I just started a new job after leaving the DoD. Here's the details on the 401k offered with the company:
Before-tax and/or Roth 401(k) after-tax contributions are limited to $18,000 per year
Contributions will automatically stop if you reach the before-tax and Roth after-tax deferral limit of $18,000 or the plan
compensation limit of $270,000 in YTD eligible compensation, whichever occurs first
Employees may contribute up to 10% of pay after-tax, up to a maximum of $27,000 per year
Employee’s before-tax or Roth after-tax deferral as a % of eligible compensationEmployer match as a % of employee’s
contribution
EXAMPLE: Mary, a Tenet employee, earns $52,000 a year. She elects to contribute 8% to her 401(k) each year.
Employee’s annual compensation Employee’s 401(k) contribution Employer match
$52,000 $4,160 ($52,000 x 8%) $1,560 ($52,000 x 6% x 50%)
The employer match is credited to employee’s account in the following year if eligibility requirements are met.
I'm currently in the 2yr guarantee portion of a 5yr productivity driven contract. My guarantee is above the $270k contribution limit.
If I'm reading this correctly, my employer match will be 50% of 6% of $270K, no matter fast fast I reach the $18K contribution limit. Correct? I don't want to max this thing our in June/July and miss out on employee match down the road. Also it seems I get closed out at $270k? Unlike most 401k's....
Now, what are the thoughts on the $27K after tax? There is a Roth option in the plan and I can potentially roll that over at the end of the year. I need to discuss with the manager of the plan to see the details (Fidelity). Is the the best use of the money?
There is a Deferred Compensation Plan which offers a 3% match AFTER the 401k $18K contribution limit is reached. I'm nervous about this because you have to give 12mos notice of withdraw, and my company has a bond rating of Ba3 and is ~$30% owned by activist investors/hedge fund. I'da rather have some certainly and forgo the 3%....but if there are strong opinon otherwise I'm happy to hear them.
I'm planning on doing a back door IRA as well.
thanks
-jd
Before-tax and/or Roth 401(k) after-tax contributions are limited to $18,000 per year
Contributions will automatically stop if you reach the before-tax and Roth after-tax deferral limit of $18,000 or the plan
compensation limit of $270,000 in YTD eligible compensation, whichever occurs first
Employees may contribute up to 10% of pay after-tax, up to a maximum of $27,000 per year
Employee’s before-tax or Roth after-tax deferral as a % of eligible compensationEmployer match as a % of employee’s
contribution
EXAMPLE: Mary, a Tenet employee, earns $52,000 a year. She elects to contribute 8% to her 401(k) each year.
Employee’s annual compensation Employee’s 401(k) contribution Employer match
$52,000 $4,160 ($52,000 x 8%) $1,560 ($52,000 x 6% x 50%)
The employer match is credited to employee’s account in the following year if eligibility requirements are met.
I'm currently in the 2yr guarantee portion of a 5yr productivity driven contract. My guarantee is above the $270k contribution limit.
If I'm reading this correctly, my employer match will be 50% of 6% of $270K, no matter fast fast I reach the $18K contribution limit. Correct? I don't want to max this thing our in June/July and miss out on employee match down the road. Also it seems I get closed out at $270k? Unlike most 401k's....
Now, what are the thoughts on the $27K after tax? There is a Roth option in the plan and I can potentially roll that over at the end of the year. I need to discuss with the manager of the plan to see the details (Fidelity). Is the the best use of the money?
There is a Deferred Compensation Plan which offers a 3% match AFTER the 401k $18K contribution limit is reached. I'm nervous about this because you have to give 12mos notice of withdraw, and my company has a bond rating of Ba3 and is ~$30% owned by activist investors/hedge fund. I'da rather have some certainly and forgo the 3%....but if there are strong opinon otherwise I'm happy to hear them.
I'm planning on doing a back door IRA as well.
thanks
-jd
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