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Well the % that will get you to $19,500 is based on your salary.....
Not sure I’m missing something in your question, but take $19,500 / gross salary = desired contribution rate
The % is the % of your salary you’re contributing. So to Max you do 19500/salary and that’s the %
Also you can get there faster and then it’ll cap you out automatically. I usually try to get there a little fast eg provide 2k a month gets you to 19.5 10 mo into the year
Depends on your platform it may not cal you out automatically, then you have to pay a overcontribution fee
401k is pre-tax so use your gross pay to determine %, Roth is post tax so that won’t lower your taxable income. Also check what your company policy is on salary % contribution- for example EY only allows up to 30%.
Last- the company match amount for your 401k doesn’t get factored into the $19,500, so don’t count for that.
I literally had the same question. Thanks for asking this!
Pro
Do the math above, but don’t worry if, for example, 10% is 19,749 but 9% is 19,345 - how do you max out without going over?? No worries - just put 10% and nearly every company has controls in place to cap contributions at $19,500 automatically. That last paycheck will only withhold enough to get you to the max without going. On the off chance it does get withheld, and you end up contributing over the max, you’ll just get a check later for the overage from the investment company, and you’ll true up the taxes when you file your tax return. Not a big deal at all.
If it’s Roth, divide it over net
I do an actual $ per paycheck not percentage. Check to see if you have that option.
Same, always had a percentage. Just always picked them over and got a little extra in the paycheck for December.
Agree with the above.
The biggest thing I would call out is that if you change jobs, the ability to auto-stop contributions once you reach $19.5k will not work
Conversation Starter
Wow thank you everyone! Very helpful. Last q - do I have to factor in full bonus etc or just pre-tax annual base salary to calc out the % over my pay?
Similar to above, I calculate based on base only to make sure I’ll get the max. So once our bonus hits (early Nov at ACN), the bonus sometimes tips me over the max, and then it’s nice for the last month or two of the year to have extra money in my pocket for the holidays.