Contributing more than $17k to 401k
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Contributing more than $17k to 401k
I know it has been discussed before how companies set up 401ks where you can personally contribute over the max $17k in a 401k. I searched on it but couldn't find what I was looking for. Does anyone know where to point me to how this is done?
Thanks!
Thanks!
Re: Contributing more than $17k to 401k
After-tax contributions to a 401(k) are pretty commonly available. What you can actually *do* with those contributions (example: sheltering them from additional taxes via a Roth rollover) varies widely. Here's a recent-ish Forbes-hosted article: http://www.forbes.com/sites/financialfi ... -heard-of/
And here's a more recent thread from this forum:
http://www.bogleheads.org/forum/viewtop ... st=1511358
And here's a more recent thread from this forum:
http://www.bogleheads.org/forum/viewtop ... st=1511358
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Re: Contributing more than $17k to 401k
great info! thanks Doug!
Re: Contributing more than $17k to 401k
After reading a few threads on this topic, I looked into this since I was interested in contributing more and then rolling these after tax contributions into a Roth IRA. I checked with my company's 401K provider and they replied thay my company's plan did not allow for after tax contributions.
Perhaps a silly question but has anyone encountered a similar situation and is there any other way to make an after tax 401K contribution? Could I simply send the 401K provider a check? Set up a separate 401K somehow?
Perhaps a silly question but has anyone encountered a similar situation and is there any other way to make an after tax 401K contribution? Could I simply send the 401K provider a check? Set up a separate 401K somehow?
Re: Contributing more than $17k to 401k
If they don't allow after-tax contributions, they're virtually certain not to allow rolling the after-tax contributions into a Roth IRA. Not sure it'd be worth your time investigating alternatives.bkslainte wrote:After reading a few threads on this topic, I looked into this since I was interested in contributing more and then rolling these after tax contributions into a Roth IRA. I checked with my company's 401K provider and they replied thay my company's plan did not allow for after tax contributions.
Re: Contributing more than $17k to 401k
Ok, thanks for the reply!
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Re: Contributing more than $17k to 401k
I would suggest submitting a formal letter to your HR department and ask that they make changes to allow after-tax contributions. My employers plan didn't have many low-cost funds and I was able to convince them to add a few Vanguard index bond and stock funds. I'm now trying to convince them to offer a Roth 401k alternative.
I would advise explaining how it would be worthwhile for the employees as a whole and your company. I believe there is advice either in the forum, in the wiki or both. Good luck!
I would advise explaining how it would be worthwhile for the employees as a whole and your company. I believe there is advice either in the forum, in the wiki or both. Good luck!
Re: Contributing more than $17k to 401k
Your company can help you put in additional, up to 50k this year and 51k next year, under section 415. Google it.
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Re: Contributing more than $17k to 401k
I'm stoked. I just got an email from my HR department. They are going to add two new funds. One is an Oppendheimer EM fund (ER .89%) which I don't care about but I'm really happy that they are adding the VG total bond fund. I suggested that they add VG index funds and they took it to committee and had them added. Just goes to show you that the squeaky wheel gets the grease!
Also, I work for a bank that employs several thousands of people and has $17 billion in assets. Sometimes the little guy is actually heard....
Also, I work for a bank that employs several thousands of people and has $17 billion in assets. Sometimes the little guy is actually heard....
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Re: Contributing more than $17k to 401k
Really, (non-Roth) after-tax 401k contributions are common?doug91 wrote:After-tax contributions to a 401(k) are pretty commonly available.
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Re: Contributing more than $17k to 401k
Another Forbes article stated:natureexplorer wrote:Really, (non-Roth) after-tax 401k contributions are common?doug91 wrote:After-tax contributions to a 401(k) are pretty commonly available.
There are actually several things lumped into "this", and it's addressing being able to take in-service distribution. It's difficult to say how prevalent being about to make after-tax contributions is. I would suspect it's below 10%, but I don't know. I don't recall if we ever had a poll on the subject.As for younger folks, the law permits them to get in-service distributions of money rolled over from previous 401(k)s; of employer (but not employee) pretax contributions; of employee aftertax contributions; and of account earnings. Here companies are less accommodating--only 16% allow this option, the 2006 survey found.
Brian
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Re: Contributing more than $17k to 401k
OK. I don't consider 10% common, so we are in agreement. However, I am taking a poll: http://www.bogleheads.org/forum/viewtop ... 1&t=104829Default User BR wrote:Another Forbes article stated:natureexplorer wrote:Really, (non-Roth) after-tax 401k contributions are common?doug91 wrote:After-tax contributions to a 401(k) are pretty commonly available.There are actually several things lumped into "this", and it's addressing being able to take in-service distribution. It's difficult to say how prevalent being about to make after-tax contributions is. I would suspect it's below 10%, but I don't know. I don't recall if we ever had a poll on the subject.As for younger folks, the law permits them to get in-service distributions of money rolled over from previous 401(k)s; of employer (but not employee) pretax contributions; of employee aftertax contributions; and of account earnings. Here companies are less accommodating--only 16% allow this option, the 2006 survey found.
Re: Contributing more than $17k to 401k
Keep in mind that even if you could make after-tax contributions to your 401(k), you wouldn't be able to roll (convert) only those after-tax contributions into a Roth. My understanding is that when you convert part of a "traditional" retirement plan to a Roth, you have to pro-rate the pre-tax and after-tax contributions. That is, if (say) 80% of your 401(k) money is pre-tax, then 80% of your converted money will be deemed to be pre-tax and you'll have to pay income tax on that amount.bkslainte wrote:I was interested in contributing more and then rolling these after tax contributions into a Roth IRA.
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
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Re: Contributing more than $17k to 401k
Actually you are able to do precisely that. Since only after-tax contributions/earnings may be taken as in-service distributions before reaching an applicable age (if the plan allows), you can effectively isolate the after-tax amounts for conversion.
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Re: Contributing more than $17k to 401k
The pre-tax contributions are not eligible for distribution, so don't take part in pro-rata. The after-tax contributions and a share of taxable earnings can be distributed. Some of us take advantage of that.22twain wrote:bkslainte wrote:Keep in mind that even if you could make after-tax contributions to your 401(k), you wouldn't be able to roll (convert) only those after-tax contributions into a Roth. My understanding is that when you convert part of a "traditional" retirement plan to a Roth, you have to pro-rate the pre-tax and after-tax contributions. That is, if (say) 80% of your 401(k) money is pre-tax, then 80% of your converted money will be deemed to be pre-tax and you'll have to pay income tax on that amount.
Brian
Re: Contributing more than $17k to 401k
Aha! I missed the significance of the in-service status because the discussion of Roth conversions that I've seen so far has involved people who were eligible to withdraw/convert all the assets in their traditional tax-deferred accounts.SpecialK22 wrote:Since only after-tax contributions/earnings may be taken as in-service distributions before reaching an applicable age (if the plan allows), you can effectively isolate the after-tax amounts for conversion.
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...