| 401k catch up contributions |
|
|
|
|
|
angelface
Contributing Member
Cash: $ 7.90
Posts: 36
Joined: 03 Aug 2005
|
| 401k catch up contributions |
 |
|
does anyone know what steps are involved in order to make 401k catch up contributions?
it says here http://www.research401k.com/catch-up-contributions.html
Why don't 401k Retirement Participants take advantage of Catch Up Contributions?
According to Lisa Hoene, VP of Financial Educational & Planning at American Express Retirement Services in Minneapolis says most of her clients don't have the "time, energy and resources" to take advantage of the 401k catch up contributions
|
Fri Sep 22, 2006 6:29 am |
|
|
BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
|
It should be just the same as making the regular contributions - except that it's more money, which addresses the "resources" comment. I don't know what they may be referring to about folks not having the time or energy to do so. I suspect it may be an education issue...
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
|
|
Fri Sep 22, 2006 9:44 pm |
|
|
efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
|
|
|
|
Part of it may be not having the extra money to make larger contributions. But part of it may be not having a clue and not willing to investigate and learn.
When I first heard of 401(k) catch up contributions, I thought maybe it meant that I could add a lump sum at the end of the year if I wanted to. But from what I can gather, you have to adjust your payroll deducted contributions throughout the year to take advantage of the additional catch up limit.
But due to non-discrimination clauses, contribution limits are not set in stone because lack of participation in a particular plan can reduce that plan to an unknown limit below the absolute legal maximum. If someone got burned by contributing beyond that unknown limit, they may not be aware if participation and that limit bumped up due to improved employer match or changes to opt-out instead of opt-in. Or they may not be aware of the catch up limit bump or how to take advantage of it (it was a mystery to me last year). Note that employer match does not count towards the limit.
Another factor may be if their plan does not offer good investments.
|
|
Sat Sep 23, 2006 12:25 am |
|
|
|
