#RetirementPlanning #Roth401k #IRA #MaxContribution
Hey all! 👋 I find myself on a path to exceed the max Roth 401k contribution of $23k. Currently, I’m putting in 15% (with a 7% employer match) and it looks like I’ll hit the limit without any extra work.
Here’s where I need some advice:
– Should I stick with 15% or decrease it to 12% and put the extra into my Roth IRA?
– Are there any penalties for going over the max contribution limit?
What do you think I should do in this situation? I’m leaning towards the 12% and maximizing my Roth IRA contributions. Any other ideas or suggestions? Let’s discuss! 💬💡
Looking forward to hearing your thoughts and possibly finding a solution that works best for all of us! Let’s navigate this together. 🌟
If you have one job, you won’t go over the max — the employer will cut your contributions off at the limit.
Check to see if your employer offers a “true up”. Most employer’s put that 7% match on a paycheck-by-paycheck basis. If you get cut off early, you’ll miss several “natural” employer matches.
My employer does the true-up thing. Any missed match that’s covered by over-contribution from other paychecks will be fixed by making a true-up contribution in late January. YMMV.
A) you should probably be contributing to your Trad 401k instead of Roth 401k
B) assuming you’ve had the same employer for all of 2024, they should automatically stop your contributions at $23k
I would change to Trad 401k, drop to 12% and contribute to Roth IRA.
99% of the time you will not be allowed to over contribute to a 401k plan. Well managed companies will stop it. Congrats on getting an employer that matches Roth contributions. Most of the time they match and put it into a pre-tax 401k.
If you are going to max out the 401k then drop it to 12% and add to your IRA. No need to max early on in the year.
Not sure about your current situation, but if you are at the point where you can max out an IRA and a 401k would it be better for you to add to a pre-tax 401k? I understand the internet gets really excited when they see the name Roth, but it isn’t always the best investment for people.
When you say $23k are you counting only your contributions or are you counting your contributions plus employer contributions?
The employer contribution does not count toward the maximum. Probably reduce the amount because the employer will might not contribute if your contribution stops. Try to figure out how much you should contribute to stretch it l out for the entire year.
How much are you making? Over 70k? Switch to traditional.