Question about Roth and Traditional 401K contributions...

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xerxes101
Posts: 534
Joined: Sat Oct 14, 2017 11:25 am

Question about Roth and Traditional 401K contributions...

Post by xerxes101 »

Hello Bogleheads,

I need some help understanding how this works. So my previous employer gave us the option to contribute to either traditional 401K (t401K)or Roth 401K (r401K), as long as the combined contributions did not exceed the maximum IRS limit. For 2021, I chose a 50:50 approach so 50% t401K and 50% r401K. I then changed my employer after Q1 of 2021 and the new employer only offers t401K.

Here is my question: when I want to specify how much money to contribute to this new employer's 401K plan, do I deduct what I had already contributed to both r401K and t401K or only the t401K of the previous employer's plan?

Thank you for your help :beer and I hope my question is clear.
Jeev1
Posts: 46
Joined: Wed Mar 17, 2021 9:37 pm
Location: TX

Re: Question about Roth and Traditional 401K contributions...

Post by Jeev1 »

as per my understanding, the total limit for employee contribution for 401K (pretax and post-tax) is 19.5K per year (number of employers does not matter).

I am hoping someone will refute it...
Lionel Hutz
Posts: 379
Joined: Sat Jan 30, 2021 12:18 pm

Re: Question about Roth and Traditional 401K contributions...

Post by Lionel Hutz »

It's an annual IRS limit, not per employer/401k. IRS 402g limit for 2021 is $19,500. 402g encompasses traditional pre-tax and Roth. It does not include traditional after-tax, nor any employer contributions.

You can do an additional $6,500 catch-up between pre-tax & Roth if over 50 years old.

You'll need to track this limit yourself; your new employer's 401k record keeper will not track your old 401k's contributions against the limits.
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retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Question about Roth and Traditional 401K contributions...

Post by retiredjg »

The limit for "elective deferrals" is $19.5k. That can be traditional 401k and/or Roth 401k and includes whatever goes into the new plan.
Topic Author
xerxes101
Posts: 534
Joined: Sat Oct 14, 2017 11:25 am

Re: Question about Roth and Traditional 401K contributions...

Post by xerxes101 »

Thank you all for your helpful responses.

Now if I were to do a direct rollover of these 401K accounts into a brokerage account would it be possible to consider the Roth portion of the 401K as my Roth contribution for the year? My understanding is that I am eligible to contribute additional $6500 to a Roth account separate from the 401K contributions.
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retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Question about Roth and Traditional 401K contributions...

Post by retiredjg »

xerxes101 wrote: Sun Apr 11, 2021 7:26 am Thank you all for your helpful responses.

Now if I were to do a direct rollover of these 401K accounts into a brokerage account would it be possible to consider the Roth portion of the 401K as my Roth contribution for the year? My understanding is that I am eligible to contribute additional $6500 to a Roth account separate from the 401K contributions.
A rollover is not part of your annual contribution limit. You can do both the rollover and a contribution if you want. However, the limit is $6,000/$7,000. Not $6,500.
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