Help this new Microsoftie setup 401k

New / Eng
MSFT_fte

New Eng

MSFT_fte
Dec 25, 2018 3 Comments

Fidelity confuses me. There are 4 things that I need to put in the "contributions" tab:

Pre-tax %
Roth %
After-tax %
Quarterly conversion of After-tax to Roth (Y/N)

This is how I do the math:

Pre-tax max for 2019 is $19,000, after-tax max is $27,500, and employer match is $9500, so the total is $56,000. Sum of pre-tax, roth and after tax percentages should be %65 to max out everything.

Pre-tax percentage to max out for the match:
19000/56000 = %33.92

After-tax percentage:
65 - 33.92 = %31.08

Also I select "Convert all my after-tax balance to Roth".

Is that what you do to max out all Pre-tax and Roth, or I'm getting it very wrong?

Thanks for the help!

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TOP 3 Comments
  • The percentages are based on your salary (and yearly bonus). So if your base is 100k you can put 19% to max out the pre tax portion. You should do some additional research if you want to contribute to after tax (and if you want to do a mega backdoor).
    Dec 25, 2018 2
    • Also keep in mind that the limits are for a calendar year. So if you start contributing half way through the year you need to double the percentages to max anything out.
      Dec 25, 2018
    • Yes. Note that Roth & after-tax contribution percentages are also based on pre-tax salary / bonus (not after-tax). Once you've reached the $19k limit on pre-tax / Roth contributions, you may want to increase your after-tax contribution amount (may help to max out that contribution as well).

      If you haven't already, consider looking into other tax-advantaged investment account types (IRA, HSA, 529) & ESPP contributions.
      Dec 25, 2018