401K contribution question....

[UGAZ]

Just a quick question...Say that you work at 2 different places. I know you can contribute to both 401K Plans at both places but wondering if you can max out at both places (18,500 for under 50?)? What happens if you max out at both places? Will IRS find out? Anyone here familiar with such situation? Thanks. What other alternatives to put your pre-tax to avoid tax? Please advise...Thanks

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[Momus]

IRS has a software to screen this type of error. You will get audited if you contribute more than 18.5k.

If you fail to correct it by April (at tax time). the excess contribution will still be taxable as income. But the IRS says it won't factor into your cost basis, meaning it will be taxed again as income when it's eventually withdrawn or returned to you. So, you will get double taxed if you let it go over 18.5k/yr without correcting it.

 

[Mambo#5]

Just a quick question...Say that you work at 2 different places. I know you can contribute to both 401K Plans at both places but wondering if you can max out at both places (18,500 for under 50?)? What happens if you max out at both places? Will IRS find out? Anyone here familiar with such situation? Thanks. What other alternatives to put your pre-tax to avoid tax? Please advise...Thanks

They’ll tax you twice.

 

[dblock05]

Just a quick question...Say that you work at 2 different places. I know you can contribute to both 401K Plans at both places but wondering if you can max out at both places (18,500 for under 50?)? What happens if you max out at both places? Will IRS find out? Anyone here familiar with such situation? Thanks. What other alternatives to put your pre-tax to avoid tax? Please advise...Thanks

HSA. Also do a backdoor roth (but thats after tax)

 

[confettiflyer]

I once exceeded the $18,500 cap by $50 on accident...nothing happened. The amount was probably so small it didn’t trigger anything, and I’m beyond the traditional 3 year audit window now.

That’s, what...$15 in taxes due if your marginal rate is 30%?


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[914451]

The IRS will certainly find out if you over contributed by 2x, and more than likely, they'll get you after April 15 of the following year, post "grace period," which is when double taxation actually hits you. The fines on unpaid tax increase over time, and there are also penalties that the IRS can slap on to the collection bill. Keep that in mind.

 

[UGAZ]

Does anyone know how much contribution can you do with roth 401k? Let's say I max out my traditional 401k at 18500....already.....how much more can I contribute into the roth 401k? Please advise.

 

[mentos]

Does anyone know how much contribution can you do with roth 401k? Let's say I max out my traditional 401k at 18500....already.....how much more can I contribute into the roth 401k? Please advise.

None. The total is 18500 for all 401k combined. After 401k, Roth IRA, HSA, you have to invest in taxable acct.

 

[TMP-SMX]

Max employee contributions to 403b/401k (roth or traditional doesn't matter) is 18,500 per year total. If you go over that you will regret it. Employers don't collaborate regarding this you need to calculate where you will be at the end of the year early on and plan ahead to avoid going over. The max contributions and employer match is 55,000 per year (would take pretty generous matching). 457 is separate and another 18,500 a year. Roth or Traditional IRA is 5500 per year (11,000 if married) with 5500 per individual. After certain income levels you cannot directly contribute to a Roth or get the deduction from a traditional IRA (so most people do backdoor roth contributions at that point). Beyond that you are looking at 529s, HSA, real estate, or taxable accounts. Putting low dividend Vanguard total stock market funds in the taxable account is a good idea as well as intermediate nontaxable bonds for diversification.

 

[UGAZ]

Please help me what to do ....up to this point I already contribute 15000 USD in my employer 401K. I just figured they also allow roth 401K. Should I contribute the rest to roth 401k? or just leave it there and do the traditional max 401k ? I want to put more savings ....any other tricks or ways to max out my saving potentials? Thanks

 

[TMP-SMX]

You can only contribute $18,500 from your paycheck to your 401k. Roth or Traditional doesn't matter with that maximum. Not every employer offers a roth 401k. Most it is just the traditional 401k. There's arguments to be made depending on where you are your tax bracket now is likely to be higher than in retirement. Personally I have 1% of my paycheck going to the Roth 403b and the remainder to the traditional 403b just for some tax diversification upon withdrawals. The other way to diversify is also contributing the $5500 to your IRA every year (separate). I don't know what other plans you have available to you. Depending on the terms and if it is available a 457 is a separate $18,500 basket to put your money pre-tax. As I said above a health savings account is a good place to put money if it's available to you (It's not at my employer). Beyond that 529s if you have kids for college savings can save you some state tax. Beyond that it is all taxable investments (real estate or index fund taxable accounts).

 

[UGAZ]

According to the IRS, it says the max (regardless of roth 401k or traditional 401K) is aggregated and limited to 18500.. It is sucky...argg.

 

[NITRAS]

I invest in ROTH for a couple reasons.
1. 18500 in after tax dollars is more than 18500 in pre-tax dollars. I've invested more by maxing out my options in ROTH.
2. look at a compound interest table. I'm starting being an attending at 29. If the market do well, I should have easily high 7 or 8 figures. . . . retirement will very easily be a pay raise. I don't think anyone knows what the tax brackets will be in 20 or 30 years, but I will rather have paid taxes on the little number than the big number.

My matching is pre-tax, and after I pay off my house I'll see if I can roll it to ROTH as well when I have money to pay the taxes.

 

[Whereismynorco]

Do back door roth??

 

[UGAZ]

Do back door roth??

How does back door Roth work? Does it have income limit?

 

[NITRAS]

Google back door Roth. But you can make non-deductible IRA contributions, and you can always roll an IRA to a ROTH.

It works, but you can't have pre-tax IRA's.

 

[TMP-SMX]

Google back door Roth. But you can make non-deductible IRA contributions, and you can always roll an IRA to a ROTH.

It works, but you can't have pre-tax IRA's.

What he said. If you do have a traditional IRA try to roll it over to your current job's traditional 401k account before you do any backdoor Roth IRA conversions otherwise you will owe tax on all of the gains on your traditional IRAs. If you are under these limits then you don't have to do it backdoor.