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Married filing jointly - 401k contribution limit

Posted: Mon Oct 12, 2020 1:41 pm
by threebuns
Married this year, we will be filing jointly for 2020 (age under 59).

I have a 401k that I have been maxing out (19.5k) for this year, she has a 401k that we have been funding just to receive the match. Her 401k options aren't that great so that's why we've been maxing out mine. Now that we're married I'd like to contribute more in total and my question is, can I put more into mine now, without contributing more to hers? Or since I'm already at my limit, do I have to contribute to hers? I know with Roth IRAs, we each have to have our own account and each have to contribute up to the 6k limit. Was trying to determine if 401ks are viewed the same way.

For example (2020 contributions to each of our 401ks):

current:
Mine: 19,500
Hers: 3,000

proposed:
Mine: 35,500
Hers: 3,000

Can I do this? or do I need to put that extra 16k into her 401k?

Thanks!

Re: Married filing jointly - 401k contribution limit

Posted: Mon Oct 12, 2020 1:44 pm
by dharrythomas
With a 401(K) it is an individual limit. Once you have hit the max, you cannot borrow capacity from a spouse.

Now if you are over 50, you can contribute a little more.

Re: Married filing jointly - 401k contribution limit

Posted: Mon Oct 12, 2020 2:39 pm
by threebuns
Thanks for the reply, it was surprisingly difficult to google for that information.

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 6:33 am
by billfromct
You say your "age under 59", but if your age is 50 & higher, you can contribute an additional $6,500 per year up to $26,000 for 2020.

bill

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 6:46 am
by nolesrule
Is her 401k actually bad or just not great?

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 6:52 am
by Grt2bOutdoors
threebuns wrote: Mon Oct 12, 2020 2:39 pm Thanks for the reply, it was surprisingly difficult to google for that information.
The source of information is found at Irs.gov Search for 401k annual limits.

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 7:34 am
by GoldenGoose
Sometimes it depends on the employer too. My wife is considered to be highly compensated employee and her contribution is limited to 8% of her salary.

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 7:39 am
by Neuron
19.5k is the pretax limit to employee contributions (assuming you are on the younger side), you may be able to add more post-tax if your employer offers that option in their plan. You need to read your employers 401k plan information to know that.

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 8:46 am
by go2run
nolesrule wrote: Tue Oct 13, 2020 6:46 am Is her 401k actually bad or just not great?
Same question here. At a minimum, if it's not "great", at least contribute the minimum to maximize any company match. What about the pre-tax benefits you get by maximizing contributions to both 401k's?

FWIW, my spouse's employer sponsored plan isn't the greatest either but there were enough fund options available to find an index fund with minimal fees. We max it out more for the benefit of reducing our taxable income.

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 9:57 am
by threebuns
nolesrule wrote: Tue Oct 13, 2020 6:46 am Is her 401k actually bad or just not great?
No, it's not that bad at all, just me being picky. It's through OneAmerica, and thankfully they offer an S&P500 Index find. Her company offers a 4% match. Mine is through Fidelity, which I happen to prefer. Our 401ks are essentially the same fund, hers just costs 6 times more:

Hers: State Street S&P 500 Index I - Exp ratio 0.65%
Mine: Northern Trust S&P500 Index Fund - Exp ratio 0.016%
GoldenGoose wrote: Tue Oct 13, 2020 7:34 am Sometimes it depends on the employer too. My wife is considered to be highly compensated employee and her contribution is limited to 8% of her salary.
Although she is not highly compensated, I do need to make sure hers doesn't have a cap. Good call.
go2run wrote: Tue Oct 13, 2020 8:46 am
Same question here. At a minimum, if it's not "great", at least contribute the minimum to maximize any company match. What about the pre-tax benefits you get by maximizing contributions to both 401k's?

FWIW, my spouse's employer sponsored plan isn't the greatest either but there were enough fund options available to find an index fund with minimal fees. We max it out more for the benefit of reducing our taxable income.
Yea that is the idea, max out all of the pre-tax accounts as best I can. We are both contributing enough already to get the maximum match.

Re: Married filing jointly - 401k contribution limit

Posted: Tue Oct 13, 2020 2:38 pm
by nolesrule
threebuns wrote: Tue Oct 13, 2020 9:57 am
nolesrule wrote: Tue Oct 13, 2020 6:46 am Is her 401k actually bad or just not great?
No, it's not that bad at all, just me being picky. It's through OneAmerica, and thankfully they offer an S&P500 Index find. Her company offers a 4% match. Mine is through Fidelity, which I happen to prefer. Our 401ks are essentially the same fund, hers just costs 6 times more:

Hers: State Street S&P 500 Index I - Exp ratio 0.65%
Mine: Northern Trust S&P500 Index Fund - Exp ratio 0.016%
I'd use it after maxing Roth IRAs.

Re: Married filing jointly - 401k contribution limit

Posted: Wed Oct 14, 2020 8:40 am
by tj
threebuns wrote: Tue Oct 13, 2020 9:57 am
nolesrule wrote: Tue Oct 13, 2020 6:46 am Is her 401k actually bad or just not great?
No, it's not that bad at all, just me being picky. It's through OneAmerica, and thankfully they offer an S&P500 Index find. Her company offers a 4% match. Mine is through Fidelity, which I happen to prefer. Our 401ks are essentially the same fund, hers just costs 6 times more:

Hers: State Street S&P 500 Index I - Exp ratio 0.65%
Mine: Northern Trust S&P500 Index Fund - Exp ratio 0.016%
GoldenGoose wrote: Tue Oct 13, 2020 7:34 am Sometimes it depends on the employer too. My wife is considered to be highly compensated employee and her contribution is limited to 8% of her salary.
Although she is not highly compensated, I do need to make sure hers doesn't have a cap. Good call.
go2run wrote: Tue Oct 13, 2020 8:46 am
Same question here. At a minimum, if it's not "great", at least contribute the minimum to maximize any company match. What about the pre-tax benefits you get by maximizing contributions to both 401k's?

FWIW, my spouse's employer sponsored plan isn't the greatest either but there were enough fund options available to find an index fund with minimal fees. We max it out more for the benefit of reducing our taxable income.
Yea that is the idea, max out all of the pre-tax accounts as best I can. We are both contributing enough already to get the maximum match.
I'm sure you meant 0.065 rather than 0.65 since the ERa you posted is 40x better not 4x. 6bps is still almost nothing and better than the vast majority of plans.

Re: Married filing jointly - 401k contribution limit

Posted: Wed Oct 14, 2020 12:56 pm
by Rlew
Are you talking about SSSWX in her 401k?

If so I see it's ER listed as 0.22 (https://finance.yahoo.com/quote/SSSWX/). Could definitely be better for an S&P index fund, but not the end of the world. Probably less than the tax drag you would see in a taxable account, and you get all the benefits of tax deferral.

If your tax situation favors tax deferred over Roth contributions, I would contribute to her 401k and use this fund as part of my US allocation without hesitation.