Originally Posted by
Nantonaku
I don’t think I have ever gotten excess 401k cash. Is it combined company/personal contributions over $56k? So by lowering your own contributions you have some control over how much and how soon in the year money would go into the MBCP? Or is it just the $19k 401 limit?
There are two ways you can end up with the "excess" DC taxable income. If either or both apply, the additional comes to you as excess. There's a difference in ALPA dues between the two.
- You reach the 415(c) limit [$66,000 for 2023] of total contributions (elective deferral and/or Roth 401(k); company DC; and/or "401a" after-tax). Once that limit is reached, you cannot make any further contributions; and DC that would have been applicable comes to you as excess (taxable income). I believe this is the type that ALPA does not tax, but I tend to get the two confused (i.e., I'm not certain).
- You reach the employee compensation limit [$330,000 for 2023], at which point no further employer contributions are allowed. Again, the DC that would have been applicable comes as excess (taxable income), and this is the flavor I believe that ALPA does tax--but, not certain. Simple math shows that the max company contribution is therefore $330K @ 16% = $52,800. That's significant because it lags the total amount (which is itself based on 20%, i.e., $330K @ 20% = $66K)--so long as our DC is below 20%, "you can't get there from here" to max your 401(k) without making up the difference from elective sources.