Heard that this time the irs limit is 18.5 k . What does that entail? Is it the employee limit or employer limit or is it like total contribution? So for example if someone earns 150k and his employer matches double upto 10 percent and his match can be max 5 percent. What is the limit that will be imposed on it?
18.5k is the limit for the employee contribution. Plain and simple.
Just to correct it’s not unlimited from employer side there is total limit too
Also, to correct, 18.5 is the limit to pre tax money. Global limit including employer contribution and after tax money is 55k
What??? Thought limit of 18.5k included employer match.
No. Employer match are only counted towards the 55k limit
holy shit. 😦
OMG 🤦♀️
What happens if you theoretically contributed more than the total 18.5k comes tax season? Say you set your contribution percentage high and just left it there to accumulate more than that limit?
Some kind of penalty at tax time, maybe? But I’ve often wondered why/if a 401k management company would even let you make that mistake. Never tried to find out.
Not exactly theoretical since it happens. It’s actually a viable strategy if you know what you’re doing. 10% penalty EVERY year until you pull the money out. You have to fill out 1099-R.
Actually why would you have it 18.5 k deposited? That money is locked until retirement
Tax sheltering. If you do Roth, you “lock in” your tax rate and then let it grow tax free. If you do traditional, you’re expecting a lower tax bracket at retirement saving some money from Uncle Sam
If only the IRS could publish this info and someone could invent a Google machine to find it. Oh wait... https://www.irs.gov/retirement-plans/roth-comparison-chart
Employee contribution limit is 18.5k for this year.. unlimited from employer side..
I think the actual limit for all sources is something like 55k - that is, an employer could match 200% of your contribution in principle.
^maybe..