Originally Posted by tennisguru

For 2023 the max anyone can put into a 401k is 66,000. This includes company contribution (DC) and employer contributions. Also, the company can only contribute to your 401k on income up to 330,000. Since they are contributing 16% of your income, that means that the max the company puts in is 52,800 (16% of 330,000). So in order to max out your 401k this year an employee would need to contribute an additional 13,200.

Now three things happen that cause you to get DC excess. One is if you hit the 66,000 contribution limit. Generally you do this by maxing out your individual contribution limit of 22,500, then when the company contribution hits 43,500 (so 66k total), you start getting the 16% as DC excess on your paycheck. The second thing that can happen is you hit the 330,000 income limit, and at that point any company money is paid out as DC excess plus. Both DC excess and DC excess plus are taxable, but I only 1 also gets ALPA dues/DPMA dues taken out. Off the top of my head I can't remember which one.

The third option you'll see thrown around is the mega backdoor Roth (MBR). In this scenario you contribute your own money to an after tax 401a, then immediately roll it out to a Roth IRA. I believe that the employee can contribute up to 66,000 of their own money, but of course every paycheck starting at the beginning of the year has company money going as well counting against your 66k limit. Thus you hear that people are trying to "race" the company to the 66k limit by putting as much of their own paycheck in each pay period starting in January to limit the amount of company DC that goes into the 401k. If you are super aggressive (putting 75% of each paycheck into your 401k) and put as much of your profit sharing check in as well, you can hit the 66k limit fairly early in the year and will end up with a significant amount of DC excess paid out for the rest of the year.

So as a new hire at least for a few years you probably won't be hitting the 330,000 income limit, but it is a little easier to hit the 66,000 cap. If you contribute the full 22,500, then you only need to earn 271,875 to get the 16% DC to fill up the rest of the 43,500 to hit the 66,000 limit. Still probably not going to do that for a few years unless you're taking a quick upgrade. And generally most new hires are not able to be super-aggressive on the mega backdoor Roth for a few years until their pay comes up.

So, you can extrapolate some of that out based on expected earnings throughout your career. Also the company DC going to 17% next Jan and then 18% in 2026 will lead to more people getting excess, plus with higher pay rates it will be easier for more pilots to hit the earnings cap. Almost every single CA should be getting some amount of excess. FO's can as well if they go for the MBR, or if they're just crushing it on earnings with green slips, profit sharing, etc, but again most FO's won't see excess for a while outside the MBR. I'm at year 7 and have yet to ever get excess.