vitamin

Does the 16% AA contributes to a pilot's 401(k) count towards the annual allowable IRS limits?

My current employee matches up to 12%. This effectively allows me to put 24% into the 401(k) because the match doesn’t count towards IRS

TIA

::sorry for the dup::

Andrew_VT

The first paragraph is money you put in. The second includes the companies 16% contribution (hopefully more in the next contract).

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401(k) Plans

The annual elective deferral limit for 401(k) plan employee contributions is increased to $20,500 in 2022. Employees age 50 or older may contribute up to an additional $6,500 for a total of $27,000.

The total contribution limit for both employee and employer contributions to 401(k) defined contribution plans under section 415(c)(1)(A) increased from $58,000 to $61,000 ($67,500 if age 50 or older).

AllYourBaseAreB

The 16% isn’t matching. You get it regardless what you put in. So if you contribute 0, the max the company could put in is 48,800 (16% of 305k IRS income limit 2022). Total of company plus personal contribution limit is 61,000 for under 50 yr old 2022.

once you hit a limit as a high earner, you get the 16% as normal income.

thrust

Just to add if it wasn’t already clear- you can (and should) max out your $20.5k contribution, but after you max that you can continue contributing after-tax money. That after-tax money can do an in-plan conversion to a Roth as well. Meanwhile, the company puts 16% in, no matter what you do… so when your $20.5k + $XXk after-tax contribution + company 16% = $61k, you’re blocked from contributing any more and subsequent company 16% money comes to you as taxable income. Obviously if you’re over 50 the numbers are slightly different.

In addition, you can contribute a separate $6k/year to a separate IRA.

There are some strategies for converting your 401k into your IRA that I’m sure others could expand upon.

Caveats apply, DYODD, YMMV, consult a tax professional and don’t believe anything you read on a pilot forum, etc.

TankerDriver

And remember that unlike a Roth IRA, the Roth 401(k) has no income limitations ($144,000 if you are single and $208,000 filing jointly). So.... max that thing out!

fixemflyem

Are you sure about the no limit to the 401k Roth? I’m with a different company, but I get shut off every year when I hit the limit, and I put it all in the 401K Roth.

vitamin

The Traditional 401(k) and the Roth 401(k) don’t have income limits in regards to contribution…unlike the Roth IRA.

To get around income limits and still max out my Roth IRA, I use the backdoor method which allows people with high incomes to fund a Roth despite IRS income limits; I don’t have a Traditional IRA. If I did, it would wreak havoc on the backdoor method.

https://www.irs.gov/retirement-plans...mparison-chart

Thanks everyone for the input. Good stuff. ))

RadialRover

No income limit, but that wasn’t the question. There are definitely contribution limits.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

vitamin

[QUOTE=RadialRover;3447632]No income limit, but that wasn’t the question. There are definitely contribution limits.
https://www.irs.gov/retirement-plans...ibution-limits[/QUOTE]

Definitely contribution limits. Maybe I misunderstood his Q.

C2078

Huh? AA has cash over cap?