Just throttled down my 401k contributions

I just logged into IBM's 401k web site and throttled down my 401k contribution from 10% to 6%. Unfortunately I may be too late.

When I logged in I realized I was already closing into my 2005 contribution limit. The limit for 2005 is $14,000 for contributions and I have already contributed $13,236.42.

IBM matches 50% of contribution up to 6% of your salary and I don't want to miss any of this free money.

After crunching the numbers it looks like I will miss out on $63.55 in matching contributions because at a 6% contribution rate I will hit the limit with $126.11 to spare. Nothing major, but certainly a disappointment.

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Comments (9)

DATE: 1:20 PM
Will IBM be offering a Roth 401(K) plan from 2006? Mine isn't, and I'm bummed at not being able to take advantage of it!

DATE: 2:17 PM
Hmmm, you know I haven't heard anything about that yet. There was no mention of a Roth 401(k) in our benefits enrollment package. I will have to look into it

DATE: 5:57 PM
What happens if you go over the $14,000 limit? Does your employer stop deducting the funds automatically or do you need to manually make the change?

DATE: 10:52 AM
With my 401k plan once you hit the limit your contribution are automatically stopped. I am not sure if all plans act the same way.

DATE: 1:18 AM
Are you making 120+ grand?Because I had to hit 21% to get 14k limit! Impressive that you started at 65k and are doing so well.

DATE: 8:54 AM
I wish I was making 120k! No I had my contributions up near 30% at the beginning of the year (because there was a freeze on IBM's ESPP plan for several months) and then had to throttle them down as the year progressed so as to not overshoot.

DATE: 8:00 PM
Hi - I just found your website.. and I, like you, maxed out my 401(k) early this year, namely in July-ish timeframe. I work for a similar large professional services company, and I woudl never have allowed myself to do this if I didn't know for sure that my comapny does a true-up at the end of the year, to make sure I don't miss out. (Same thing happened to me last year) So... good news for you -- you might be okay! As a matter of fact, i figured the amount of my true-up and posted a future dated entry in Quicken for Dec 28th, so I will remember to chek to make sure they do it. My "significant other" also works for IBM, and i think that you guys also have Hewitt.. I recommened Calling Hewitt and asking about the true-up. If not, complain.. that's your money!

I am confused.

If "once you hit the limit your contribution are automatically stopped." why are you throttling back?

Myself, I contribute just a wee bit more than necessary, so the full $15,000 will go in this year. My last paycheck will top up the 401k and have a couple hundred more than usual in my take-home pay. That "extra" money will pay off the credit card for my Christmas gifts.

I apologize for the confusion. I am not sure how common this is, but my 401k plan currently has a little gotcha in regards to its match; therefore you have to time you contributions correctly.

See this discussion on the 401k contribution match issue I am talking about.

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