Why is the Annual Retirement Contribution Still Maxed at $18.5k?

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[Post New]04/02/2018 19:16
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Anonymous
On a joint return where wife is a stay at home spouse the 401k amount should be doubled. The working spouse has to save for two retirements
[Post New]04/02/2018 19:29
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Anonymous
Anonymous wrote:On a joint return where wife is a stay at home spouse the 401k amount should be doubled. The working spouse has to save for two retirements


You’re supporting the house on one income during your working/child-raising years. I’m sure you can do it when the kids are gone and the house is paid off.
[Post New]04/02/2018 19:53
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Anonymous
Anonymous wrote:On a joint return where wife is a stay at home spouse the 401k amount should be doubled. The working spouse has to save for two retirements


That makes no sense. The working spouse is already supporting 2 people on one income. You make a choice to be on one income. Nobody is forcing you to only have one income. If you can already support a household on your income, I do not see how that changes in retirement.
[Post New]04/13/2018 02:56
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TwistdMike
Member Offline
You can max out the deferred contributions of $18,500 to your 401k, then continue with non- deferred contributions up to a total of $50-55k, depending upon age.

Then you can roll the surplus over to a Roth IRA in addition to the $5,500 limit for direct contributions.

The good thing about an IRA, is you can use the direct contributions as an emergency fund, pulled out without penalties or tax. It’s better not to do for compounded interest growth, but available.

Keeping in mind, you can also open an IRA in your spouses name, if they don’t have one already, adds an additional $5,500 to retirement investments.

Also, if you haven’t filed taxes for 2017 yet, you can contribute $5,500 for last year and again for this year, immediately.
[Post New]04/13/2018 09:14
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Anonymous
Why is the Annual Retirement Contribution Still Maxed at $18.5k?


This is the first year that the 401k contribution limit is $18.5k.
[Post New]04/13/2018 09:56
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Anonymous
TwistdMike wrote:You can max out the deferred contributions of $18,500 to your 401k, then continue with non- deferred contributions up to a total of $50-55k, depending upon age.

Then you can roll the surplus over to a Roth IRA in addition to the $5,500 limit for direct contributions.

The good thing about an IRA, is you can use the direct contributions as an emergency fund, pulled out without penalties or tax. It’s better not to do for compounded interest growth, but available.

Keeping in mind, you can also open an IRA in your spouses name, if they don’t have one already, adds an additional $5,500 to retirement investments.

Also, if you haven’t filed taxes for 2017 yet, you can contribute $5,500 for last year and again for this year, immediately.


Can you provide some links on that (non-deferred contribution)? I've tried to find IRS or other authoritative links on that and failed. Most of the info. that comes up is that you can contribute upto 18,500 and if you do contribute more, the adminstrator will return the excess contribution to you. If not returned, it will be penalized at 10% per year until it is returned.

To summarize what you are saying, one can effectively contribute $50K into a 401K and roll over $31,500 into a Roth IRA each year regardless of their income? This would be a sweet deal if possible and everyone on DCUM will be doing it. Again, appreciate any official links on this..

[Post New]04/13/2018 20:11
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Anonymous
Can you contribute $18500 + $5000 to Roth IRA?
[Post New]04/13/2018 20:56
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Anonymous
Anonymous wrote:
TwistdMike wrote:You can max out the deferred contributions of $18,500 to your 401k, then continue with non- deferred contributions up to a total of $50-55k, depending upon age.

Then you can roll the surplus over to a Roth IRA in addition to the $5,500 limit for direct contributions.

The good thing about an IRA, is you can use the direct contributions as an emergency fund, pulled out without penalties or tax. It’s better not to do for compounded interest growth, but available.

Keeping in mind, you can also open an IRA in your spouses name, if they don’t have one already, adds an additional $5,500 to retirement investments.

Also, if you haven’t filed taxes for 2017 yet, you can contribute $5,500 for last year and again for this year, immediately.


Can you provide some links on that (non-deferred contribution)? I've tried to find IRS or other authoritative links on that and failed. Most of the info. that comes up is that you can contribute upto 18,500 and if you do contribute more, the adminstrator will return the excess contribution to you. If not returned, it will be penalized at 10% per year until it is returned.

To summarize what you are saying, one can effectively contribute $50K into a 401K and roll over $31,500 into a Roth IRA each year regardless of their income? This would be a sweet deal if possible and everyone on DCUM will be doing it. Again, appreciate any official links on this..



NP. This isn't exactly true. A LOT of employers do not allow you to contribute above the IRS max ($18.5k) because it's hard to keep track of, etc. Plus, the max per person is $50-55k including all contributions - matches, profit sharing, discretionary, etc. so you wouldn't want to put your own money in and miss out on the free money. Some employers do allow these contributions (they're referred to as after-tax, not Roth) but again, not very common. It's very hard to find IRS rules about them. I used to work very closely with a large 401k plan that had a lot of participants who made these after-tax contributions over the years, and it was never clear whether they were allowed to roll them to a Roth IRA or not. It was more of a best guess thing.

It is also is incorrect to state "The good thing about an IRA, is you can use the direct contributions as an emergency fund, pulled out without penalties or tax." This is ONLY true of Roth IRAs, not Traditional/Rollover IRAs.
[Post New]04/13/2018 22:27
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TwistdMike
Member Offline
This is the link for more info:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

Also, after reading about the 401k limits, you can click the IRA link on the left side to learn more about rollover of excess distributions. There are rules that must be followed to avoid taxes and penalties.

Handy rollover chart:
https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

It’s best if you can discuss directly with the retirement account management company which is holding your account, for specific information that will be applicable to your case.

Thanks for adding Roth as a clarification, it was assumed, but you’re correct. Luckily, the company I work with allows after-tax contributions.
[Post New]04/13/2018 22:31
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Anonymous
Anonymous wrote:The GOP is in control and they want you eating cat food into your retirement. It will be your fault when you can’t make ends meet.


you just can't help yourself.
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