tennisguru

It is just personal preference. Assuming you are going to earn at or over 345k, every dollar that you personally contribute over 3% will drive a dollar more into spill territory. If you are just looking for a simple way to invest more money in a tax-sheltered manner, then that is one way to go. If you are wanting to minimize spill money (to either invest in another manner or spend) then you'd want to stick with the 3%.

So, assume you earn exactly 345k in 2024. You get 17% DC which is $58,650. You must contribute 3%, or $10,350 to hit the 69K cap. But if you early in the year max out your personal 23k contribution, that is $12,650 more than the $10,350 needed to max out. You would in that case by the end of the year end up with $12,650 in spill money.

The numbers are the same even if you earn more than 345k, it's just that every dollar over 345k that you earn will automatically get the 17% DC put into spill above and beyond whatever spill amount you forced by contributing more than 3% personally.

CoefficientX

Thanks. Would I not be better off maxing out my personal contribution to take advantage of the Roth401k vs letting the company fill up their 17% into a 401k?

tennisguru

You can convert company DC to Roth (you'll have to pay the taxes on it when you file) so either way you can get the whole 69k into Roth if you want.

Gone Flying

it depends if you are trying to keep money out of spill cash territory like I am. I didn稚 opt out of MBCBP but for now I want as little as possible to go into that account. So if I think I値l make 345k or more, I would just do 3%

I知 99% sure you can roth company 401k contributions now. That was a change about a year ago IIRC

RightSide

Just a quick question for the 401k gurus. I maxed out my 401k this year ($22,500) and the company match ($43,500). What happens if I didn't contribute anything, would the company continue to fund my 401k up to the $66,000 IRS limit or would it stop at $43,500? Just thinking about that today.

Thanks.

FL370esq

For this year (2023), if you had done nothing, they would have continued to deposit 16% of your earnings into your 415(c) plan until you hit the 401(a)(17) limit of $330,000 in earnings. Thus, the Company would have put $52,800 into your account and the rest would have either been paid to you in cash or sent to your MBCBP, depending on how you opted.

RightSide

Ah good to know, thanks for the reply!

DWC CAP10 USAF

R&I Alert 22-02 dated 5 Jan 2022 has the deets.

CoefficientX

Thank you!

First Break

One thing the MBCBP discussion has done, whether you opted in or out, is brought more awareness of these limits and how they affect our savings. Thanks for posting.