# Can I put my raise into 401k without a change to my paycheck & taxes?

I received a 2.5% raise.

My HR website says :

per paycheck (13%) : (12% before tax + 1% Roth 401k)

and

Getting Full Company Match Yes

If I take home \$X/week, change my contribution to 15.5%, will I still take home \$X/week or does the increase in pay throw the numbers off?

Basically I need the take home pay and don't want to get a tax surprise next year.

Changing your contribution to 15.5% from 13% after a 2.5% raise will not give you exactly the same take home salary. Consider this example:

``````Your initial salary per pay period is \$100.

13% would be \$13, leaving you with \$87 take home pay.

add 2.5% raise, you get \$102.50 per period.

13% would be \$13.33, leaving you with \$89.17 take home pay.

15.5% would be \$15.89, leaving you with \$86.61 take home pay.
``````

It is pretty close, but not exactly the same. You can tweak the percentages a bit to get closer. But in a more realistic world you'll need to take into account the fact that FICA taxes will be a bit higher, and if you reach the 401k contribution limit - you'll be reaching it sooner now.

If you currently contribute 12% (+1% ROTH), you're effectively getting taxed on 88% of your income(obviously there will be other deductions, but I will ignore those for simplicity). Receiving a 2.5% raise affects ALL of your income, not just the taxable portion, so you will want to consider that when you figure out how to change your contributions.

To maintain your current tax burden, you will want to change your contributions by 12 (+1) * 1+(1/40) [1/40 = 2.5/100]

This will leave your contributions at just over 2% higher (call it 14+1% even), leaving your paycheck effectively the same.

EDIT: As littleadv points out, the contribution cap is a real thing, so you may be out of luck on avoiding the tax increase if you already cap out your 401(k) every year.