401k - more than one company in one year

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JBTX
Posts: 4039
Joined: Wed Jul 26, 2017 12:46 pm

401k - more than one company in one year

Post by JBTX » Thu Oct 11, 2018 9:15 am

Currently working on a contract basis W2 through an agency - and contributing to the agency's 401k plan. It is a decent plan expense wise, and OK choices, but there is no match, which isn't surprising. I can also contribute at a pretty high percentage to catch up to my annual max (over 50)

Question is what happens next year, and what to do about it. Of course, I ultimately don't know. The engagement will probably spill over into next year, but I don't know how long, and if it ends, do I go to another engagement, or do I get full time employment elsewhere, with a 401k plan that has a match? These are all hypotheticals at this point.

1. My first issue is figuring out next year how much to contribute to the current plan, which has no match - not knowing how long I'll be with the agency.

2. The second issue is a question - let's say I maxed out my tax deferred limit next year at the agency (approx $25K?), then leave and get a job with a company that has a 401k and a lucrative match. Am I screwed? Can I contribute non-tax deferred and still get the match (I assume that depends on the company's policy)

PolarBearMarket
Posts: 11
Joined: Thu Sep 13, 2018 11:52 am

Re: 401k - more than one company in one year

Post by PolarBearMarket » Thu Oct 11, 2018 9:34 am

It sounds like your first concern is just missing out on a potential employer match. In my experience, most employers that match 401(k) contributions match a portion of monthly pay. If you contribute $2,042/month to your 401(k) all year, you should be able to maximize the hypothetical match of your potential future employer as long as your salary isn't more than $400K (assuming generous 6% match).

When you raise point #2, it sounds like the secondary issue is what happens if you front-load your 401(k) contributions. If you expect to be employed all of next year and think you could be switching to an employer with a match, then it's probably worth not front-loading your contributions to keep the match option open. I don't know of a method to contribute to non-tax deferred account in a way that qualifies you for a typical company's matching program, but would be interested to hear if others have experience with this.

Spirit Rider
Posts: 8678
Joined: Fri Mar 02, 2007 2:39 pm

Re: 401k - more than one company in one year

Post by Spirit Rider » Thu Oct 11, 2018 10:21 am

Some companies match after-tax contributions.

megabad
Posts: 574
Joined: Fri Jun 01, 2018 4:00 pm

Re: 401k - more than one company in one year

Post by megabad » Thu Oct 11, 2018 10:41 am

Spirit Rider wrote:
Thu Oct 11, 2018 10:21 am
Some companies match after-tax contributions.
This was true at the last two megacorps I worked at. So my answer to question 1 is--the max you can afford up to the legal/plan limits. And my answer to question 2 is--You are not "screwed" if you find a plan that allows and matches after tax contributions.

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