WHAT!? Us! Double comma! Can I pull back?

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SparkyNJ
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WHAT!? Us! Double comma! Can I pull back?

Post by SparkyNJ » Sat Jun 03, 2017 2:06 pm

I stumbled across this website a few months back. I’ve been reading it ever since, catching up on the theories and past discussions. What a great repository of information.

Since I was 10 yrs old with a paper route, I've been working and saving. College, marriage, career, mortgage, kids, daycare, soccer, braces….it’s been a whirlwind. This entire time I thought I was in the accumulation phase of our lives, save, save, save…..never really pausing and considering that we should evaluate where we are at, and what lies ahead. My wife and I were like crazed squirrels just collecting and saving acorns without realizing how many we’ve already stored in the tree. It wasn’t until I stumbled across this site that I really took the time to look at our numbers and see what we’ve accomplished. From reading some of the concepts on this site, using our 401K, IRA, brokerage balances along with our home equity, we have passed the double comma target (this does not take into consideration our pensions).

I have a question to ask, but first some high level pertinent information.

Ages
DH 47
DW 46
DS 13
DD 10

Salaries
DH $100K
DW $160K

401K bal
DH $350K - contributing 14% (my funds + company match)
DW $450K - maxing out

IRA/Brokerage $135K @ Northwestern Mutual
Both of us have active, fully vested pensions thru our employers

Mortgage - Year 8 of 30 yr fixed @ 4.25% - bal $334K - equity ~$170K
DS 529 account $28K
DD 529 account $26K

Our kids have gone to parochial elementary and middle school. That was paid out of our monthly income. Parochial high school will be a much larger expense. I have some funds from my parents estate to put towards the high school tuition but not enough to cover the complete costs. With the retirement savings that we presently have, and knowing that we both have pensions, would it be wise to pull back the 401K contributions so as to only get the company match, using the additional monies to cover the tuition costs?

Thanks for your insights.

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bligh
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by bligh » Sat Jun 03, 2017 2:32 pm

SparkyNJ wrote: Our kids have gone to parochial elementary and middle school. That was paid out of our monthly income. Parochial high school will be a much larger expense. I have some funds from my parents estate to put towards the high school tuition but not enough to cover the complete costs. With the retirement savings that we presently have, and knowing that we both have pensions, would it be wise to pull back the 401K contributions so as to only get the company match, using the additional monies to cover the tuition costs?
First of all congratulations for having done so well for yourself!

In my humble opinion, the following will have a huge impact on that decision:
[1]The size of your annual expense in retirement.
[2]How secure and large your and your wifes pensions are. What percentage of your expenses in retirement will they cover?
[3]How long you intend to keep working. Do you plan to retire @ 65 or at @50?

In general the immediate impact for you not trying to max out your 401K will be the higher income tax expense you will incur. You are in a pretty high tax bracket. Are you better off financially continuing to put aside as much as possible into your 401K ? Of course. But you gotta do what you gotta do right? What is the alternative if the consensus was to say, no you cannot afford it? Would you then send your kids to a different high school?

In my opinion you guys are doing great, and provided your answer to the 3 major bullet points are 1 - Not much, 2 - almost all and 3 - 65, I dont think you are being crazy dialing down your 401K contribution to send your kids to the schools of your/their choice.

Jack FFR1846
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Jack FFR1846 » Sat Jun 03, 2017 2:47 pm

You mention brokerage but not how much is there (sort of combined with IRA at Northwestern. I would pull the money out of the brokerage in order to fund the 401k as much as you can.
Bogle: Smart Beta is stupid

TallBoy29er
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by TallBoy29er » Sat Jun 03, 2017 2:53 pm

Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.

avalpert
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by avalpert » Sat Jun 03, 2017 3:10 pm

As others have said, the biggest reason not to cut back on 401k contributions is that you will be increasing your tax cost by quite a bit to do so.

What is your current monthly cash flow - can you really not afford the tuition with your current contribution level?

123
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by 123 » Sat Jun 03, 2017 3:54 pm

Two commas are good, three commas are better.
The closest helping hand is at the end of your own arm.

Dottie57
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Dottie57 » Sat Jun 03, 2017 4:04 pm

TallBoy29er wrote:Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.

I agree. Although I think the income after 401k max contributuions would be 224k.

It seems there are other areas which you should be able to cut.

You don't say what your expenses are and the categories are.
Last edited by Dottie57 on Sat Jun 03, 2017 4:10 pm, edited 1 time in total.

TallBoy29er
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by TallBoy29er » Sat Jun 03, 2017 4:07 pm

Dottie57 wrote:
TallBoy29er wrote:Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.

I agree. Although I think the income after 401k max contributuions would be 224k.

It seems there are other areas which you should be able to cut.
You got me!! Although, I think it's contributions, not contributuions. :D

Dottie57
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Dottie57 » Sat Jun 03, 2017 4:11 pm

TallBoy29er wrote:
Dottie57 wrote:
TallBoy29er wrote:Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.

I agree. Although I think the income after 401k max contributuions would be 224k.

It seems there are other areas which you should be able to cut.
You got me!! Although, I think it's contributions, not contributuions. :D
Too funny :)

delamer
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by delamer » Sat Jun 03, 2017 4:30 pm

It isn't clear from your post what the alternative is for funding private high school if you don't cut back on your 401(k) contributions. Is there any? If there isn't, then you don't have any choice (other than public school).

Also, your 529 college savings are on the low side for the age of your kids. And I assume you can't cash flow college, if you can't do so for high school, without reducing your 401(k) contributions.

So you are in a position of reduced 401(k) for many years to come.

So I don't think the question is whether it is "wise" to cut back on the 401(k), but is the financial cost of doing so worth it given your family's priorities? And that is a decision only your family can make.

marcopolo
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by marcopolo » Sat Jun 03, 2017 4:46 pm

Dottie57 wrote:
TallBoy29er wrote:Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.

I agree. Although I think the income after 401k max contributuions would be 224k.
If I understood the OP, only the DW is maxing, DH is at 14% (including Match) of $100k. So, there might be more. I don't think there is enough information to know if the HS costs could be cash flowed.

As an aside, maxing out could mean quite a bit more than indicated. Each could be putting in $54k ($108k combined), then $60k each once they turn 50.
Once in a while you get shown the light, in the strangest of places if you look at it right.

bloom2708
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by bloom2708 » Sat Jun 03, 2017 4:59 pm

Your scenario is very similar to another recent thread. It is a good time to look at all spending and prioritize. College is coming fast and the 529 accounts are OK but not great.

My friend is sending 2 kids through private parochial school from Kindergarten up. He will spend close to $275k before college starts.

As mentioned, cutting the 401k increases your tax burden and may end up giving you less net cash. $10k not put in the 401k is maybe $6k to spend on tuition.

What will you give up to keep things as they are?
Where to spend your time: | 1. You completely control <--spend your time here! | 2. You partially control <--spend your time here! | 3. You have no control <--spend no time here!

IlliniDave
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by IlliniDave » Sat Jun 03, 2017 5:00 pm

Well, I don't know what parochial school tuition costs in your area but based on your top level numbers it doesn't seem like it should be difficult to cash flow without dialing down on your 401k.

That said, you're in pretty good shape so far, and it probably wouldn't cripple your future to reduce 401k contributions.

The thing to do maybe is start thinking about when you want to retire and how much you'll need/want to spend while retired. You can use that to estimate the assets required to support that spending and use the various calculators out there to see what kind of ongoing contributions you'll need to give you good odds of achieving the accumulation goal in the desired time frame.
Don't do something. Just stand there!

staythecourse
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by staythecourse » Sat Jun 03, 2017 5:31 pm

This will surely cause a firestorm of discussion, but I don't think it is wise to use your home equity in your analysis. It isn't like you are going to sell and know exactly the amount of profit. Even if you did then you would have to apply some of that money back into renting a place for the rest of your lives OR figure out what the delta difference between downsizing would be. Also, it isn't as easy as selling from investments to make up for any cash flow differences that may occur.

I am not saying house equity should not be part of your net worth calculation just not part of this discussion as the real issue is monthly inflow and outflow of money. This I would think really depends on stability of jobs, your intended retirement ages, how likely you guys will actually make those retirement ages and not get laid off before that, expected retirement costs, and in my opinion the biggest would be if you were intending to pay for college or not.

The answer to some of those questions will give your answer.

I have said before the real big costs of life are: House, colleges education for kids, and retirement. If you start throwing in paying for education for multiple kids from k-12 the numbers are MUCH more daunting and have to be recalculated.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Cosmo
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Cosmo » Sat Jun 03, 2017 5:34 pm

TallBoy29er wrote:Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.
+1
Cosmo

SparkyNJ
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by SparkyNJ » Sat Jun 03, 2017 6:02 pm

Bligh, I never took into consideration the impact that a greater take home pay would have on our overall taxes situation. Excellent point that never entered my mind and another reason why I’m glad to have come to the village elders to seek advice. I would say that (1) our expenses in retirement will be less than what we are presently carrying. We don’t lead a lavish lifestyle and would be looking to downsize and simplify in retirement. (2) With 22 years on the job at present, my pension would payout $1650 Age 65 Monthly Single Life Annuity. Certainly not enough to cover expenses alone but with RMDs would be enough to live comfortably; besides I'm not retiring anytime soon, that number will increase. Not sure about my wife's pension, I'd have to look that up. (3) The plan as of now is to retire no later than 62 for me and possibly 59 or 60 for DW.

An interesting point was brought up by Jack FFR1846. Thank you. He suggested hitting the brokerage account for the balance of the HS tuition. That would allow us to keep socking away the current levels of retirement savings. I roughly calculate that my shortfall for HS tuition across 2 kids would be ~$50K. HS tuition is presently $16K/year. That deficit could be covered by our brokerage account. I’m still early on in the college application/college aid submission process. I have much to learn yet about this entire process. Although one thing that I did read, about the aid component, was that the parents' retirement accounts are not considered in calculating if their child is eligible for aid. What is considered is any funds in brokerage accounts. A secondary benefit of using brokerage funds to cover HS tuition would be that we may be increasing our kids odds of being potentially awarded financial aid for college. Thats another possibility that requires more investigation. Seems like Dad has a lot of homework to do himself.

As an aside, we are seriously considering simplifying and reducing costs by moving our IRA/brokerage into a Vanguard 3/4 fund portfolio. This would also prepare us for the future when we roll 401Ks at retirement.

Lots of great advice on this site. Sometimes we get so caught up in the situation that it takes someone else to point out the obvious to us.
Last edited by SparkyNJ on Sat Jun 03, 2017 6:10 pm, edited 1 time in total.

SparkyNJ
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by SparkyNJ » Sat Jun 03, 2017 6:09 pm

staythecourse, I agree with you. Home equity shouldn’t be considered in calculating one’s net worth. I used it, as it appeared to be the lowest limb to grab to help one climb into the double comma tree. If I remove our loosely calculated home equity from our net worth, then my DW and I are just below the 2 comma threshold and will hit it soon enough with the rate at which we are shoveling acorns into the tree.

avalpert
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by avalpert » Sat Jun 03, 2017 6:14 pm

SparkyNJ wrote:staythecourse, I agree with you. Home equity shouldn’t be considered in calculating one’s net worth. I used it, as it appeared to be the lowest limb to grab to help one climb into the double comma tree. If I remove our loosely calculated home equity from our net worth, then my DW and I are just below the 2 comma threshold and will hit it soon enough with the rate at which we are shoveling acorns into the tree.
Read it again - he said that home equity should be considered in net worth - it should not be considered as part of the discussion here about whether you should cut back on 401k contributions (and I agree in your case but it is not a universal rule, if say someone had a fully paid off $1m house it may make more sense for him to fund tuition with a home equity loan than and get the tax break from 401k contributions than to reduce contributions and fund tuition from cash flow - your home equity isn't high enough that I would suggest that for you)

cherijoh
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by cherijoh » Sat Jun 03, 2017 6:53 pm

staythecourse wrote:This will surely cause a firestorm of discussion, but I don't think it is wise to use your home equity in your analysis. It isn't like you are going to sell and know exactly the amount of profit. Even if you did then you would have to apply some of that money back into renting a place for the rest of your lives OR figure out what the delta difference between downsizing would be. Also, it isn't as easy as selling from investments to make up for any cash flow differences that may occur.

I am not saying house equity should not be part of your net worth calculation just not part of this discussion as the real issue is monthly inflow and outflow of money. This I would think really depends on stability of jobs, your intended retirement ages, how likely you guys will actually make those retirement ages and not get laid off before that, expected retirement costs, and in my opinion the biggest would be if you were intending to pay for college or not.

The answer to some of those questions will give your answer.

I have said before the real big costs of life are: House, colleges education for kids, and retirement. If you start throwing in paying for education for multiple kids from k-12 the numbers are MUCH more daunting and have to be recalculated.

Good luck.
I agree. Assuming the OPs screen name indicates they live in NJ, then housing costs are going to be high. But based on them being 8 years into a 30 yr mortgage I am betting they upsized their house. In any case they fall into a demographic that really got hurt in the last recession - older parents faced with substantial mortgage payments, saving for college, and saving for retirement at the same time. I have several friends and former coworkers who were in this same boat and lost jobs during the Great Recession. It wasn't a pretty picture. So personally I would be hesitant to take my foot off the gas too soon.

Another thing to keep in mind is that pensions are becoming as rare as the dodo bird. ERISA protects your accrued benefits but it doesn't cover projected future benefits. Defined benefit plans gain most of their value in the last 10 years or so before retirement since they usually involve a fixed percentage x years of service x some measure of final salary. If the plan gets frozen, the years of service and salary used in the calculation of your monthly benefit get frozen too. The end result is that your pension may cover a lot less of your retirement expenses than you expected.

staythecourse
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by staythecourse » Sat Jun 03, 2017 8:11 pm

cherijoh wrote:Another thing to keep in mind is that pensions are becoming as rare as the dodo bird. ERISA protects your accrued benefits but it doesn't cover projected future benefits. Defined benefit plans gain most of their value in the last 10 years or so before retirement since they usually involve a fixed percentage x years of service x some measure of final salary. If the plan gets frozen, the years of service and salary used in the calculation of your monthly benefit get frozen too. The end result is that your pension may cover a lot less of your retirement expenses than you expected.
Not to sidetrack this thread, but if this is correct then it makes sense for the consultants giving advice to companies on how to manage future liabilities is to expedite eliminating more "experienced" workers as legally as possible. This benefits cutting down current salaries (the more experienced are the higher paid) and future liabilities (preventing folks from accruing those pension numbers).

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Dottie57
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Dottie57 » Sat Jun 03, 2017 9:14 pm

marcopolo wrote:
Dottie57 wrote:
TallBoy29er wrote:Combined you pull in $260 k per year. Maxing 401k's would put you at $234 k before taxes. That's a solid income. We obviously don't have your full situation, but on its face, it seems like there should be room in your budget to cash flow the effort.

I agree. Although I think the income after 401k max contributuions would be 224k.
If I understood the OP, only the DW is maxing, DH is at 14% (including Match) of $100k. So, there might be more. I don't think there is enough information to know if the HS costs could be cash flowed.

As an aside, maxing out could mean quite a bit more than indicated. Each could be putting in $54k ($108k combined), then $60k each once they turn 50.

I suspect the "max' is 18k. I think the 401k balances would be larger if the max is 54k. Many, many people do not know of 54k limit and many plans do not allow for non-payroll contributions. I was really disappointed mine did not.

marcopolo
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by marcopolo » Sat Jun 03, 2017 10:59 pm

Dottie57 wrote:
I suspect the "max' is 18k. I think the 401k balances would be larger if the max is 54k. Many, many people do not know of 54k limit and many plans do not allow for non-payroll contributions. I was really disappointed mine did not.
I suspect the 'max' is 18k as well. I was just pointing out that it could be 54k. It does seem a lot of people miss the fact that you can do that. I am not sure what you mean by non-payroll contributions. I believe the plan just needs to allow after-tax contributions, as only the first 18k can be pre-tax
Once in a while you get shown the light, in the strangest of places if you look at it right.

cherijoh
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by cherijoh » Sun Jun 04, 2017 8:46 am

staythecourse wrote:
cherijoh wrote:Another thing to keep in mind is that pensions are becoming as rare as the dodo bird. ERISA protects your accrued benefits but it doesn't cover projected future benefits. Defined benefit plans gain most of their value in the last 10 years or so before retirement since they usually involve a fixed percentage x years of service x some measure of final salary. If the plan gets frozen, the years of service and salary used in the calculation of your monthly benefit get frozen too. The end result is that your pension may cover a lot less of your retirement expenses than you expected.
Not to sidetrack this thread, but if this is correct then it makes sense for the consultants giving advice to companies on how to manage future liabilities is to expedite eliminating more "experienced" workers as legally as possible. This benefits cutting down current salaries (the more experienced are the higher paid) and future liabilities (preventing folks from accruing those pension numbers).

Good luck.
I separated from an employer that offered a DB pension about 10 years before I would have been eligible to take early retirement. (The company has since frozen the pension plan for all employees - around the time I would have retired). From a % of salary perspective, my pension would have been about 40% higher had I stayed the extra 10 years PLUS it would have been based on my salary at retirement (rather than my salary at separation). Presumably my salary would have at least kept up with inflation even if I didn't get another promotion. So that is probably at least another 20%. Since these factors are multiplicative not additive, I expect my pension payment would have been at least 2/3 bigger.

In addition, a penalty of 20% would have been applied had I opted to take the pension at what would have been my minimum retirement age to get full benefits (based on an early retirement formula). By waiting 5 years, I will be able to avoid the 20% penalty (4% per year) - of course at the expense of losing 5 years of benefits. (Employees with less than 15 years of service at the time of separation were subject to a 40% reduction or a 10 year delay to get full benefits).

So all in all, leaving the company cost me big time with respect to my pension benefits. At least for me it was "voluntary" since I turned a relocation offer (to move out of state) when my work site close. However, if your employer freezes your pension then you are stuck. You can look for another job with better benefits but you may or may not have time to up your savings to account for the loss in benefits. Fortunately my former employer also offered a 401k with a generous match. But I'm not sure how many of my colleagues were investing beyond the match.

Staythecourse is correct about the incentive to reduce the overall pension burden. This company offered several rounds of incentives to reduce the workforce in the 5 years before I left. The formula was tiered - 1 week salary/year of service for the first 5 years of service, 2 weeks salary per/year or years 6 - 10, and 3 weeks salary/per year of service for years 11 and beyond. (The maximum incentive was capped at 2 years of salary). Needless to say, most of the takers were more senior employees, although a few younger employees took the package to be stay at home parents or to go back to school.

Dottie57
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Dottie57 » Sun Jun 04, 2017 10:50 am

marcopolo wrote:
Dottie57 wrote:
I suspect the "max' is 18k. I think the 401k balances would be larger if the max is 54k. Many, many people do not know of 54k limit and many plans do not allow for non-payroll contributions. I was really disappointed mine did not.
I suspect the 'max' is 18k as well. I was just pointing out that it could be 54k. It does seem a lot of people miss the fact that you can do that. I am not sure what you mean by non-payroll contributions. I believe the plan just needs to allow after-tax contributions, as only the first 18k can be pre-tax

I did not understand about 54k max either until I came to this form. But I would not have had the money to put in either until recently.

The 401k plan does not allow contributions from a check written for the 401k. I have checked by calling Fidelity which is the plan administrator and by reading the plan summarry document which specifies all contributions come from payroll. The payroll system automatically stops deductions from paychecks at my max of 24k - I have tried that route.

marcopolo
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by marcopolo » Sun Jun 04, 2017 11:28 am

Dottie57 wrote:The payroll system automatically stops deductions from paychecks at my max of 24k - I have tried that route.

You are probably aware of this, but for the benefit of other readers, If you are over 50, the $24k represents the allowable max for pre-tax 401k contributions, including the "catch-up" provisions. The fact that your payroll system automatically stops at that point means that either your plan does not allow post-tax contributions (many plans do not), or that you have not selected them. In our plan you have to specifically choose to make after-tax contributions, separate from the decision of what percentage you chose to contribute. If you select a high percentage, and don't opt to do the after-tax, then the contributions stop when the pre-tax limit is hit.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Dottie57
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Dottie57 » Sun Jun 04, 2017 11:41 am

marcopolo wrote:
Dottie57 wrote:The payroll system automatically stops deductions from paychecks at my max of 24k - I have tried that route.

You are probably aware of this, but for the benefit of other readers, If you are over 50, the $24k represents the allowable max for pre-tax 401k contributions, including the "catch-up" provisions. The fact that your payroll system automatically stops at that point means that either your plan does not allow post-tax contributions (many plans do not), or that you have not selected them. In our plan you have to specifically choose to make after-tax contributions, separate from the decision of what percentage you chose to contribute. If you select a high percentage, and don't opt to do the after-tax, then the contributions stop when the pre-tax limit is hit.
You are right, no post tax contributions allowed. I've to talked Fidelity 3 times trying to find a chink in the wall to let more money through.

marcopolo
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by marcopolo » Sun Jun 04, 2017 11:47 am

Dottie57 wrote:
marcopolo wrote:
Dottie57 wrote:The payroll system automatically stops deductions from paychecks at my max of 24k - I have tried that route.

You are probably aware of this, but for the benefit of other readers, If you are over 50, the $24k represents the allowable max for pre-tax 401k contributions, including the "catch-up" provisions. The fact that your payroll system automatically stops at that point means that either your plan does not allow post-tax contributions (many plans do not), or that you have not selected them. In our plan you have to specifically choose to make after-tax contributions, separate from the decision of what percentage you chose to contribute. If you select a high percentage, and don't opt to do the after-tax, then the contributions stop when the pre-tax limit is hit.
You are right, no post tax contributions allowed. I've to talked Fidelity 3 times trying to find a chink in the wall to let more money through.
I don't think it is Fidelity that sets the plan rules, they just administer what the employer dictates. It is your employer that you would have to convince to allow more money through.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Dottie57
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Re: WHAT!? Us! Double comma! Can I pull back?

Post by Dottie57 » Sun Jun 04, 2017 12:02 pm

marcopolo wrote:
Dottie57 wrote:
marcopolo wrote:
Dottie57 wrote:The payroll system automatically stops deductions from paychecks at my max of 24k - I have tried that route.

You are probably aware of this, but for the benefit of other readers, If you are over 50, the $24k represents the allowable max for pre-tax 401k contributions, including the "catch-up" provisions. The fact that your payroll system automatically stops at that point means that either your plan does not allow post-tax contributions (many plans do not), or that you have not selected them. In our plan you have to specifically choose to make after-tax contributions, separate from the decision of what percentage you chose to contribute. If you select a high percentage, and don't opt to do the after-tax, then the contributions stop when the pre-tax limit is hit.
You are right, no post tax contributions allowed. I've to talked Fidelity 3 times trying to find a chink in the wall to let more money through.
I don't think it is Fidelity that sets the plan rules, they just administer what the employer dictates. It is your employer that you would have to convince to allow more money through.
I agree Fidelity does not set rules. But they are the only interpreter of plan summary documents I have found. My employer is LARGE (200k employees world wide). HR is delegated to outside corp via web site. Finding anyone to talk to about changing benefits is near impossible. Seriously.

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