What happens if you over contribute, say, $2000 in the previous year. Hypothetically this person makes $150k so that eliminates Roth IRA for overflow (from my understanding). Nobody has said anything to this point. Is there any concern for this moving forward by either the government or the financial company?

They will cut you a check and tax it.

per you title you were asking about over contributing to a 401k. Unless you have 2 or more employers in the year it is not possible to over contribute. The company will stop the deductions at the legal limits. Now if you over to a Roth or have 2 employees who total over the limit you will get zinged at tax time when you file. Its an easy calculation that IS checked by the IRS so don't try and trick em.

was curious how you can over contribute...payroll usually handles all that automatically

Can you reclassify the excess contributions to post-tax?

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was curious how you can over contribute...payroll usually handles all that automatically

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If you set your contribution % and then get a raise, I'm assuming it would qualify for this use case.

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per you title you were asking about over contributing to a 401k. Unless you have 2 or more employers in the year it is not possible to over contribute. The company will stop the deductions at the legal limits. Now if you over to a Roth or have 2 employees who total over the limit you will get zinged at tax time when you file. Its an easy calculation that IS checked by the IRS so don't try and trick em.

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depending on how the spd is written the plan may be subject to discrimination testing. If that is the case you can easily over contribute and not even touch the irs maximums payroll will use as your cap. If the company's workforce has a lot of young non-hce folks their contribution % will be low and drag down the testing.

nvm... Didn't realize company match didn't count towards the $18k.

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per you title you were asking about over contributing to a 401k. Unless you have 2 or more employers in the year it is not possible to over contribute. The company will stop the deductions at the legal limits. Now if you over to a Roth or have 2 employees who total over the limit you will get zinged at tax time when you file. Its an easy calculation that IS checked by the IRS so don't try and trick em.

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depending on how the spd is written the plan may be subject to discrimination testing. If that is the case you can easily over contribute and not even touch the irs maximums payroll will use as your cap. If the company's workforce has a lot of young non-hce folks their contribution % will be low and drag down the testing.

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Word. It is absolute bull**** to see someone max out their 401k only to have the entire ****ing thing come back to them because the company won't safe harbor or anything. Why even have a 401k when no one can contribute to it? ****ing bull**** i say.

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nvm... Didn't realize company match didn't count towards the $18k.

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Yeah. with a company match and profit sharing you can get to 53k currently.

I contributed 18,285 last year.

The extra 285 shows up as 'POST 1986 AFTER-TAX'. No checks, no IRS breaking down my door.

You can also over contribute pretty easily if you switch jobs during the year.

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per you title you were asking about over contributing to a 401k. Unless you have 2 or more employers in the year it is not possible to over contribute. The company will stop the deductions at the legal limits. Now if you over to a Roth or have 2 employees who total over the limit you will get zinged at tax time when you file. Its an easy calculation that IS checked by the IRS so don't try and trick em.

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My company does not automatically stop contributions. It's up to me to change my percentages to get as close to 18k as I can.

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per you title you were asking about over contributing to a 401k. Unless you have 2 or more employers in the year it is not possible to over contribute. The company will stop the deductions at the legal limits. Now if you over to a Roth or have 2 employees who total over the limit you will get zinged at tax time when you file. Its an easy calculation that IS checked by the IRS so don't try and trick em.

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My company does not automatically stop contributions. It's up to me to change my percentages to get as close to 18k as I can.

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Mine too. I knew I was coming up to the limit the first (and only) time I over contributed, but I assumed the company would automatically stop it. I was wrong. Won't make that mistake again.

Do most of you contribute 20-25% in the beginning to hopefully make your money work longer? Any benefit to stretching it out till you hit $18k? I try to max out early so that take home is bigger second half of the year.

Does your company true-up matching contributions?

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Do most of you contribute 20-25% in the beginning to hopefully make your money work longer? Any benefit to stretching it out till you hit $18k? I try to max out early so that take home is bigger second half of the year.

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Dollar cost averaging

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I contributed 18,285 last year.

The extra 285 shows up as 'POST 1986 AFTER-TAX'. No checks, no IRS breaking down my door.

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Some plans allow for another 10k to go into an after tax 401k after the 18k is hit.

If they do, you should plan on rolling it into a Roth. Most plans will take the growth to the pre-401k and the principal to a Roth.

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I contributed 18,285 last year.

The extra 285 shows up as 'POST 1986 AFTER-TAX'. No checks, no IRS breaking down my door.

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Some plans allow for another 10k to go into an after tax 401k after the 18k is hit.

If they do, you should plan on rolling it into a Roth. Most plans will take the growth to the pre-401k and the principal to a Roth.

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This isn't exactly right. The rules allow $18k of employee contributions (up to $24k if age 50 or older) and employer contributions of up to 25% (includes matches, profit sharing, etc) to a maximum TOTAL of $53k. However, it is allowable by regulation for employee contributions over the $18k (or $24k if age 50 or older) to be made POST TAX up to the $53k max. The only catch, as Harkrider pointed out, is that the plan has to allow it.

The real benefit, also mentioned by Harkrider, is that when you rollover to an IRA after separating from service or qualifying for in-service withdrawals, is that you can roll the POST TAX money to a Roth IRA while the pre tax contributions, employer contributions, and earnings would all go to a traditional rollover IRA.

Regarding the OP's original question, it seems to have been addressed in subsequent posts. The main thing to understand is that the plan is required to test for non discrimination which can limit participation by control persons and/or highly compensated employees. If the plan determines an over-contribution has been made, a taxable but not-penalized distribution is made.

I realize I wasn't telling the whole story. It really doesn't matter what the overall rules say because it all goes back to what each individual 401k allows. I was giving one that was the most common and probable in his particular instance.