How to Lobby an employer for additional retirement accounts

[hypercube]

I am an employee and I get paid with a W2. I have available a 401 k   and a 457b  . So far I have already maximized the accounts available to me

18K in 401K

18 K 457b

5.5 K backdoor Roth IRA

7.2  HSA

5 K  on 529 college savings  plan

I placed any  extra savings  inside a taxable account. However I would like to increase the space available for pretax money  from the employer. I read in other posts that I should ask my employer for this,  but have not really seen any specific example of what or how to ask . Examples and links would be helpful.  Thanks

[spiritrider]

What exactly do you expect your employer to do that wouldn't cost them a ton of money. Not to mention the additional administrative, compliance and liability concerns. You are probably better off than about 95% of Americans with both a 401k and 457b.

If it is more pre-tax contribution space you want. Certain non-commercial entities could offer a 401a with only employee pre-tax contributions. Properly constructed these would be mandatory contributions and would not be considered employee deferrals that would interfere with the 401k.

A much less costly option would be to offer after-tax contributions and in-service rollovers to the 401k. These are not pre-tax contributions, but they increase your tax-advantaged space and are easier and less costly for an employer to add features to an existing plan rather than an entirely new plan.

[jbmitt]

In theory they could increase their 401k match.  It doesn't help you for deferring income, but it would allow for additional employer contributions above and beyond the 18,000 limit.

[hypercube]

Thank you both

The employer offers a Safe Harbor  match, in their words  “  100% of the first 4% of compensation, matching contribution will not exceed 4% of compensation” They ´ve been  matching me so far 10K. I don’t fully understand how that number comes to be, as 10 K is less than 4% of my compensation, but I was explained by HR that they are maximizing their matching already.   BTW, its actually a 403b; not a 401k. Not sure if that would make things different

Being the  total amount allowed  52 K/ year, so I could ask them to match up to 34 K ? or 188% of my contribution (18 x 188% = 34).  34 (potential employer contribution) + 18 (employee pretax contribution) = 52 .  I would assume they will not agree to this option, because  they have to match every employee in the same percentage

If I understand well, my second option is to  ask  to allow me to contribute up to 24K with after tax money for a total of 52K ?  18 K employee pretax + 10 K employer match + 24 K employee aftertax = 52 K .  I assume that the aftertax contribution would be something like a Roth contribution?  If so, could you provide with links and rationales / explanations  to present to the employer  of what needs to be done from their  side.

[nachos31]

You could also find a 1099/indep contractor side gig and set up a solo 401k to get yourself more income and tax deferred space. Any significant other with tax deferred vehicles at work?

[spiritrider]

They are not likely to increase the employer contribution, because as you and I noted that will cost them significant money.

Your best option is to get them to amend the plan for after-tax contributions and in-service rollovers. The amendment is  a minimal one time cost. Then there will be modest additional yearly costs for Actual Contribution Percentage (ACP) testing and the in-service rollovers.

This information for enabling this should be easily available to the employer from their 401k plan provider. The annual addition limit for 2017 = $54K and 2018 = $55K. Note: If you are an Highly Compensated Employee (HCE) the results of ACP testing may limit your after-tax contributions.

[hypercube]

I am reading explanations in the web  for the in-service rollover. It says that I could  transfer the 403b to an IRA. If so, would that “empty” my  space for contribution? Meaning that after I transfer the money to an IRA, then I will be able to contribute again 18K to the 403b for the same year?. Also after rolling over that money to an IRA, would I  be creating a new problem because for the  Back door roth conversion  the   pro -  rata rule would apply?

Ive been looking for to be an independent contractor. Work being  busy and  a  non-competing clause made it difficult. My wife currently works a few hours a year  as an independent contractor. She had been contributing in the past to a SEP IRA. We are in the process to roll that over to a solo 401 K

[litovskyassetmanagement]

hypercube wrote:

I am an employee and I get paid with a W2. I have available a 401 k   and a 457b  . So far I have already maximized the accounts available to me

18K in 401K

18 K 457b

5.5 K backdoor Roth IRA

7.2  HSA

5 K  on 529 college savings  plan

I placed any  extra savings  inside a taxable account. However I would like to increase the space available for pretax money  from the employer. I read in other posts that I should ask my employer for this,  but have not really seen any specific example of what or how to ask . Examples and links would be helpful.  Thanks

Click to expand...

Yes, making profit sharing contributions with your own money up to $54k is something that I see happening with some employers.  However, this is a plan level decision because even though this is your own money, the employer would have to kick in extra contributions to NHCE staff, and this might be very expensive for them, though this is definitely a possibility.

Also, adding a Cash Balance plan can be a possibility, but with both of these options, extensive design studies have to be performed to make sure the cost justifies the benefit.

[startupdoc]

you are better off than the vast majority of people. you are very lucky in the plans you have access to.

[nachos31]

hypercube wrote:

If so, would that “empty” my  space for contribution? Meaning that after I transfer the money to an IRA, then I will be able to contribute again 18K to the 403b for the same year?. Also after rolling over that money to an IRA, would I  be creating a new problem because for the  Back door roth conversion  the   pro –  rata rule would apply?

Click to expand...

You can only contribute one 18k balance to the 403b for the year, no double dipping. And yes, the pro-rata rule would apply and affect any backdoor Roth conversions.