401K Contributions

I split our 401k into two buckets :bucket: Pretax dollars and Roth dollars to make sure we hit our Roth IRA contributions income limits to be able to contribute a max Roth IRA for wife and myself.

Is that a good idea?

We both our maxing out 401k with catch ups and my wife plan allows a $10,000 contribution to after tax portion so we are contributing $64,000 to 401k’s and another $14,000 to Roth IRA for a combined total of $78,000.

I was thinking of doing a back door Roth but I have two much pretax IRA which will cause them to prorate.

I don’t see how this is possible. The IRS limit for 401k contributions is a little over $20k.

You must have some serious employer matching contributions…

I think there is a typo in the OP’s post.

Because the OP is using the “Catch-up” contribution he can contribute up to $27,000 for the 401k as can his spouse, total is $54,000 and not the $64,000.

The $54,000 contribution is split somehow between tax deferred (traditional) and Roth (after tax). They are also contributing $7,000 each to their Roth IRAs. This sounds good to me.

The fact that a “backdoor Roth contribution” seems cost prohibitive is OK too. Transferring the tax deferred 401k contributions to a traditiioal IRA will allow for the tax free Qualified Charitable Contributions.

My wife plan allows extra contributions of after tax contributions of $10,000 which will be a total of $37,000 plus company match. So we are able to contribute $64,000 between the two plans.

Thats the part I am struggling with…how can a specific plan circumvent the IRS limit ?

The Total amount that is allowed to be contributing into an employee 401k from employer/employee a year is the following:

Under 50: $61,000.00
Over 50: $67,500.00

That amount will include the IRS limits for the employee contributions is the following of $20,500 and $27,000 for the under/over 50.

The rest of the dollar amount will be the specific rules of your plan documents such as the following.

  1. Company match
  2. Profit sharing
  3. After tax contributions like my wife plan has.

I had a company that was trying to hire me had a crazy profit sharing of 26k a year instead of a match.

The key thing is that the combined contributions of the employer/employee must be under the $60k amounts based on age.

Here is link from Forbes Combined 401k limits