New employer- 401k plan not set up yet- how can I max 2020?

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Topic Author
Mongoose
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Joined: Fri Sep 04, 2009 5:02 pm

New employer- 401k plan not set up yet- how can I max 2020?

Post by Mongoose »

I was recently laid off and accepted a position with a startup company that was not able to get the 401k set up until Jan 2021.

My total contributions for the year are at $14.5k. Is there any way I can get the last $5k into a trad ira (or 401k) before the end of the year for tax purposes? That $5k roughly translates into $750 of lost investment. Basically- can I legally fill this space?

I also have the same problem with the HSA but I know I can open my own HSA to finish this years contributions so it isn't as big of a deal.
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FiveK
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by FiveK »

401k operates on a calendar year only.

The traditional IRA contribution limit is completely separate from any 401k contribution.

If you have already contributed $6K to an IRA for 2020, then you cannot contribute any more to a 2020 IRA. If you have not already contributed $6K to an IRA for 2020, then you may contribute so your total IRA contributions for 2020 are no more than $6K. See IRA Deduction Limits | Internal Revenue Service to determine if you could deduct those contributions.
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Nate79
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Nate79 »

For HSA you need to have an HSA eligible health insurance plan. Do you?
Topic Author
Mongoose
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Mongoose »

Yes. Works better for us with the high deductible plans currently.
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theRoCK
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by theRoCK »

Unfortunately, I dont think you can backfill a 401k. I had the same situation last year due to a layoff and the new company having a 2 month waiting period before enrolling me in their 401k plan. Since my previous company didnt have a true-up match, I had to calculate the monthly contributions per paycheck to get full matching, but that meant the last 2 months of the year I lost on making the contribution due to layoff, and I couldnt have the new 401k setup until Jan 2020.

I also joined a startup, and they dont even have a 401k match. So really baffled as to why have a waiting period when there is not even a match!!
Topic Author
Mongoose
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Joined: Fri Sep 04, 2009 5:02 pm

Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Mongoose »

Yeah unfortunately I think I am out of luck. Only bright side as another poster mentioned is that I can claim the deduction on the IRA side- I haven't put anything into the Roth this year so I may just go traditional to lower the tax bill.
Flyer24
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Flyer24 »

Topic moved to Personal Investments.
Spirit Rider
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Spirit Rider »

Mongoose wrote: Sat Oct 17, 2020 3:18 pm Yeah unfortunately I think I am out of luck. Only bright side as another poster mentioned is that I can claim the deduction on the IRA side- I haven't put anything into the Roth this year so I may just go traditional to lower the tax bill.
If you had 401k employee and/or employer contributions of even $1 for even 1 day. You are subject to the traditional IRA deduction income limit as pointed out by @FiveK.
Lee_WSP
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Lee_WSP »

Mongoose wrote: Sat Oct 17, 2020 3:18 pm Yeah unfortunately I think I am out of luck. Only bright side as another poster mentioned is that I can claim the deduction on the IRA side- I haven't put anything into the Roth this year so I may just go traditional to lower the tax bill.
Wouldn't your total tax bill be miniscule this year?
Lalamimi
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Lalamimi »

does spouse work? can they make an extra/spousal IRA contribution?
Topic Author
Mongoose
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Re: New employer- 401k plan not set up yet- how can I max 2020?

Post by Mongoose »

Lalamimi wrote: Sun Oct 18, 2020 9:39 am does spouse work? can they make an extra/spousal IRA contribution?
No- but doing research after posting this she is eligible to open an individual 401k as a sole proprietorship business owner. I think that this would solve all of my problems.
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