retirement

Employer match counts toward 401(k) limit?

Don TaylorDear Dr. Don,
Do employer contributions to a 401(k) plan count against the maximum limits you can contribute to the plan? Do they affect the amount you can put into a traditional or Roth IRA?
-- Pat Plans

Dear Pat,
The employer matching contributions don't count toward the maximum limits that you can contribute to a 401(k) plan. There is, however, a combined contribution limit of $52,000 for the employer and employee contributions in 2014.

In 2014, the employee's contribution limit is $17,500. Plans may permit catch-up contributions of up to an additional $5,500 for employees ages 50 and older at the end of the calendar year, which raises the employee and combined contribution limits for these employees to $23,000 and $56,500, respectively.

For 401(k) plans that favor highly compensated employees, which for 2014 is defined as employees earning $115,000, contributions made by highly compensated employees may be limited. A highly compensated employee includes officers of the company, certain major shareholders, employees who are highly compensated "based on the facts and circumstances," and spouses or dependents of those above. Your plan administrator can provide you with additional information about highly compensated employee limits if you fall into that category.

Your participation in a 401(k) plan may limit your ability to make tax-deferred contributions to a traditional IRA, although you can make nondeductible contributions if you have sufficient taxable compensation to do so. As I point out in another letter, there are income limitations on contributing to a Roth IRA, but no income limitations on converting a traditional IRA to a Roth IRA.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.12%  0.06 4.18%
15 year fixed 3.25%  0.04 3.21%
5/1 ARM 3.48%  0.16 3.32%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.30%  0.01 4.29%
50K FICO-based HELOC 4.06%  0.02 4.04%
100K FICO-based HELOC 3.91%  0.02 3.89%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.79% --0.00 2.79%
48 month used car loan 2.99% --0.00 2.99%
60 month new car loan 3.23%  0.01 3.24%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.97% --0.00 0.97%
2 Year CD 1.18%  0.01 1.17%
5 Year CD 1.81%  0.05 1.76%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.75% --0.00 15.75%
Cash Back Cards 16.45% --0.00 16.45%
Low Interest Cards 10.96% --0.00 10.96%
 
Next
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Blog

Jennie Phipps

How to love a reverse mortgage

Reverse mortgages are getting more respect now that retirees really need the money.  ... Read more

advertisement
Partner Center
advertisement

Connect with us