How to avoid save above limit for 401k?

Amazon
XIoO13

Go to company page Amazon

XIoO13
Apr 16 37 Comments

I am always confused about how to save just the limit for 401k. Here below are what I would like to achieve.

Target:
1. Save just the limit of money for 401k. Not above as I heard I will receive penalty if I save more.
2. Ensure I could get the match by Amazon. Amazon will match 50% up to 4% of salary.

Tool:
1. I could decide how much percentage from salary to be saved into 401k every month.

That would be helpful if anyone experienced could share info about this.

37

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 TOP 37 Comments
  • Spotify
    NoyU87

    Go to company page Spotify

    NoyU87
    Divide 20500 by 12, and use that as your monthly contribution.
    Apr 16 14
  • Snap / Eng
    👻Slimer

    Go to company page Snap Eng

    PRE
    Meta
     👻Slimer
    Most 401k plans, once you reach the cap for the year, they stop taking money from your check.

    I usually frontload the year and go with a higher witholding percentage to hit the cap early. Once cap is hit, paychecks look bigger for the rest of the year.
    Apr 16 8
    • Amazon / Eng
      QueMasPues

      Go to company page Amazon Eng

       QueMasPues
      I don't know. At one point I asked Fidelity and the person that I spoke to did not seem to understand what I was asking, so I don't feel confident in the answer that they gave (which is that the match is not impacted). I have not pursued a definitive answer since then.
      Apr 16
    • Snap / Eng
      👻Slimer

      Go to company page Snap Eng

      PRE
      Meta
       👻Slimer
      Yeah, good point on the “true up.” Ask your HR if that’s what your company does. If not, you may have to be careful about front loading.
      Apr 17
  • Huh? You can’t save above the max limit for 401k. When you hit the limit, the company stops taking it out of your check. The match isn’t part of your contribution limit.
    Apr 16 4
  • New
    PBMB45

    New

    PBMB45
    Talk with your CPA about how much you can contribute to max everything out.

    Roughly it breaks down like this: $58,000 max across all your retirement accounts for tax year 2021.

    $58,000 (2021 max allowed across all your retirement accounts)- $19,500 (401k contribution) - $X (your employers 401k match) - $6,000 (IRA) - $X (after tax contribution) = $0 (you max out your yearly limit)

    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

    If you have any additional 401ks (I.e. side business and/or other jobs just continue to subtract what you contributed to those in the above equation)
    Apr 16 3
  • Meta / Eng
    up&down

    Go to company page Meta Eng

     up&down
    amzn does not contribute rsu vest to 401k so it should make super easy:

    go do fidelity and set contribute % = 20_500/$base
    you can also max out the after tax (the one that let you hit IRS limit), same idea
    Apr 16 0