I didn’t actually max out my 401(k) for 2011?

Remember how one of my goals for 2011 was to max out my 401(k)?

I had the paycheck deductions set up so that this would happen with my December 30th paycheck (the last one of the year). But my employer didn’t send the money to the 401(k) company until early in January. It looks like this means that I a) lost that contribution room, b) did not actually max out my 401(k) in 2011, and c) now essentially have a lowered contribution limit for 2012 by that amount.

To look on the bright side, I did meet my secondary goal of investing 20% of my gross income towards retirement since the funds from that paycheck did eventually make it into my 401(k).

I’m not completely sure of how the 2011 and 2012 contribution limits are affected by this. I did the math and if I contribute the amount I calculated in setting my 2012 investing strategy, then I will either a) max it out in December if the December 2011 paycheck actually counted against the 2011 contribution year or b) max it out in November if the December 2011 paycheck counted against the 2012 contribution year.

If b) ends up happening, then I will have a larger paycheck than normal in November instead of just in December and I will divert some of that to taxable investments to reach my 20% gross income invested goal for the year. I will also then set my 401(k) paycheck deductions for 2013 to ensure that I max it out in November and don’t run into this problem again.

Readers, have you had any problems with your 401(k) or 403(b) contributions not posting on time? What did you do about it?

2 thoughts on “I didn’t actually max out my 401(k) for 2011?

  1. I have had 401k issues before (wrong amount taken out etc) and payroll has always been able to fix it after the fact. Although I have had not had this specific issue, you may want to at least check.

    This must be a problem for a lot of people in theory because I know our 401k contributions always post a couple of days after our paychecks. I maxed out my contribution earlier in the year so I am not sure how my office deals with this.

    • Payroll can’t fix it because they posted in the wrong calendar year and the IRS is sticky about that. The company who runs the plan and my HR department both gave me opposite stories. I talked to people around me and found other people with the same problem. I think I’m going to try to max it out in November this year – we’ll see. I don’t want to go too much earlier because then I may not get the match for December.

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