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This is a 401(k) question. So I think it's a tax question.

This is a 401(k) question...
This is a 401(k) question. So I think it's a tax question. My daughter left one company and went to another. Her start date at her new employer was Nov 13, 2017 and they automatically enrolled her in a 401(k) at 6% of her wages. At her former employer she has made 17,712 in contributions to a Roth 401(k) for 2017. What happens if she goes over $18k for the year? And if she cant put the 6% in a new Roth 401(k) then where should it go? The company offers three choices: What they describe as an employee pre-tax, an employee Roth 401(k), and After-tax non-Roth.
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Answered in 36 minutes by:
11/28/2017
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,390
Experience: 15years with H & R Block. Divisional leader, Instructor
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The amount she can defer to both plans can’t exceed her individual limit for the year.

If she does go over and the excess isn’t returned by April 15 of the next year, she could be subject to double taxation:

  • once in the year she deferred her salary, and
  • again when she receives a distribution.

If she is going to exceed the total then she can let them know now and put her money in a Roth outside the work plan for the remaining year (up to the ROTH allowed limit).

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Customer reply replied 8 months ago
she has also contributed $5500 to a Roth IRA for 2017

Then she just needs to let them know her limitation and wait for the new year.

There is just one month left.

I sincerely ***** ***** has been helpful.

A positive 5 star rating is appreciated so I am credited for assisting.

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Customer reply replied 8 months ago
ok and thank you.
The new employer has already started to contribute for 2017. So what should she direct them to put it in . The company offers three choices: What they describe as an employee pre-tax, an employee Roth 401(k), and After-tax non-Roth. obviously not the Roth 401k.

You are most welcome.
After tax non ROTH would be her only option. She will not receive any tax benefit now but at least she can contribute.

A positive 5 star rating is appreciated so I am credited for assisting.

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Customer reply replied 8 months ago
the After-tax non-Roth will not be considered IRA or 401k or be included in going toward her contribution limit?

If it is not a 401k or an plan in the company that is taken out before taxes are calculated.

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Customer reply replied 8 months ago
How do I know it's not a 401k? it is only described as an After-tax non-Roth.

Tell her to ask them. Some employers do have after tax 401k contributions but they are still limited to the annual amount.

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Customer reply replied 8 months ago
Right. Let me approach it a different way. If it turns out she over-contributes for 2017, can she fix it if it's withdrawn before she files her 2017 taxes?

Yes, by taking out the money before April 15th

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,390
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
Robin D. and 87 other Tax Specialists are ready to help you
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Customer reply replied 8 months ago
good. I'm going to suggest then that she put it in the After-tax non-Roth for now and we will see what happens. At least she will get the company match.
I think that will do it for now. I will run all this by her.

That may be the best for now.

Thank you for the bonus, that was very generous of you.

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