Do the next percent over. If staying at one job and it's the only plan you contribute to, your payroll should stop you at the max automatically

Most (all?) modern payroll systems will prevent you from over-contributing. So do 22% and you should be fine.

[deleted]

Two questions that you need to investigate & answer first:

(1) if your company has a 401k match, will they "true up" at the end of the year?

(2) Will your plan stop contributions when you reach the total? Or will they switch to an after-tax 401k?

Assuming you have only one employer and one 401K, they’ll cut it off. Do 22%, the last contribution will be reduced to max out.

[deleted]

[deleted]

[deleted]

401k is not limited by company match. If you put in the max, whatever your companies give you is free cheese over the max. Plans like 457b have a employer/employee combined max contribution. 401k does not.

So we use a PEO to mange all our payroll and benefits. We switched in October. I had contributed $15600 with the first vendor. And then today I saw my check and my year to date with the new one is $6357. That’s puts my total at $21947. This new company has been an absolute nightmare to get things done correctly and I think what happened was that they took a contribution from our end of year bonuses which the old vendor never did.

This is obviously over the IRS max contribution. What happens now?

I echo the true up feature. My company had it then got rid of it.

So now have to contribute every paycheck to not miss any match

If you went over, you’ll have to remove excess contributions before you file taxes. Not that big a deal, just let your new administrator know that you’re over, they’ll fix.

I did reach out to them today as soon as I noticed. Thanks!

I think you missed the thrust of my question regarding company true-ups.

Let's say your company will match dollar for dollar up to 3% of your salary. You contribute 6% of your salary every paycheck, but you max out your 401k by the end of June and dont contribute the second half of the year.

If you work for a company that does not True Up, they will match the 3% for the paychecks that you contribute, that's it. So by maxing contribution early you miss out on the full company match. This is an extreme example but with Fidelity's percentage method of contribution, it's easy to miss the match for the last paycheck.

But if your company will true up the match at the end of the year, it doesn't matter if you miss contribution weeks as long as you work there for the whole year and your contribution percentage is high enough. For my example, since you contributed 6% for half the year that is equivalent to 3% for the whole year, and the company will make up the missing match.

I see now. Either way you can't go to post tax 401k after you max out your pre tax 401k. The plan is maxed at the annual cap up to $23,500 for FY23

If your plan allows it, you can contribute to an after-tax 401k above the limit for traditional and Roth, up to the total of $66,000 for all employee+employer contributions in 2023. To be clear, an after-tax 401k is different from a Roth.

Yes I know. I use both in my household.

So then you know that you CAN use an after-tax 401k after maxing out your Roth 401k/traditional 401k space, if offered by your plan.