Discussion:401K PLan
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Discussion Forum Index --> Tax Questions --> 401K PLan
| 18 August 2006 | |
| If you have 2 Jobs and both the jobs offer 401k plan, can you put away 15k on each job ? | |
| 18 August 2006 | |
| No. The limit on employee contributions is at the individual level, not at the plan level. Any excess employee deferral for 20X1(e.g., resulting from leaving one job where employee participated in the plan and going to another job and participating in a second plan without taking into consideration EE deferals already made to the first plan) must be refunded to the employee no later than 4/15/X2 and included in 20X1 income. If the refund is not made, it will be taxable in 20X1 as though it had been refunded, and will be taxable a second time and subject to early w/d penalties in the year it is refunded, e.g., 20X2 | |
| 22 August 2006 | |
| So the max for the employee is 15k, regardless of # of jobs. | |
| 1 July 2009 | |
| I have a client who contributed $12k to the company 401k plan..the catch up is $8k as he is over 50...he contributed that amount to 401k by himself to get to $20k...his W2 is showing only $12k...where do I put the additional $8k he contributed by himself... | |
| 2 July 2009 | |
| The $8,000 is not deductible. An individual employee cannot directly contribute to a 401(k) plan from his own funds. The employer must make the contribution for him via payroll reduction.
Also, the catch up limit for 2008 is $5,000. | |
| July 2, 2009 | |
| Yes, an employee can contribute, it's just not deductible. But is that what happened here? | |
Death&Taxes (talk|edits) said: | 2 July 2009 |
| Did he contribute directly to the plan, or return part of his pay to his employer to put into the plan? | |
| 2 July 2009 | |
| He directly contributed to 401k plan over and above what is showing on W2 which $12k...as per the retirement consultant, he has another $8k to contribute to reach the limit and he contributed by himself to get the full benefit..I would guess that it would be deductible unless what Marty is saying that it has to be contributed by employer...thank for your comments.. | |
| 3 July 2009 | |
| Yes, to be a pretax salary reduction 402(g) elective deferral, it must be taken from the employee's pay. Employee can't receive the pay and then contribute it, even if it's via the employer.
Regular deferral limit for 2008 was $15,500 and catch up was $5,000. This does not mean everyone over 50 with sufficent compensation can contribute $20,500. Contributions count as catch up dollars once the person has reached some other limit imposed by law or plan design. For example, consider a person who earned $200,000. The 401(k) nondiscrimination test might dictate this person can contribute only 6% of pay, or $12,000. Alternatively, the plan design could state that contributions for 2008 will be limited to 6% of pay, even if the nondiscrimination test results would have allowed more than 6% to be contributed. In either scenario, a plan using the catch up rules must limit the person to $12,000 + $5,000, not $15,500 + $5,000. | |
| 3 July 2009 | |
| curious how the 401(k) trustee accepted the check directly from the account owner and not the employer | |
| 3 July 2009 | |
| We need more facts. Maybe KCGuy's client is the company owner (employer), although this would not be my first thought. Chances are the funds are invested with a brokerage who's a plan custodian while some other party is the plan trustee (eg an officer of the employer).
It's true that after tax employee contributions are currently allowed by some plans and that an employee might be able to contribute directly to the trust. I would venture this plan's written documentation does not provide for same. If I'm right, then the entire plan has a problem that theoretically could affect its qualified status. | |
