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401(k) discrimination testing
Posted on 3/15/15 at 9:35 pm
Posted on 3/15/15 at 9:35 pm
Received word by email on Friday that my company did not pass testing. The email did not reveal how much money I would be getting back.
Fast forward to Saturday and I received a check in the mail for just under $10K after taxes were taken out.
Given the industry that I am in, it is likely that my company will not pass discrimination testing again for this year. Less than 20 % of our workforce participates in our 401(k) program and those that do are in the top earning tier of our company.
What's done is done, can't change anything for 2014. My question is, would I be better served starting my own seperate ROTH IRA and reduce my contribution to my company's 401(k) program?
Currently, I am contributing 15 % per pay period.
Fast forward to Saturday and I received a check in the mail for just under $10K after taxes were taken out.
Given the industry that I am in, it is likely that my company will not pass discrimination testing again for this year. Less than 20 % of our workforce participates in our 401(k) program and those that do are in the top earning tier of our company.
What's done is done, can't change anything for 2014. My question is, would I be better served starting my own seperate ROTH IRA and reduce my contribution to my company's 401(k) program?
Currently, I am contributing 15 % per pay period.
This post was edited on 3/15/15 at 9:36 pm
5
Posted on 3/15/15 at 11:08 pm to Will Cover
Only contribute what the company matches. Put the rest in a Roth IRA.
Posted on 3/16/15 at 6:55 am to Will Cover
Is the company unwilling to go to a safe harbor 401k so they can eliminate the discrimination test?
Posted on 3/16/15 at 9:54 am to Will Cover
I don't know how much you are contributing, but considering you got back 10K after taxes, and considering what the contribution limits are... my guess is your company failed testing by a wide margin.
I would definitely 401K to the match, then Roth, and see where that gets you. If you have other buckets like a HSA you can use, fill that up. Then go back to the 401K.
As someone who volunteers with personal finance classes, I'm saddened that so few of your employees are taking advantage. Do they just not have any extra money to invest, or are they just not knowledgeable?
I would definitely 401K to the match, then Roth, and see where that gets you. If you have other buckets like a HSA you can use, fill that up. Then go back to the 401K.
As someone who volunteers with personal finance classes, I'm saddened that so few of your employees are taking advantage. Do they just not have any extra money to invest, or are they just not knowledgeable?
Posted on 3/16/15 at 7:05 pm to Will Cover
Bump.
Just received another check in the mail today for $2K and some change.
Called Fidelity and was told this was the "employer contribution" amount. The representative that I spoke to on the phone said he didn't know why our company decided to issue two separate checks.
Either way, I believe it is time for me to bump down my contribution amount and start a separate ROTH IRA.
Just received another check in the mail today for $2K and some change.
Called Fidelity and was told this was the "employer contribution" amount. The representative that I spoke to on the phone said he didn't know why our company decided to issue two separate checks.
Either way, I believe it is time for me to bump down my contribution amount and start a separate ROTH IRA.
Posted on 3/17/15 at 1:02 pm to Will Cover
quote:
What's done is done, can't change anything for 2014.
I think you can still start your own Roth IRA for 2014.
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