Originally Posted by
R1200RT
Did you just seriously say that the B-fund bump doesn't get you anything if you’ve already reached “IRS compensation limits”? You clearly don’t understand how the IRS limits work. You get B-fund contributions until you reach the 401(a)(17) limit, which is $265K for both 2015 and 2016. The limit is indexed to inflation (CPI-U), but wasn’t increased for 2016 since the low level of inflation this year did not meet the legal threshold. So, even if you make more than $265k (which would mean more than 1000 credit hours per year before the new CBA), you get $2,650 extra for every percent increase in B-fund contribution. There are other limits in play, 415(c), but you’d have to have around a 20% b-fund before those limits would kick in. Also, all of those limits could be mitigated if we had cash over the cap provisions.
You completely missed. The IRS Defined Contribution Plans (annual additions limit) is $53,000 for 2016. That is the max cap. It does not matter how much you make, you cannot deposit more than $53,000. If you are over 50 then you are saving $24k in your 401k with makeup (pretax). You have left 29k that can be deposited into your account. Well really 28.5k when you subtract the company $500 IRA match. So regardless of how big the B fund percentage is, once you reach $28.5k you are finished. No more contributions for you.
Now if you will make enough to hit the cap, you will need to contribute less to your 401k so that your B fund amounts will go into your account. It's still extra money, but your taxable amount will increase by the AMT for that year since you will now lose some of the pretax that used to go into your 401k.
And for the black helicopters folks, the $53,000 is a legislative amount. If congress changes the max cap to $25,000 then that is now the cap amount. Max cap is the max cap. We do not get pay over cap, so any extra earned is not paid. You would have to not contribute to your 401k in order to receive as much B fund payout as possible. If congress eliminates that section of the tax law completely during "tax reform" as proposed by many running for President, then we get nothing.