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401k Employer Match Tax Year

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  • 401k Employer Match Tax Year

    Doing my first MDBR this year and I'm using Harry Sit's spreadsheet. I have an individual 401k through employee fiduciary as well as a fidelity 401 through my main W2 job. I've maxed out at 19,500 with the employer "match" last year, which was like 2800 or something sad which posted Jan 2020 and 1500 which posted this Jan (2021).

    Anyway Does the employer match count toward the 57K in the year it's posted or the "tax year"

    i.e. if I'm calculating how much I can MBDR do I use the 2800 posted in Jan 2020 or the 1500 that just posted this Jan 2021

    Your help is appreciated

  • #2
    Employer contributions are always counted for the tax year they are for and not the calendar year they are deposited in.

    However, employee deferrals and employer contributions to an unaffiliated W-2 employer have a separate annual addition limit from your one participant 401k. Neither of the $1500 or the $2800 employer contributions or your employee deferral to your unaffiliated W-2 employer's 401k plan have any affect on your one-participant 401k's annual addition limit.


    • #3
      Regarding tax year versus calendar year, if you are doing a MBDR with after tax contributions to your employer 401k it also may be important to realize your employer plan tax year is not the calendar year. For example, some (most?) academic institutions run on a July-June tax year and that is the period to which the annual addition limit of $57k applies. That means it is possible to exceed the limit on a calendar year basis and still be fine for the tax year. If you make uneven after tax payments as I sometimes do, it pays to track carefully.


      • #4
        So, just to make sure the math is correct.

        Main (W2 job) employee self deferral : $19,500, employer match $1750 (posted Jan 2021 for 2020 tax year)

        According to Sit's calculator
        Employee Fiduciary solo 401k: employer profit sharing (me) $8,555
        Non-roth after-tax contribution that I will use to MBDR: $25,666

        That would put my total at $55,471. Or does that employer $1750 not count toward this 57k limit?


        • #5
          The $1750 does count towards the $57k annual limit for your 401k. However, see spiritrider first reply. In effect, you have two annual addition $57k limits, one for your employer 401k and one for your solo 401k. If I read your numbers right, the $8555 goes to your solo limit, not your employer 401k limit.