54 votes
Accepted

What is the logic behind a 50% of X% 401(k) contribution match?

Many employees don't contribute enough to maximize the match, so the cost to the employer is not the same. Under the 50% of 6% strategy an employee contributing 5% would get a 2.5% match not a 3% and ...
quid's user avatar
  • 49k
52 votes

What is the logic behind a 50% of X% 401(k) contribution match?

This creates incentive for the employee to contribute more and increases the funds under management of the 401(k) plan. The size of the plan influences the fees that are charged in each of the funds ...
NL - Apologize to Monica's user avatar
47 votes
Accepted

Why would someone who thought they will work until they die contribute to a pension plan?

Why? Simply: because it has been mandated as law, and so you may have no choice in the matter whether to contribute or not. Quoting from GOV.UK – Workplace pensions: ‘Automatic enrolment’ ...
Chris W. Rea's user avatar
  • 31.7k
42 votes
Accepted

Could my employer match contribution have caused me to have an excess 401K contribution?

The limit of $19,500 (plus an additional $6,500 for those 50 and over, for a total of $26,000) only applies to employee pre-tax contributions to Traditional 401(k) and employee contributions to Roth ...
user102008's user avatar
  • 17.2k
31 votes

What is the logic behind a 50% of X% 401(k) contribution match?

Another factor to consider is that it encourages employees to contribute more into to the plan so that they'll be able to comfortably retire. Getting the full match encourages people to put at least ...
Dan Is Fiddling By Firelight's user avatar
21 votes

How does one get the 401(k) max contribution of 57K?

I think the currently accepted answer misses the most typical way that larger contributions can be made. The $19.5k limit applies to employee pre-tax and Roth contributions. Employee after-tax ...
nanoman's user avatar
  • 29.7k
17 votes

Does employer matching count toward the yearly 401(k) limit?

Employer contributions do not count toward the individual contribution limit, which for 2017 is, 18K. However they do count toward the combined contribution limit, which for 2017, is 54K. See this ...
Pete B.'s user avatar
  • 76.5k
17 votes
Accepted

I'm attempting to understand my 401k and how much I need to contribute to maximize the match

The key clause is this: 1% of eligible compensation each pay period. If you are hired mid-year, you would be eligible for 1% of the remaining paychecks. If you contributed $19,000 from the first ...
Pete B.'s user avatar
  • 76.5k
17 votes

Why is my 401k manager recommending me to save more?

No one at fidelity told you to save more. Some poorly coded notification system suggested you save a higher percentage of your income with no consideration that your current election is taking you ...
quid's user avatar
  • 49k
16 votes
Accepted

If I have a 401k for a partial year can I still contribute the maximum amount?

I moved from a job that did not have a 401k plan to a job that does have a 401k plan. I have not contributed to any other IRA or 401k so far this year. Because you have not contributed any money ...
mhoran_psprep's user avatar
15 votes

Why would someone who thought they will work until they die contribute to a pension plan?

Even if you expect to work you might not be able to due to health reasons or economic factors that make it difficult to obtain employment, so it's good to have a safety-net. A pension scheme, ...
Peter N's user avatar
  • 151
13 votes
Accepted

How does one get the 401(k) max contribution of 57K?

Employers can offer matches more than 100%, and can also offer contributions that are not tied to your contributions. This increases participation without forcing employees to contribute, which helps ...
D Stanley's user avatar
  • 135k
9 votes
Accepted

Implications of withdrawing Roth IRA contributions before age 59?

Can I withdraw up to $27,500 without any fees/penalties/taxes/implications? Absolutely. For the details see Form 8606 - Nondeductible IRAs, which you'd file if you took a Roth IRA distribution. In ...
Craig W's user avatar
  • 15.9k
9 votes
Accepted

Do employer contributions to an HSA count towards contribution limits?

Yes, the contribution limit includes anything contributed to your HSA, whether added by you or your employer. From IRS Publication 969: Employer contributions. You must reduce the amount you, or ...
Ben Miller's user avatar
  • 116k
9 votes
Accepted

When calculating Roth IRA contribution limit, is MAGI for previous or current year used?

The Roth IRA contribution income limit is based on the current year (2019)'s MAGI. If you are not sure whether you will be over the limit or not, you can 1) wait until January 1 - April 15 of 2020 to ...
user102008's user avatar
  • 17.2k
8 votes

Are contributions to 401k outside of payroll pre-tax?

It is not possible to put money into a 401k other than through payroll deductions. If your employer’s plan limits the amount you can put in, there’s nothing more you can do. By the way, the employer’...
prl's user avatar
  • 2,804
8 votes

I'm attempting to understand my 401k and how much I need to contribute to maximize the match

There are generally two key percentages in a match program: the match ratio, and the match cap. The match ratio is how much money the employer will contribute for each dollar that you contribute. The ...
Acccumulation's user avatar
8 votes
Accepted

Roth 401k - Contributions are not going in as after tax?

5% contribution rate refers to your salary, regardless of the taxes. The employer has no knowledge of your effective tax rate. The difference between pre-tax and after-tax/Roth contributions is that ...
littleadv's user avatar
  • 174k
7 votes

What happens to the company match for a 401k over-contribution?

The first employer matching contribution gets taken back. You don't want to mess around with over contributions like this. In addition to withdrawing over contributions, they withdraw some portion ...
minou's user avatar
  • 7,526
7 votes
Accepted

Can a 403b contribution be rescinded?

Having money held from one paycheck hardly counts as being covered by a retirement plan in my book! It's not your book that counts, it's the Congress' book called the Internal Revenue Code. No, you ...
littleadv's user avatar
  • 174k
7 votes
Accepted

Do political campaign contributions count as gifts for tax purposes?

No. No. No. Standard federal candidate political donations are limited to $2700 per candidate per election. The primary and general elections are different elections for this purpose. Source: ...
Brythan's user avatar
  • 21k
7 votes
Accepted

IRA yearly contribution limit

are you allowed to open multiple IRAs? Yes - but the contribution limit applies to all IRAs in total, so you cannot go over that limit by contributing to multiple IRAs. I was curious what people ...
D Stanley's user avatar
  • 135k
7 votes

Is it possible to deposit stock into a Solo 401k?

No. This account, along with IRAs, can only take 'deposits' in cash. They may accept transfers from similar tax status accounts "in kind", e.g. I can transfer assets from my pre-tax IRA to my ...
JTP - Apologise to Monica's user avatar
7 votes

Why is my 401k manager recommending me to save more?

You didn't mention how old you are, which may be a factor, but as you observe you are already contributing the maximum you can to a 401(k) (or at least close to it). Most retirement systems have some ...
D Stanley's user avatar
  • 135k
7 votes
Accepted

Year of 401k contribution for last paycheck?

W-2 and 401(k) are based on the Pay Date, not the Period Beginning and Period Ending dates. Split things up would be a big complication. Individual wage and 1099 employees always(?) whether they ...
RonJohn's user avatar
  • 50.7k
7 votes

Can I contribute to my Roth IRA in December and then again in January?

Traditional and Roth IRA contributions are linked to the tax calendar. The 2021 IRA contributions can be made anytime from January 1st 2021 until the day tax returns are due in April 2022. The 2022 ...
mhoran_psprep's user avatar
7 votes
Accepted

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

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 $...
littleadv's user avatar
  • 174k
6 votes

Why would someone who thought they will work until they die contribute to a pension plan?

I would look at the wording of the question. "Expect" does not necessarily mean that they plan to work until they die, or that they want to work until they die. "Expect" here likely means that they ...
Joe's user avatar
  • 35.8k
6 votes

Why would someone who thought they will work until they die contribute to a pension plan?

The thing you appear to neglect is that: Many people don't have a choice of when they retire. They get sick They break a leg or arm or physically can't work anymore They get laid off and employers ...
Lan's user avatar
  • 2,680
6 votes
Accepted

Max Contribution to IRA, Roth, and Both

When they say your total contributions do they mean combined traditional and Roth IRA, or do they mean traditional, separate, Roth separate? Yes, they mean that the amount you contribute to ...
user102008's user avatar
  • 17.2k

Only top scored, non community-wiki answers of a minimum length are eligible