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Started By
Message
What to do with overfunded 401k
Posted on 4/9/24 at 8:33 am
Posted on 4/9/24 at 8:33 am
For the first time last year I maxed out my 401K. Unfortunately it appears our company failed the ADP test and I have been issued a refund over 9K.
Ive already filed taxes for last year, do I need to amend?
What can I do with the refund money? Would a backdoor roth ira be best? And I assume it would go towards 2024?
Company also had a roth 401k, can some of this be avoided (for next year) by contributing to that for 2024?
Ive already filed taxes for last year, do I need to amend?
What can I do with the refund money? Would a backdoor roth ira be best? And I assume it would go towards 2024?
Company also had a roth 401k, can some of this be avoided (for next year) by contributing to that for 2024?
2
Posted on 4/9/24 at 8:44 am to JusTrollin
So, just to be straight, you put 9K more than the limit in your 401k and you got a refund for it?
If so, I would think roth or traditional ira, depending on your circumstances. You can put 6,500 towards that for last year up until april 15th. You would need to ammend if you put it in a traditional so that you would get the tax refund back for the taxes you paid on it. I don't think there is any reason you need to if you put it in a roth, but someone may know better.
ETA: from google (You can contribute to a Roth individual retirement account (IRA) after filing your taxes, and you don't need to amend your return.)
If so, I would think roth or traditional ira, depending on your circumstances. You can put 6,500 towards that for last year up until april 15th. You would need to ammend if you put it in a traditional so that you would get the tax refund back for the taxes you paid on it. I don't think there is any reason you need to if you put it in a roth, but someone may know better.
ETA: from google (You can contribute to a Roth individual retirement account (IRA) after filing your taxes, and you don't need to amend your return.)
This post was edited on 4/9/24 at 8:47 am
Posted on 4/9/24 at 8:57 am to NATidefan
No I contributed the max of 22,500 but I guess I fall under the rules of a highly compensated employee (which in my opinion I am not) and the lower % of the workforce did not contribute enough to their 401k's.
Also I cant fund a traditional due to wife and my income is too high.
Also I cant fund a traditional due to wife and my income is too high.
Posted on 4/9/24 at 9:03 am to JusTrollin
Ah, got cha.
I think you have that backwards though, traditional don't have an income limit. Roths IRAs do.
I think you have that backwards though, traditional don't have an income limit. Roths IRAs do.
Posted on 4/9/24 at 9:13 am to NATidefan
There is a phase out limitation on the deductibility for a traditional Ira.
OP, id ask your HR first if they’re going to send you an amended w2 and how to proceed. Since the correction happened in 2024 your ‘23 return might not need to be amended. Not sure though.
OP, id ask your HR first if they’re going to send you an amended w2 and how to proceed. Since the correction happened in 2024 your ‘23 return might not need to be amended. Not sure though.
This post was edited on 4/9/24 at 9:22 am
Posted on 4/9/24 at 9:54 am to Shepherd88
My return check had the taxes already stolen from them.
For this year im splitting between the roth 401k and the 401k. I already max out my roth ira.
For this year im splitting between the roth 401k and the 401k. I already max out my roth ira.
Posted on 4/9/24 at 9:59 am to dgnx6
If I am doing a backdoor roth do I have to contribute to a regular ira then convert it over every time or once the conversion is done and the roth account if made can i just contribute to it directly?
We make too much so it will have to be a backdoor, I just have not done one yet.
We make too much so it will have to be a backdoor, I just have not done one yet.
Posted on 4/9/24 at 12:05 pm to JusTrollin
Posted on 4/9/24 at 1:50 pm to JusTrollin
Tips for HCEs
quote:
Bottom Line
Being a highly compensated employee has a nice ring to it. This can also mean you will get a few chains put on your retirement nest egg, but thankfully you have options. You can contribute to an IRA, a Roth IRA or a Backdoor Roth IRA. Opening an HSA can also give you some tax benefits and help you save for future medical expenses. Plus, you can always invest in taxable accounts regardless of income.
Posted on 4/9/24 at 8:40 pm to JusTrollin
quote:
Also I cant fund a traditional due to wife and my income is too high
I thought that only applies to an IRA not traditional 401k
Also check to see if your 401k plan allows post tax contributions and then look into the “mega back door Roth IRA”
This post was edited on 4/9/24 at 8:43 pm
Posted on 4/9/24 at 9:54 pm to hottub
That’s what I meant traditional ira.
Yes we also have a Roth 401k. I have asked if this falls under the same rules as the pretax 401k but haven’t got an answer yet.
I will look into the back door stuff some more. I already have accounts with vanguard so it should be fairly straightforward I hope.
Yes we also have a Roth 401k. I have asked if this falls under the same rules as the pretax 401k but haven’t got an answer yet.
I will look into the back door stuff some more. I already have accounts with vanguard so it should be fairly straightforward I hope.
Posted on 4/10/24 at 8:58 am to JusTrollin
Can you move it to a Roth account?
Posted on 4/10/24 at 5:05 pm to Gorilla Ball
Not sure. Talked to trowe today again and they said they have to hear back from ‘the plan’. Apparently trowe is just a middle man that takes our money and sends it to some other group that is actually the plan. What a clown show.
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