Originally Posted by
Piklepausepull
You are allowed to contribute up to the max of $53,000 using $18,000 of your own money but IF you max out the Delta $$ you cannot reach the $18,000 limit, UNLESS, you're over 50, when you can contribute an extra $6000 up to $59K....
All totaled, you can't max out the Delta money and the 18k and the 6k because it's too much! (IF you earn >265k)
If you don't care about "tax free" money, then put the $18k in from your PS check in February, and the Delta money will stop at $35,000, and you'll pay taxes on the $4,750.....
That's apples & oranges.
- Which maxes "first" is what controls whether you're maxing the elective deferral (the $18K) or the company limit (15% of $265K = $39,750). If you make large enough contributions, it'd be easy for a high-earner (>$265K) to contribute $18K before reaching the $265 limit--in which case the full deferral limit has been reached, and the company contributions will stop at the $53K (total) mark, with the excess coming as taxable income. Mostly a moot point, though, since either way the total tax-deferral (and thus total reduction to taxable income) is the same $53K.
- The $6K over-50 is independent of the other limits--an over-50 employee can add up to $6K to the total of his and/or the company's contributions without regard to the limits.
- Where you
can limit your tax advantage (assuming your goal is to max out your $53K limit) is if you make too-large of a 401(a) contribution, thus forcing some of your company contribution to taxable income. This problem doesn't exist for anyone making over $233,333: their $18K deferred + their 15% company ($35K) = $53K, so the question of making a 401(a) contribution doesn't arise. Anyone making less than that $233,333 would need to make a 401(a) contribution to hit the $53K limit--and would therefore need to ensure they don't contribute any more than the difference between the limit and the pre-tax (elective + company). If they do, they forgo the tax deferral.
(This last point assumes that tax deferral is the prime goal. Different strategy altogether if one wants, say, to maximize Roth-type savings.)