing 15%, how did you not already get the full match?

because the accounting is per pay period (bi weekly for me)… so my company has been paying 5% of my biweekly salary towards my retirement so far in the year. Now that I have reached the 17K limit, technically my contribution for ensuing paychecks will be 0 and technically, there will be no matching company match going forward. But due to true-up provision, company will keep on putting money into my 401K (or will put it at year end lump sum) till the total company match = 5% of my yearly compensation.