2007 401k contrib limit

[dunc0029]

Does anyone know if the 401k contribution limit has been determined for 2007 or when it will be? I know the "indexing for inflation" begins for 2007. By my math, we'd need a 3.33% inflation measurement to get the $500 bump in the contribution limit for this coming year.

[Martha]

I don't think the IRS has published the limits yet.

[Spanky]

Unfortunately, the increase in limit is not always inflation adjusted - we will see.

[FinanceDude]

Will be announced in mid-October..............

Oh no, yet another "economic indicator" to look at..............

[dunc0029]

Thanks FinanceDude! I'm one of these anal spreadsheet types. Currently, I have a $500/yr limit increase factored in, knowing that won't be perfect. I recently changed jobs and can't contribute to my new 401k until Nov, so I am revisiting my financial #s to see how much of a hit I'm taking.

Off topic, but I asked the HR guy here and he claims I can contribute "as much as I want" to my 401k. So, I'm hoping to be able to make it up with some huge contributions starting in Nov. At my old employer, we could contribute a max of 25% so I would have been SOL.

The good spin on this is it allows me to pad my after-tax savings for the next few months ( I'd say 90% of my net worth is in retirement accounts ).

[FinanceDude]

Quote:

Originally Posted by dunc0029 Off topic, but I asked the HR guy here and he claims I can contribute "as much as I want" to my 401k.* So, I'm hoping to be able to make it up with some huge contributions starting in Nov.* At my old employer, we could contribute a max of 25% so I would have been SOL.

Your HR dude scares me ............there are LIMITS, even though they're going up, there will be limits.

[SecondCor521]

In my new job the new hire paperwork explicitly stated that I can contribute up to 75% of my pay to my 401(k). Since I won't be eligible for another 85 days or so, I may do massive contributions the last couple of months of the year to max it out this year.

2Cor521

[spideyrdpd]

Mines allows 85% .
If your going to meet the max before the end of the year you want to see if that will effect the company matching program.
I dont think I would want to have 90 % of my assets to be in my retirement program. Although I try to make sure my roth is maxed out. I like the idea of not having to pay taxes on that money when I am retired. Or have the ability to get my money out that I put in with no taxes and no penalties.

[Nords]

Quote:

Originally Posted by SecondCor521 In my new job the new hire paperwork explicitly stated that I can contribute up to 75% of my pay to my 401(k).

Doesn't the IRS have some sort of 401(k) contribution limit in terms of max dollars per year that would take precedence over the company limits?

The reason I ask is that the military's TSP allows 100% of pay to be contributed but the annual amount (for my spouse) is still capped by the IRS at $15K. At that point the TSP software stops the pay deductions.

[Martha]

Quote:

Originally Posted by Nords Doesn't the IRS have some sort of 401(k) contribution limit in terms of max dollars per year that would take precedence over the company limits? The reason I ask is that the military's TSP allows 100% of pay to be contributed but the annual amount (for my spouse) is still capped by the IRS at $15K.* At that point the TSP software stops the pay deductions.

Yes, if you are less than 50 your voluntary contribution limit is $15,000 this year. The good thing about high employer limits is the chance to chose when you contribute and the chance to contribute a high portion of your income.

[samclem]

For the self-employed among us: If you're a sole-proprietor (or the business employs just you and your spouse) your "self-employed 401K" maxes out at $15k + 25% of your earnings (up to $44K contribution). So, the max total is $69K. Those were figures for 2005, they could go up for 2006.

[eridanus]

Quote:

Originally Posted by samclem For the self-employed among us: If you're a sole-proprietor (or the business employs just you and your spouse) your "self-employed 401K" maxes out at $15k + 25% of your earnings (up to $44K contribution). So, the max total is $69K. Those were figures for 2005, they could go up for 2006.

The maximum of $44,000 includes the $15,000.

http://www.smartmoney.com/taxmatters...story=20021031

[samclem]

Quote:

Originally Posted by eridanus The maximum of $44,000 includes the $15,000. http://www.smartmoney.com/taxmatters...story=20021031

I stand corrected--thanks.

In addition to the higher contribution limits, many semi-retired self-employed folks will prefer the "solo 401K" to the the SEP IRA because if you are earning a relatively small amount you can put more into tax-deferred savings with the solo 401K.

[dunc0029]

Yeah, this HR guy scares me a little, too. I know the dollar amount limits, my inquiry was about % of paycheck limits. To my knowledge, this is left to the company/retirement plan. I went from mega corp to a smallish dotcom. Previously, I spread my contributions out throughout the year to max out the company match. Well, I'm missing out on 3 months of matching while I'm in my probation period. It looks like I'll need to contribute around 35% for the last 2 months to be able to max out this year.

I didn't mention my age, but I'm 28, with no house, and I'm at ~125k net worth. My priority has always been maxing out retirement accounts. I'm just getting to the point where I'll have enough left over to start growing my after-tax accounts by more and more, assuming continued raises and all that jazz.

[Texas Proud]

Yes.. it is up to the company...

My mega corp used to be 12% a few years ago... now have increased it to 16%... so you can not "max out" at the end of the year...

When my sister was about to retire from teaching.. her district said she could put 100% of you 'net' into the account... you had to pay your taxes and insurance etc... but then all can go... great to catch up..

[Andre1969]

My company lets you put in up to 75% of your pay, so it's pretty easy to max out. I think I came in at $100-200 below the max last year. So far this year I've put in $10,641. With 8 paychecks left in this year, and a minimum of $606 getting contributed each paycheck (more if I work OT), I figure I'll almost be there with the 7th paycheck, which should put me at $14,883. So the final paycheck, they'll only take out $117 for my 401k. And then it resets back to zero for 2007.

So, does anybody think we're gonna get bumped to $15500 for 2007?

[Craig]

The absurd limits on 401K contributions, plus the discrimination testing BS really frost me. As a middle manager for most of my life, I was always amazed some idiots in Congress throught it was cool the CEO could contribute the max, the "non-highly compensated" could contribute the max, but those of us in the middle got screwed ... even had contributions returned to us ... contributions that had they grown, still would have made little difference. The whole employee qualified plan system is very poorly thought out.

But, that's not the point of the thread ... just a personal peeve.

[dunc0029]

Digging up this old thread, does anyone know if the limit was increased $500 for 2007?

The update on my situation - I am coming out of my probationary period in November, so I can finally contribute to my 401k. The good news is I can go up to 96%, so I can still max out on the year ( although I missed the employer match for 3 months ). The bad news is ... the funds are horrible! They are all around 2% management fees. I just chose the 2 best ones, still well over 1%.

Off topic, this is one somewhat minor issue among many that unfortunately has me already looking for greener pastures. Wednesday-Yesterday, one of my coworkers workers did a 30+ hour shift. He came in around 10AM Wed, left at 4:30PM Thursday. Personally, I just think that is insane and don't like this trend. Another day, us developers were sworn at and called "children" because there was a mess by the coffee machine ( which of course was made by a guy from another department ). I never thought I'd be looking fondly back at my time in corporate America. Why is it that programmers are often pushed to quasi-sweatshop conditions?

[Martha]

Yes. I started a new thread:

http://early-retirement.org/forums/i...?topic=10244.0

[astromeria]

Quote:

Originally Posted by dunc0029 Why is it that programmers are often pushed to quasi-sweatshop conditions?

Because they aren't banding together to insist upon better conditions (no unions)? Because there's a surplus of available programmers around the world? Becasue middle management isn't given the resources to hire as many workers as are needed?