Unexpected 401k Contribution

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Sourc3
Posts: 108
Joined: Wed Aug 05, 2015 4:45 pm

Unexpected 401k Contribution

Post by Sourc3 » Sun Oct 06, 2019 11:09 am

Last week I looked at my retirement account at Fidelity to see an unexpected contribution (401k) from an old employer (3 years ago).

The contribution seems to be “employer contribution” not employee, but I’m curious as to if this will cause any issues going over the maximum 401k contribution this year.

I received no written communication from either fidelity or my previous employer. What would yo do in this case?

HomeStretch
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Re: Unexpected 401k Contribution

Post by HomeStretch » Sun Oct 06, 2019 11:54 am

I would call Fidelity and ask about it.

Maybe the former employer is correcting an old match error or maybe the deposit to your account was an error. As it’s an old plan and an employer contribution, it should not cause you an issue with contributions to your current plan.

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telemark
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Re: Unexpected 401k Contribution

Post by telemark » Sun Oct 06, 2019 12:53 pm

Something similar happened to me last spring, thought it was a mistake at first. I had worked part of 2018 and my former employer made a year-end contribution to everyone who had worked in that year. I don't know why one might show up three years later. In any case, employer contributions don't count towards your limit.

Spirit Rider
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Re: Unexpected 401k Contribution

Post by Spirit Rider » Sun Oct 06, 2019 2:31 pm

It is more likely than not that this is a correction for a plan error. This could be the result of a plan audit.

It could be an original employer contribution calculation error, a plan vesting calculation error, a corrective QNEC or any number of plan errors.

It is less likely that this is current year mistaken contribution by the plan. It could even by something as simple as an account number error.

Personally, I would assume you are entitled to it. If you aren't they might come looking for it eventually. Either way I wouldn't waste any time on it. What will be will be. It will not interfere with your contributions.

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Brianmcg321
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Re: Unexpected 401k Contribution

Post by Brianmcg321 » Sun Oct 06, 2019 3:12 pm

I would roll it over to my IRA.

An employer contribution has nothing to do with your max contribution to the 401k.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

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Stinky
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Re: Unexpected 401k Contribution

Post by Stinky » Sun Oct 06, 2019 3:35 pm

Spirit Rider wrote:
Sun Oct 06, 2019 2:31 pm

Personally, I would assume you are entitled to it. If you aren't they might come looking for it eventually. Either way I wouldn't waste any time on it. What will be will be. It will not interfere with your contributions.
I agree.

I would let this sleeping dog lie. And be pleased with your good fortune of having more retirement savings than you thought!
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lukestuckenhymer
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Re: Unexpected 401k Contribution

Post by lukestuckenhymer » Sun Oct 06, 2019 3:39 pm

The only limit an employer match could put you over is the 415(c) limit of combined EE & ER contributions, which is: the lesser of 100% of an employee’s compensation or $56,000 for 2019 ($55,000 for 2018 not including "catch-up" elective deferrals of $6,000 in 2015 - 2019 for employees age 50 or older)

As other users said, it may be the result of your previous employer's plan audit.

Topic Author
Sourc3
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Joined: Wed Aug 05, 2015 4:45 pm

Re: Unexpected 401k Contribution

Post by Sourc3 » Sun Oct 06, 2019 4:13 pm

Thank you all for the replies. I am going to just let it sit there and maybe roll it over to my 401k plan (with fidelity again) next year.

Spirit Rider
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Re: Unexpected 401k Contribution

Post by Spirit Rider » Sun Oct 06, 2019 4:51 pm

lukestuckenhymer wrote:
Sun Oct 06, 2019 3:39 pm
The only limit an employer match could put you over is the 415(c) limit of combined EE & ER contributions, which is: the lesser of 100% of an employee’s compensation or $56,000 for 2019 ($55,000 for 2018 not including "catch-up" elective deferrals of $6,000 in 2015 - 2019 for employees age 50 or older)
Employer contributions are normally attributable to the plan year they are "for".

The 415c annual addition limit (2019 = $56K) is separate for each unaffiliated employer. Even if this "employer contribution" would be attributable for this tax year. It would not apply to the OP's annual addition limit for his current employer.

lukestuckenhymer
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Re: Unexpected 401k Contribution

Post by lukestuckenhymer » Sun Oct 06, 2019 5:23 pm

Spirit Rider wrote:
Sun Oct 06, 2019 4:51 pm
lukestuckenhymer wrote:
Sun Oct 06, 2019 3:39 pm
The only limit an employer match could put you over is the 415(c) limit of combined EE & ER contributions, which is: the lesser of 100% of an employee’s compensation or $56,000 for 2019 ($55,000 for 2018 not including "catch-up" elective deferrals of $6,000 in 2015 - 2019 for employees age 50 or older)
Employer contributions are normally attributable to the plan year they are "for".

The 415c annual addition limit (2019 = $56K) is separate for each unaffiliated employer. Even if this "employer contribution" would be attributable for this tax year. It would not apply to the OP's annual addition limit for his current employer.
Good to know. Thanks.

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