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401K and catchup contribution
Old 10-10-2018, 10:15 AM   #1
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401K and catchup contribution

example:
over 50
I make 100K /yr and have my 401K set to 24.5% that would put $24,500 into my 401K


can I do that?


or do I need to set it 18.5% for contribution of $18,500 and my catch-up as 6% or $6K ?
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Old 10-10-2018, 10:16 AM   #2
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I think the catch-up is a separate election but I'm not 100% sure

I make a separate election
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Old 10-10-2018, 10:19 AM   #3
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I don't think you need to separately designate part of the contribution as the "catch up". At least, I didn't do that with my 457. I just upped my contribution amount to take advantage of the increased dollar limit. Probably others will know better.
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Old 10-10-2018, 10:26 AM   #4
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whenn I was working I just increased the % going into the plan. The one I had stopped letting $ go in when the plan limit was exceeded.
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Old 10-10-2018, 10:34 AM   #5
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My FIDO plan has separate elections for the base 18.5k and the catch up. It also matches them separately which is nice.
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Old 10-10-2018, 10:37 AM   #6
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It depends on your employer's plan. It can be treated as a separate election or as second destination for your contributions after the limit is reached.

In my current employer's 401k plan I can designate percentages to regular contributions, catch-up contributions and after-tax contributions and allow the various limits to fill up at the rates I set. I can also just set a percentage for regular contributions and the plan will shuttle the money into the buckets in the order: regular > catch-up > after-tax as each fills up. This isn't universal though and your plan may treat your percentage instructions differently. I just set 25% contributions and the buckets in my plan fill up sequentially. I try to fill up the after-tax limit as well as regular $18.5K limit and catch-up limit. After-tax is the last bucket to fill in the sequence. Not all plans allow after-tax contributions and not all plans match them.

An important consideration is what contributions are eligible for match and whether your plan has a true-up match. That varies by plan.

You need to contact your HR rep and ask the questions there.
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Old 10-10-2018, 10:46 AM   #7
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Originally Posted by bada bing View Post
An important consideration is what contributions are eligible for match and whether your plan has a true-up match. That varies by plan.

You need to contact your HR rep and ask the questions there.
This is an important point. My plan does not do a true up so I need to do the math to maximize the match throughout the year. You also need to be aware of any salary cap limits for contributions (not sure that applies to you, but may to others). Once I hit $275k in eligible salary, all my contributions stop immediately no matter how much I have already contributed.
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Old 10-10-2018, 11:18 AM   #8
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Originally Posted by bada bing View Post




You need to contact your HR rep and ask the questions there.



Did that 5 minutes before posting this, chat function to india..didn't get much
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Old 10-10-2018, 11:23 AM   #9
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My old Mega used Fido and catch-up was a separate election. It showed up as a separate contribution transaction in my account. They also did the true-up for matching. In DW's 457b, you just specified a single contribution amount, so she increased it at 50 for the catch-up.
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Old 10-10-2018, 11:25 AM   #10
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Originally Posted by bada bing View Post
It depends on your employer's plan. It can be treated as a separate election or as second destination for your contributions after the limit is reached.

In my current employer's 401k plan I can designate percentages to regular contributions, catch-up contributions and after-tax contributions and allow the various limits to fill up at the rates I set. I can also just set a percentage for regular contributions and the plan will shuttle the money into the buckets in the order: regular > catch-up > after-tax as each fills up. This isn't universal though and your plan may treat your percentage instructions differently. I just set 25% contributions and the buckets in my plan fill up sequentially. I try to fill up the after-tax limit as well as regular $18.5K limit and catch-up limit. After-tax is the last bucket to fill in the sequence. Not all plans allow after-tax contributions and not all plans match them.

An important consideration is what contributions are eligible for match and whether your plan has a true-up match. That varies by plan.

You need to contact your HR rep and ask the questions there.



I'm hourly with paid overtime and get yearly bonus, its hard to nail down a number. but I am pretty consistent in the overtime and bonus is early in the year so I just gotta math better.
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Old 10-10-2018, 11:33 AM   #11
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here is the match info:


Company will match the first 4% of your eligible earnings that
you contribute to the 401(k) Plan at 150%, and will match the
next 2% you contribute at 50%. The company match applies
to pre-tax and/or Roth 401(k) after-tax contributions.
For example, if you contribute 6%, here is how the company
match would work:
• For the first 4% you contribute, Company will provide an
additional 6%.
• For the next 2% you contribute, Company will provide an
additional 1%.
• This means if you contribute 6%, Company will provide an
additional 7%, for a total of 13% (up to IRS limits).
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Old 10-10-2018, 11:45 AM   #12
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In my former employer's plan, excess pretax contributions were automatically designated as after tax and when I rolled it over, the after tax went into a Roth, the pretax into a traditional IRA. Regarding matching, it is important to know when the matching occurs. If it is quarterly, for example, and you max out earlier in the year, you may miss out on some matching.
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Old 10-10-2018, 11:57 AM   #13
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In my former employers plan, excess pretax contributions were automatically designated as after tax and when I rolled it over, the after tax went into a Roth, the pretax into a traditional IRA. Regarding matching, it is important to know when the matching occurs. If it is quarterly, for example, and you max out earlier in the year, you may miss out on some matching.

the match happens as i put money in.
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Old 10-10-2018, 12:05 PM   #14
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Quote:
Originally Posted by corn18 View Post
My plan does not do a true up
why don't they? ours does

even though we do a true up I front-load my catch up and contribute the remainder ratably throughout the year

maybe I'll front load the whole thing next year
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Old 10-10-2018, 12:10 PM   #15
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At my company, the regular and catchup contributions are treated separately (i.e. we have to allocate two separate withholding percentages).
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Old 10-10-2018, 12:20 PM   #16
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Originally Posted by Big_Hitter View Post
why don't they? ours does

even though we do a true up I front-load my catch up and contribute the remainder ratably throughout the year

maybe I'll front load the whole thing next year
Dunno. All plans are different. I'll take 401k after tax + in service roll overs so I can do mega back door Roth. I can manage the contributions to get the max match.
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Old 10-10-2018, 12:56 PM   #17
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There isn't a generic answer, it depends on your plan sponsor and your plan custodian.


Towards the end, I jacked my contribution rate to 80% (max % allowed) starting Jan 1 and jiggled it down as necessary to stay under the annual caps. That way if I were laid off mid-year, I'd still have the max tax deduction (and savings contribution) allowed for that year.
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Old 10-10-2018, 01:31 PM   #18
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something explaining why catch-ups need to be accounted for separately and what a "true-up" is

https://www.psca.org/blog_jack_2018_46
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Old 10-10-2018, 03:37 PM   #19
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FYI - If you have Fidelity 401k and you turn 50 this year, the catch-up contribution field will not appear until your birthday. I tried upping the contribution using the normal field in the beginning of the year that I turned 50 but as soon as it hit $18.5k it stopped taking money from my paycheck until I started using the catch-up field.
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Old 10-10-2018, 03:49 PM   #20
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why don't they? ours does

even though we do a true up I front-load my catch up and contribute the remainder ratably throughout the year

maybe I'll front load the whole thing next year
Mine doesn't true up either. I have to make sure I hit the $18,500 max on the last paycheck of the year otherwise I miss out on match. It's always a big guessing game because I get about 35% of my pay in one bonus in early December. Too many times my bonus was much higher than expected and I hit the $18,500 max on the bonus check and then miss the match on my last 2 or 3 paychecks of the year. #FirstWorldProblems
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