Of course contributions are based on gross wages. Where do I say it's based on net earnings? Of course it's based on gross. duhh.
You said 6% of $18000. This means that you thought the companies contribution was based on 6% of the amount that you contributed to your 401K, not your gross earnings.
2. If you are able to exceed the $18,000 max into your 401k contributions, than I am wrong. I am not aware of that. I am basing it on $18,000 max 401 K contributions.
Your contribution cannot exceed $18000. If your employer also contributes to your fund, their limit is over $30000 I believe.
3. The rest of what you say, is totally wrong.
No, it is not.
you'd better sign up for my class too.
I would fail your class. It looks like you teach 2+2=5.
"An employee grosses $100K. In order to max his 401K, he contributes 18%"
No he doesn't contribute 18% to max out. IT'S $18,000 MAX! The IRS doesn't place a max percentage wise, it's a dollar amount, as in $18,000 max.
Again, you were a math teacher? What percentage does an employee have to contribute to reach $18000 if he grosses $100K? Do you need some help doing the math? He contributes 18% to max out.
I didn't say the IRS has a max percentage. In this scenario, he contributes 18% to max out his dollar amount.
Earn $200,000 and it's still $18,000 max contributed by the employee into his 401K !
OK. What percentage would an employee, in this scenario, have to contribute to max out his 401K?
Again, we are talking simple math here. I'll help you out. 9% And with the employers matching max rate of 6%, contributing $12000, he would have $30K contributed for the year.
If you need help solving the equation, let me know and we can go over it line by line.
Did you go to school with brown slave?
No, but at least we were both taught math the correct way.
Oh crap!!! I was wrong on the 6% matching! That would be $6000 matching funds max from the company. Ohhhh crap! ooooops!
Bingo. We have a winner.
taught public, went to parochial school. Who gets blamed?
I can't stop laughing!!!!
So you taught math different than you learned it? I know, Common Core.
Yep! Where I got it wrong, was matching 6% of the employees contribution (6% of $18,000 = $1080) rather than matching the first 6% contributed up to 401K (which based on max $18,000) can be as high as $6,000.
Yup.
But it can be higher than $6000. It is all based on gross wages. Gross $120K, like some feeder drivers do, and they would contribute up to $7200.
That's all anyone was trying to explain to you was that you were confused on what exactly a 6% match meant.
Yup.
As my dad would say in a situation similar to this one.
"Good thing I wasn't trying to split the atom, for the first time"!
How about the second time?
i'm buying.
I look at it this way.....2 separate accounts. Employee puts up to $18,000 in theirs and the employer puts up to $6% match,(based on employees gross wages)which can be the remainder up to the IRS limits. In 2015 the limit was $53,000. So the employer could put in $35,000.
Thank you. Wasn't sure of the exact limit, but thought it was somewhere around the $50K mark for the combined total.
