Direct Contribution ???
 

I was won.dering.....With the limit this year for 401Ks at $19,500 (or so). If your direct contribution from your company is greater (ex 16% of $150,000 = $24,000) - what happens to the extra $5,500? Is it just lost?

First post - thanks for the help.

I think after year-end and all the dust settles you typically get the excess as cash... fully taxable.

$19500 is just the limit on what you can contribute out of your pay. The maximum combined contribution between you and your employer is $56k. Once you reach your max contribution ($19.5k) the company just stops taking any more out of your paycheck until the following year. If you reach the max $56k combined contribution then it depends on what your pilot contract says. Some have a "cash over cap" provision where the company adds the excess to your paycheck. For others once the max is reached then that's it. You "lose" the excess.

He said it better. YOU cannot contribute more than $19.5K, the system just won't do it.

Thank you! Hopefully I'll experience this in 2 years when I can retire from the AF.

Right. Some have an HRA, VEBA, what have you where the excess can go into.

50+ you can 6500 catchuo

you can if you are over 50. It’s an additional 6,500 in catch up.

You can contribute more than the $19.5k limit, it just has to be after-tax money.

There can be some benefits to quickly stuffing more after-tax money into the 401k (hit the $57k limit early in the year, which could force more spill over money into your VEBA/HRA). Also look into mega-backdoor Roth conversions.

https://www.thestreet.com/investing/...is-it-15182456

The 2020 Compensation limit for computing 401k employer contributions is $285,000 which mean the most the company (based on 16% Direct contribution) can put in your 401k based on income is $45,600 leaving you $11,400 (not including catch up) that you would be able to contribute and achieve max $$$ from the company into your 401k.

IF you max out The individual contribution limit of 19,500 (catch up excluded as it does not figure into the 57k limit) that would dollar for dollar reduce the amount the company can put into your 401k via DC. Above this income level, what happens to your company contributions depends on your contract.

This does not become an issue until you make more than $234,375 at which point if you want to max your contributions you need to do it earlier in the year to ensure you hit the individual limit prior to the combined limit.