All right, doing end-of-month catch-up. Standard backdoor roth is maxed (although it doesn’t really count since it was done with last year’s savings). I’m playing around with how I want to deal with the pre-tax 401k/megabackdoor as far as timing since matching happens only with pre-tax and I’m debating whether I want to trickle that out through the year rather than waiting for the catch-up, but the rest of the accounts are set up to go.
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Question, how does this affect taxes withheld?
My company gives a nice match plus I hate the fuss of changing things to I’m not rushing to max. But I’m curious.
Our bonuses just posted, and based on some quick calculations I think I’ll barely clear the max limit when I quit my job!
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I’m looking over Mr Darling’s benefits paperwork for his new job, and I didn’t realize that employer contributions to HSA’s counted towards the limit. Looks like that’s going to be moved up from a stretch goal just because we’re getting $1500 from employers.
His company doesn’t do 401k matching until you’ve been there a year, but once they start it’s mind-boggling. I’ve done the math 3 times, and they have a weird tier system that I’m not certain I understand, but it seems like they end up matching ~50%!?!
Other than that progress is slow, since he won’t start working til March 2. But I bumped up my 401k contribution to 8% in anticipation, and to see how long it takes the software to implement the change. And when we get our tax refund at the end of the month (~1400), that will go into 2019 Roth IRAs.
Overall I swing between feeling like this goal is totally awesome and doable and wondering how I ever though this was a reasonable idea. We’ll see how it progresses as the year goes!
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That’s awesome progress! Also omg 50%?
At my previous job, they matched $.50 per dollar with a cap of 6%. So I guess that’s 50% match, but it ends up meaning if I contribute 6% of my salary they contribute an additional 3% of my salary. Anything beyond that was just my own contributions. Still a good deal though!
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That’s what my company does. Not great, not terrible. Like I said, it’s a weird 3 tier system, but unless I’m reading it very wrong they end up contributing 9.5% of the salary up to the Social Security base (if you contribute enough). It’s enough money that I keep checking it again, and I keep not finding math errors.
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Just checked my pay stub, and it looks like here’s what happened:
- Medicare and social security taxes stayed the same regardless of my contribution amount
- Federal and state withholding dropped to almost nothing, because by contributing to my 401k I ended up with almost no taxable income that pay period
- My ESPP contribution dropped to about 25%, which is a strange amount and I have no idea how that calculation works
My progress so far, as of Feb 20:
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401k: $12,643.76 / $19,500
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IRA: $0 / $6000
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HSA: $346.26 / $3550
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Yeah that’s bit me in the butt a couple times because I forget to incorporate it. Our employer contribution happens in summer and usually I’m thinking of HSA contributions around New Years. If you over contribute and catch it in time you can request an over contribution form from your HSA provider and then they’ll send you a check for it, but it’s a huge PITA. Or you just pay extra at tax time on the over contribution. I’ve done both scenarios at this point ( 
)
Another piece of HSA trivia, if you leave an HSA plan partway through the year your contribution amount is prorated by however many weeks you were in the HSA plan for the year. The individual amount for 2020 is $3,550 so, for example, if you only have an HSA plan for three months of the year then your limit would change to $887.50.
Since Mr. Darling is just starting his job that probably won’t be an issue for y’all but if anyone is currently on an HSA and looking to change jobs, it won’t do them any favors to front-load for the year.
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Addition HSA trivia: you cant front load because of The prorated eligibility. But you can back load for the whole entire year if you’re eligible on the first day of December thanks to something called the “last month rule.”
https://apps.irs.gov/app/vita/content/37/37_06_040.jsp?level=basic
US taxes are stupid.
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Weird. Although now I feel like I have some finance nerd achievement unlocked for learning that.
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Since we’re talking about HSA trivia does anyone know if it matters to the IRS which accounts we put the money in? Mr Darling is on my insurance for the first 3 months of the year, and then will switch to his new job’s. Both have HSAs. Do we need to put (my contribution + 3 months of his) into my company’s HSA and (his contribution - 3 months) into his, or does it not matter as long as we collectively put $7,100 or less into HSA accounts?
I wouldn’t think it matters, since there’s also the option of contributing to an HSA that isn’t affiliated with either of your workplace plans.
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Right, doesn’t matter. Make sure you get all of the match from both employers (and subtract that from your $7100).
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I am in!
I maxed my IRA (6000) on the first of the year for the first time (money nerd achievement unlocked!!)
My 401k plan does not do a matching trueup, so I’m on the slow and steady plan there. I updated my percentage contribution today after working out when my raise goes into effect!
HSA-single also on the slow and steady plan.
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FWIW maxed last year’s IRAs yesterday, all at once. With luck we’ll do the same for this year’s sometime next year. 
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End of month update, not very exciting, I’m afraid, since things are pretty well on auto-pilot at this point. My HSA is automated through paychecks to hit the max at the end of December. The pre-tax 401k is front-loaded as best I could estimate so from here on out I’m just putting in the minimum to get the match and should max out sometime in November. I was going to completely front-load to make life easier, but work pulled some shenanigans with people who were let go at the start of this year, and I decided that I didn’t want to trust them with a full delayed match true-up. This way they’re limited to about $600 that they could keep rather than my full match. Post-tax is also automated (and not front-loaded so what’s happening in the market now is less wince-worthy there, as much as I’m trying not to pay attention), and although I’ll need to play around with that when raises/COL adjustments come in to make sure I can hit the match in December, until that happens the auto-deductions are set to go.
End of Feb update!
My progress so far, as of Mar 1:
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401k: $18,965.64 / $19,500
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IRA: $0 / $6000
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HSA: $461.68 / $3550
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I just changed my 401k contribution to try to fill up but not go over the limit, but I think they’ll make sure it doesn’t go over regardless. Next up I need to figure out how to contribute to my IRA. I honestly don’t even remember where it is right now.
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Progress so far:
401k: 3404.28/19500 = 17%
HSA: 580.36/3500 = 17%
IRA: 3630.75/6000 = 60%
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Last paycheck came in and topped off my 401k. Also bought at $31/share instead of $39, too bad I didn’t buy the last chunk of it at that price!
I also remembered that I should do the mega backdoor roth, so that is next on my list to figure out how to do.
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