I have been putting away 20% of my pay in my 401k and just received a bonus check that maxed out my 401k ($15,500) for the 2007 tax year. Does this mean that I have to change my contribution amount to 0% for the remainder of the year. Obviously if I do this I will not get the company match but I am worried that there a penalty for contributing beyond the max limit?
Thanks!
2007-09-20 13:29:43 · 6 answers · asked by msp76 1 in Business & Finance ➔ Personal Finance
If your company takes 401K money out of your bonus, won't they match it ?
Talk with your HR Dept about how they handle that. Then you'll know.
Meanwhile, you could always max out an IRA for the year, another $4000. It won't get matching funds, but it'll still be tucked away for retirement.
2007-09-20 13:44:45 · answer #1 · answered by dukefan86 4 · 0⤊ 1⤋
Your company's plan administrator should stop additional contributions into your 401k account to keep the whole plan and your account within the legal contribution limits. Any additional contributions that are received above your max contribution should be returned to you before investing in the plan. In that case the only "penalty" will be paying the normal income taxes due on the additional income paid directly to you.
By the way, most 401k plans that have a company match usually only match the first 3-10% or so. If your company is matching 100% of your contribution up to the leagal limit that is just AMAZING!
As for any additional tax saving on your income, I would recomend that you check with your persoal tax advisor.
2007-09-20 14:16:07 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Company should take care of stopping your contribution to 401k. Make sure it is done though.
Put extra $ into your Roth and/spouses' Roth. Then do traditional IRAs.
Spouse? make sure his 401k is maxed also.
Put back cash for emergency fund, money market account.
2007-09-21 04:21:08 · answer #3 · answered by PFS rep 3 · 0⤊ 0⤋
Take your extra money and put it in IRAs. When you maxed out your 401k it only means that you maxed out your company's contributions.
2007-09-22 08:07:31 · answer #4 · answered by Gary 5 · 0⤊ 0⤋
Put any excess contributions into a ROTH IRA.
Get information from;
Charles Schwab Inc.
Fidelity Brokerage
Vanguard
or
T. Rowe Price
2007-09-20 16:22:36 · answer #5 · answered by Common Sense 7 · 0⤊ 0⤋
it should automatically stop if your company has decent payroll software - your company probably only matches up to your first 6% of contributions - that's pretty standard - I seriously doubt you get matched on your full 20% contrinution
2007-09-20 13:58:52 · answer #6 · answered by Anonymous · 1⤊ 0⤋