401K Question

[Aerogal]

If you were employed by a company and left that company for another job during the current tax year, do the contributions you made to the 401K Plan with company #1 count against the pretax contributions you can make with company #2 on a different plan?

 

[Spring10]

Yes. You can only put in 16,500 per year into a 401K plan. This cap would be it for any number of 401K's . It's a lot of money most people don't even get close to contributing so if you fall into that catagory, you won't have much to worry about. If you do, and you are over 50, you can add another 5K for a total of 21,500.

 

[Aerogal]

Thanks Spring10! Dual income + Navy retirement gives us elbow room. We've kept our standard of living lower (budgeting like we did at lower income) so it gives us plenty of room to save.

 

[Spring10]

Well you can each contribute the maximum. The amounts are per person. I'm happy to hear you are going to enjoy your retirement, as I hope to. If you ever decide to roll over one 401 into another one, be sure to talk to an expert first. Sometimes they get really tricky and it's easy to make a mistake.

Tax advantage, if you are 50 and invest 20k a year, the gov. gives you about 6k in tax relief . This is the amount you were not taxed during the year. This was true up til now, not sure what it will be in the future.