I started this thread so that I wasn't clogging up the Profit Sharing thread with 401k strategy discussions.

Thanks for the correction; I don't think about <50 anymore.

For below, the following are tied to Schwab PRAP contribution choices
(1) is Pre-Tax and Roth
(2) is Post-Tax
(3) is the company's 16% contribution

To go through my example, you MUST fund the $18K ($24K for 50+) , (1), before funding Post-Tax (2). Your two choices for (1) are Pre-Tax and Roth. I chose Pre-Tax to lower my taxable income since we're paying the Pease/PEP surtax; you chose Roth. I'll convert the Pre-Tax contributions to Roth after I retire and we drop below Pease/PEP. I prefer Roth over tax deferred for a number of reasons, and can discuss that further if anyone's interested.

After you've contributed $18K/$24K, you can make Post-Tax contributions (2). Note that even if you have selected only Post-Tax funding on your Schwab PRAP, (1) will be fully funded before money flows to (2).

There's a total of $36K space for (2) and (3) before all contributions to your 401K are shut down for the year and all new (3) flows into your RHA VEBA. For last year, I tried to get money into my 401k as quickly as possible; at the same time, the company was sending 16% (3) to my account ... that totaled ~$14,200 before I completely filled my 401k for the year.

In my example from the PS thread, I put in $20,800 from my paycheck Post-Tax and the company 16% was $14,200 when my 401k was maxed out for the year.



While I'm going through this, it's probably best to talk about the Schwab PRAP contributions page. If you log on to the Schwab PRAP website: https://www.schwabplan.com/Net2/cmsp...PRAPlogin.html
you want to go to Manage Account > Contributions
This page allows you to fund your 401K on top of the company's 16% contribution.

You'll see three gray boxes. The first one is titled, Pre-Tax and Roth. That's (1), which must be funded first with your contributions up to $18K ($24K for 50+). Your two choices are Pre-Tax (tax deferred) and Roth (after tax contributions).

Once you've filled Pre-Tax and/or Roth with $18/24K with your contributions, you can fill the rest of your 401k with the line below the third box, Post-Tax. I fill my 401k with Post-Tax in order to get more money spilled into my RHA VEBA. I also convert my Post-Tax to Roth as soon as I'm done filling my 401K ... I do this because I've already paid tax on the money and the conversion ensures that my Post-Tax contributions grow tax free.

Note that you can select Post-Tax, skipping the first two boxes, but that money will go into your 401k as Pre-Tax money until $18/24K is reached. I know this from experience.

Fire away with any further questions.

 

is there a way to look at the account online sometime later in the year and monitor whether the contributions year-to-date are getting close to any limits?

 

Towards the bottom of the main page that comes up when you log into Schwabplan displays a running total of both yours and the company contributions in real time.

 

Yep. On the first page you get after logging on, there's a section that lists everything.

 

When does the distribution-election window close?

 

Profit sharing "Modifications can be made until 11:59 PM Central time on February 12, 2017."

 

Appreciate it...thanks!