401k matching limits

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01-18-2018, 04:03 PM

chickenorbeef

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401k matching limits

I see a lot of people mention they will get the full $36000 for 401k match at their airline ($54000 max irs limit minus $18000 self contribution leaving $36000 for the maximum company match). I inquired at my airline and they calculate at max annual compensation of $270000 for a maximum match of $27000 even though I earned well north of $270000.
Are there any tax experts that can explain why airline A will match up to $36000 while airline B caps it at $27000?
I read this irs page about it but its still clear as mud to me.

https://www.irs.gov/retirement-plans...e-annual-limit

Thanks!

01-18-2018, 05:09 PM

Bobman80

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I’m sure some of it has to do with your contractual rules (like if you get 10% DC and it stops at 270k) however here is how it works at Delta and how the 36k happens. Basically, I’m assuming your company (UPS ?) stops at 10% of 270. Simple as that.

We get 16% up to an unlimited amount of income (the 16% never stops). What does limit you is the IRS limits for tax free. So let’s say you made 500k. You would get 80K but only the portion that the IRS let’s be tax free would be tax free and the rest would be income subject to tax. There are 2 limits and 270k is one where they stop being tax free and 54k is the max combined too. So for a Delta guy you could go about it a couple ways. 1. Put in 18k and let the company put in up to 36k or 2. Put in 43.2k (.16 x 54) and you personally put in 10.8.

Make sense?

Last edited by Bobman80; 01-18-2018 at 05:23 PM.

01-18-2018, 05:46 PM

chickenorbeef

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Thanks Bob, that makes more sense. Well there goes $9000 I’ll never get....a year! 😩

01-23-2018, 07:58 AM

sailingfun

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Quote:

Originally Posted by chickenorbeef

Thanks Bob, that makes more sense. Well there goes $9000 I’ll never get....a year! 😩

Make sure you understand your contract. You may be due that money anyway. As mentioned at Delta when you fill up your 415C bucket the 16% is still paid however as ordinary income. The 270K number is a IRS limit that stops you from adding tax free money on your own to your 401K. Make sure your contribution percentage is enough to hit the limit before you reach 270k in pay. If the 270k is written into your contract as the end of contributions that year your screwed.