Our first post here, on the new extra large inflation adjustments were …. well not in a good format…
Patience is a virtue…. we chopped this up and reordered in our personal most used… we will also have this pasted on a special tab here in our blog…;. Enjoy!
Annual Gift Amount $17,000
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
The most common type of Retirement Plan, the 401k in 2021 has a maximum deferral amount of $19,500 with a catch up provision for those age 50 or greater of $6.500 for a total of $26,000 again in year 2021.
Should you accidentally over fund your retirement plan … what occurs is a double taxation!
This is not the end of the world, especially if a very small dollar amount, but you still do not want this to happen…
While it may seem puzzling at first, upon second thought the most common reason for overfunding a retirement plan is a job change.
It is impossible for your new employer to know your prior contributions, so an accidental overzealous withholding that throws you over the annual maximum will not be allowed from a IRS tax standpoint.
If you change jobs mid year, be sure to carefully determine your prior withholdings and monitor you new withholdings throughout the year as the burden is on us the employee to keep ourselves in check with the maximum.
For those gainfully employed at the same employer we have not seen an accidental over allowance in a very long time, so most employers have systems set up to automatically stop your contribution once the maximum is achieved. Should your employer merge with another company or change administrators, it is a good idea to make sure they pick up your prior contributions, which can be achieved by checking your paycheck’s ytd retirement plan withholdings after the change.
The good news is there are ways in certain cases to unwind this overpayment, but they are frequently very complicated, may create a tax issue for the IRS to review, and in some cases just not available.
Have a Great “No Overfunded 401k” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
As we enter the home stretch of the year, we wanted to remind all to confirm the desired contribution level is being met for your company retirement plan.
401k and similar corporate plans – $18k + $6k if over age 50
Now is a good time to confirm our desired level of contribution is actually occurring. If not, this is the perfect time to adjust.
All of the above and others, are reasons contribution levels may vary from our desired level.
Take a few minutes to check your latest paycheck and confirm your YTD deferrals …. Contact us with any questions, we are glad to help !
Have a great “Confirmed Retirement Contribution” Day!
John A. Kvale CFA, CFP
Posted in Investing/Financial Planning, Retirement Planning
Tagged 401k, 401k retirement
Tis the season for many new and replacement investment options for 401k plans. While our fancy New Vault, which we are still establishing connections does a fantastic job of reporting, it has one catch.
Be sure to let us know if you have a new investment option in your 401k. ESPECIALLY important to let us know if your current option is being replaced with a new fund.
We will do a complete analysis to determine the appropriate action.
Hat-tip GA from the field …thanks for the reminder of the season!
Next week starts a two week trip out of the state for business, friends, family, tennis, Newsletter creation, and lastly a little R & R.
Expecting to be heavily tethered next week, but as a family favor lightly tethered the following week.
Always connected
…. Oh, some terrific articles coming here too…one VERY IMPRESSIVE research related post from Donald “The Brain” that we have never seen completed…such the research and neat findings.
But …. that is all next week, and today is a Friday, heading into a summer weekend! ENJOY!!!
John A. Kvale CFA, CFP
With our friend Zigg still on his island and his friends intent on staying for a while, we decided to shift gears and discuss our favorite question of the week. This week’s question derives its origin from several conversations we have had lately with client’s, making it topical for discussion.
Should I only put the amount the company matches in my 401k? and a follow-up question, Should I put extra, non-pre taxed funds into my plan?
NO and NO !
We recommend you put as much as possible in your company 401k even if there is no match at all. There are various restrictions such as compensation and general government caps which limit contributions, but putting as much PRE-tax funds into your 401k as possible, is our recommendation.
Various plans allow you to continue after-tax contributions to retirement plans, which we are not advocates of doing. Most plans do not have the ability to provide for specialized allocations which may be more appropriate for investment. Don’t bypass saving these extra dollars and spend! Just save these funds in a more self-directed manner.
In closing, just because Zigg is on vacation, does not mean there are not sharks out there, keeping our guard up for an “Event” is still a good idea, however, economic, consumer, and earnings (more discussions soon) look very good!
Have a Super Day and a Great Weekend!
JK
214-706-4300
Comments Off on Favorite Question of the Week from the Field; Zigg Still on Vacation
Posted in General Financial Planning, Investing/Financial Planning
Tagged 401k, 401k retirement, Pre-Tax, Zigg
Under current tax laws, if you do not have outside restrictions (see below), you should be able to contribute $22,000 to your company 401k if you are 50 years of age or better.
According to the IRS’s current Catch Up contribution rules individuals age 50 or over are able to contribute an extra $5500 into their 401k retirement plans, bringing the total for 2011 from $16,500 to $22,000 (2012: $17,000 to $22,500.)
If you fall into this young age category, take a peek at your latest paycheck to confirm “YTD Deferrals Into 401k” is either close, or at the above mentioned maximum.
If not, here are a few items you may want to know:
We hope you enjoyed another tax saving tip. We understand many of these tips are very near the end of the year, however, we often find this information is more receptive to us all at this time. OH, and again, we are not recommending tax advice, as each situation is different.
Have a Great Day!
JK
214-706-4300
Comments Off on Are You Caught Up? Those of us 50 Years of Age or Older? – Another End of the Year Tax Tip
Posted in Investing/Financial Planning, Tax Related
Tagged 401k retirement, deferrals, maximum contribution
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