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I am trying to figure out the number I need to max out my 401(k). It becomes complicated once you consider occasional raises - I'd have to see what I put in before the raise, calculate any back-pay that comes with the raise, and finally calculate how much money will come in the rest of the year due to the raise.

What happens if I go over? What if there's an unexpected bonus one month? How can someone actually max out their 401(k) easily?

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    Maxing out a 401(k) is pretty simple: contribute $18K or $1.5K per month. Are you referring to a Solo 401(k), which allows contributions on behalf of the corporation as well?
    – farnsy
    Jul 10, 2017 at 16:23
  • @farnsy - the corporation does matching, is that what you mean? Jul 10, 2017 at 17:06
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    What I meant is if you are self-employed, you must determine the corporation's matching. If not, it's not a concern. If you work for someone else, all you have to do is ensure that you do not contribute more than $18k. Subtract what you have already contributed from $18K. Divide by the number of remaining months. That's what you can contribute per month. That's it. Your income uncertainty is not a factor.
    – farnsy
    Jul 10, 2017 at 17:14
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    @farnsy I'm guessing the OP is being asked to set a contribution as a percentage of their salary -- that seems to be the way most questions on here describe the process (I'm in the UK, but the roughly-equivalent process, at least for me, is also normally set as a percentage). Whether some/all schemes let you set an absolute amount, I don't know.
    – TripeHound
    Jul 11, 2017 at 6:49

2 Answers 2

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Sure it is quite easy depending on income. If one receives a bonus that is high in relationship to their income, it is very easy to max out a 401K prior to when one intended. The later in the year such a bonus occurs the more likely that one will max out prematurely.

If one only has a single employer in the year, the custodial company will not accept amounts above the max, so one need not worry about that case. If there is more than one employer, a refund is typically issued with the appropriate tax withheld.

Assume that a person makes about 60K per year. They intend to put 12k into their 401K, thus have their contribution set to 20%. By the beginning of September, they have 8K into their retirement, but they also receive a bonus of 50K. Their 401K contribution for that bonus will be 10K, and thus they have maxed out their individual contribution for the year.

So they will not be able to contribute for the rest of the year, including the first paycheck in September. They will miss out on any match that the company may supply. While that sucks, it should be relieved by the bless of receiving such a large bonus.

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    "If one only has a single employer in the year, the custodial company will not accept amounts above the max, so one need not worry about that case. " - if this is true for all (my) custodial company, the problem's solved. Thanks Jul 10, 2017 at 14:21
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    But then, won't my company still try to send the money to the custodial company every month, until I edit my contribution amount (and the custodial company will just send it back)? Jul 10, 2017 at 14:21
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    Obviously each payroll/custodial company is different, but typically the payroll systems are also smart enough to reject excess contributions. More than likely you will not have contributions withdrawn if working in a single company. However, check with HR.
    – Pete B.
    Jul 10, 2017 at 14:23
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I routinely max out my 401k contributions. The company's stupid website actually forces me to make two contributions -- one for the regular contribution, and another for the Catchup Contribution.

I routinely adjust my 401k contribution throughout the year -- at the first of the year, I calculate how much to withhold such that I can adjust withholding to 6% of salary more than before, once I hit the SS tax limit. At the first of the year, I ignore bonuses. I re-adjust (if needed) once I know bonuses.

I've worked for my company for almost 30 years now.

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