Are 401k contribution percents on salary before or after FSA/HSA elections?

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ipo_fin_z
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Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by ipo_fin_z » Sat Dec 08, 2018 3:59 pm

/the joys of setting up a new 401k with one pay cycle remaining.

My 401k provider (Fidelity) is asking for a contribution percentage of my salary. It's really unclear (and I can't find any documentation on their site or elsewhere on the internet) if this percentage is of my base salary or base salary less FSA, HSA, etc. contributions.

* The language suggests base salary
* But if it becomes base salary, it becomes very easy to have a 401K contribution plus FSA/HSA contributions exceed paycheck - in which case I have no idea what happens. (So it would seem to make more sense to be base salary less FSA contributions to avoid such a problem)

Is this something controlled by HR or standardized?

Asking here as my HR is very backlogged and I risk missing the next pay cycle.

livesoft
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by livesoft » Sat Dec 08, 2018 4:07 pm

FWIW, we never used a percentage, but used a dollar amount. And we changed the amount whenever we wanted to.

I doubt that one can only use a percentage. There must be a way to use a dollar amount.

Sometimes the dollar amount set would result in a negative paycheck. Believe me, HR always has time to talk to someone who is slated to a get a negative paycheck.
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Nate79
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by Nate79 » Sat Dec 08, 2018 4:28 pm

At my employer our 401k is a percentage of pretax income and that is the only option.

StopIroningShirts
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by StopIroningShirts » Sat Dec 08, 2018 4:57 pm

My employer has a 401k % deduction based on gross salary.

Our HSA is a dollar amount.

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jhfenton
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by jhfenton » Sat Dec 08, 2018 5:09 pm

livesoft wrote:
Sat Dec 08, 2018 4:07 pm
I doubt that one can only use a percentage. There must be a way to use a dollar amount.
My Fidelity 401(k) only allows me to enter whole percentages from 0% to 75%. I can change it as often as I like, and as long as I give them a few days, it goes into effect for the next paycheck.

I actually had to bump it up a few percent for the last three paychecks of the year because they skimped a bit on our Q2 and Q3 bonus payouts compared to prior years, so I realized that I was going to come up a few hundred dollars short of maxing it out.

My wife's 401(k) is through Empower, and it literally offers a slider for choosing her deferral percentage. We can move the slider from 0% to 100%. We can't actually type in a number.

To answer the OP's question, in my experience the percentage is always of base salary.

My wife's company prioritizes other deductions (health insurance, FSA, etc.), but bases the 401(k) deferral on base salary. If the requested 401(k) deferral is greater than what's left after other deductions, they'll simply defer everything that's left.

My company choses to leave a 25% cushion to avoid the problem.

drk
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by drk » Sat Dec 08, 2018 5:11 pm

livesoft wrote:
Sat Dec 08, 2018 4:07 pm
I doubt that one can only use a percentage. There must be a way to use a dollar amount.
My company's Vanguard 401k only allows percentage (up to 90%).

OP, in my company's case, the percentage is taken based on gross base salary before any other contributions. My HSA money is a flat dollar amount.

Spirit Rider
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by Spirit Rider » Sat Dec 08, 2018 6:38 pm

Contribution percentages would always be based on gross compensation, but subject to ordering rules of mandatory deductions followed by voluntary deductions. Mandatory deduction order would generally be employment taxes, federal withholding, state withholding and government/court orders. Voluntary deductions would be based on the employee benefit plan rules with DC retirement plan (401k, 403b, etc...) contributions generally last.

P.S. Are you sure you have enough time to change the election for 2018. Some employers require a minimum of one pay period delay after the current pay period. Meaning if today is the end of a two week pay period, you could not change until the pay period beginning two weeks from tomorrow which would have a pay date in 2019. Some employers require 2+ pay periods.

lazydavid
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by lazydavid » Sun Dec 09, 2018 8:27 pm

livesoft wrote:
Sat Dec 08, 2018 4:07 pm
I doubt that one can only use a percentage. There must be a way to use a dollar amount.
My 401k at Fidelity only allows contributions as a percentage of pay, with a maximum of 50% (or 10% if you're unlucky enough to be classified as an HCE).

livesoft
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by livesoft » Sun Dec 09, 2018 8:52 pm

Well, I will just say that I am absolutely wrong about all plans allowing a dollar amount. Thanks to everyone for setting me straight on that.
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pdavi21
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by pdavi21 » Sun Dec 09, 2018 9:00 pm

I would suggest it's the same as company match (another 401k percentage based on salary). It's always base salary, one company paid match and calculated percent on bonuses too.

Most employers cap the amount at 50-80% to prevent negative paychecks (most of them).

If you want to go negative, ask HR if it's allowed.

Spirit Rider
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Re: Are 401k contribution percents on salary before or after FSA/HSA elections?

Post by Spirit Rider » Sun Dec 09, 2018 9:17 pm

It would never cause a negative paycheck.

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