So I came up with how much money I need to set aside each paycheck to max my 401k (including employer match). But I did not factor any year end bonus...

Question: are 401k distributions also deducted from your bonus paycheck? I'm concerned if I max out through my base salary paycheck, I'm gonna be way over once the bonus hits.

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Also just FYI, the employer match doesn’t count towards the $20.5K limit

They can contribute up to another $40.5K if they wanted to ($61K max between employee/employer unless you’re over 50 then $6K more)

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No it does not include the match.

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As long as you are at the same company all year, contributions should stop at the cap. Ask your employer if they deduct bonuses or not. I’m not aware of a standard.

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Company is supposed to stop at the max but if it goes over you can ask them to remove the overage and it will be paid back to you as regular taxable income.

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You can also change your 401k elections prior to the bonus. A lot of people change their tax withholding and 401k elections for the bonus payroll cycle, and change it back to normal after.

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I am changing companies next month. I have been aggressively putting money to my 401k (almost at 10k for the year). How do you all recommend I make sure I hit the max and do not go over ? Is there a way to get it exact (worried that contribution percentages aren’t always clear as to exactly when they will take effect)

helpful

Talk to your new employer or 401k administrator and let them know how much you have contributed so far. Hopefully they will then be able to cut it off at the right time. If not you will need to track it and will likely be a little under or go a little over

A company can pick and choose which bonuses are 401(k) eligible. At in the past at Deloitte, they have told me which ones are.

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Most companies, maybe all, will stop when you hit the limit. Issues arise when you work at more than one employer during a year

Yes, 401k distributions are deducted from bonuses. I usually set my contributions 1% lower and by the end of the year, I'm shy by a few hundreds dollars after the bonus. I don't trust them stopping or returning to me any extra money. You can do the math.

P.S. All my contributions are 401k Roth.

Interesting. Is your bonus not distributed through your paycheck?

I just rely on company stopping at cap.

So if I’m contributing to a 401K Roth - What’s the max cap? Based on the comments, it would stop at the allowable max. I only thought it applied for a individual Roth IRA.

If you are referring to income cap, there isn’t one for roth 401k.

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There is no standard rule about 401k deduction from bonuses. Some (like Accenture) deduct from bonus. Some others give you an option to choose whether to deduct or not.
Best to check with your HR

The plan document will govern whether or not bonuses are included in plan compensation. Your summary plan description should have the plans specific definition of comp.

Most companies will automatically stop at the 402(g) limit, but if you ever change jobs mid year, but sure to keep track yourself. If you do need a corrective distribution, do so before April 15th the following year.

You will not be allowed to go over the max if bonus is also contributed.

At my job, they ask you whether you want the bonus on the 401k or not, is not automatic.

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