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Anyone here had to deal with a 401k refund? This is happening for the second time now. My last employer just halted the 401k because it went into an imbalance state between what are considered HCE (highly compensated employees i.e. earn > $120k/yr) and other employees. Due to this reason I missed a years worth of contributions.
Now, my present employer just sent me a letter saying they are refunding a good chunk of my 2017 contributions since they are excessive compared to the rest of the company. I am only contributing the max which was $18,000 in 2017.
Frankly this is frustrating. The govt. wants to come after average middle class people like me who is just trying to save for retirement. It's not really my issue that others are not contributing, why penalize those that save?
According to the govt. they are trying to correct a disparity so it's fair to all, i'm still waiting for the disparity to be corrected where Mitt Romney earns $44 million and pays 10% tax. Still waiting....
This isn’t the govt coming after you and it has nothing to do with Mitt Romney. If you want to be upset with someone you should look at your coworkers as they are the problem.
why should I be upset at my coworkers? they are free to choose their path in life... the govt needs to stop like everyone's mother. If people don't want to save then that is their choice. How is penalizing some other random person because another's choice fair?
You are free to save you aren’t being stopped but your fellow coworkers are to blame for your inability to fully participate in your 401k. Maybe the government should stop acting like your mom and eliminate the 401k option all together? How’s that for take your ball and go home?
why should I be upset at my coworkers? they are free to choose their path in life... the govt needs to stop like everyone's mother. If people don't want to save then that is their choice. How is penalizing some other random person because another's choice fair?
It's stupid IRS rules that have been in place for more than a decade.
Anyone here had to deal with a 401k refund? This is happening for the second time now. My last employer just halted the 401k because it went into an imbalance state between what are considered HCE (highly compensated employees i.e. earn > $120k/yr) and other employees. Due to this reason I missed a years worth of contributions.
Now, my present employer just sent me a letter saying they are refunding a good chunk of my 2017 contributions since they are excessive compared to the rest of the company. I am only contributing the max which was $18,000 in 2017.
Frankly this is frustrating. The govt. wants to come after average middle class people like me who is just trying to save for retirement. It's not really my issue that others are not contributing, why penalize those that save?
According to the govt. they are trying to correct a disparity so it's fair to all, i'm still waiting for the disparity to be corrected where Mitt Romney earns $44 million and pays 10% tax. Still waiting....
Since you're having money refunded to you that means you're a highly compensated employee in the discrimination testing. Forgive us if we don't feel sorry for you. When you say you're "ONLY' contributing the max of $18,000, you do realize that's more than some people make in a year don't you?
If the non-HCE employees are not contributing to the plan that means that either the plan design is flawed or the company is not educating it's workforce on the benefits of retirement saving. Either way it's fixable, but someone has to take the time and spend the money to figure it out and implement a solution.
By the way, Mitt Romney was paying what he was legally obligated to pay. There's no disparity to be corrected.
Since you're having money refunded to you that means you're a highly compensated employee in the discrimination testing. Forgive us if we don't feel sorry for you. When you say you're "ONLY' contributing the max of $18,000, you do realize that's more than some people make in a year don't you?
If the non-HCE employees are not contributing to the plan that means that either the plan design is flawed or the company is not educating it's workforce on the benefits of retirement saving. Either way it's fixable, but someone has to take the time and spend the money to figure it out and implement a solution.
By the way, Mitt Romney was paying what he was legally obligated to pay. There's no disparity to be corrected.
If the company made a fixed contribution of 3% to each employee the problem would be solved as well fwiw
Since you're having money refunded to you that means you're a highly compensated employee in the discrimination testing. Forgive us if we don't feel sorry for you. When you say you're "ONLY' contributing the max of $18,000, you do realize that's more than some people make in a year don't you?
Not quite sure what is so unusual. I live in the LA area, six figure incomes are pretty common here and are not considered high incomes at the IRS threshold for HCEs. Infact I believe FHA recently classified $90k/yr for the area as low income. Obviously the $120k/yr threshold has not been indexed for geographical area... LA in general has an absolutely astronomical COL so yes, while $120k/yr in Omaha, Nebraska may be a ton of money, it's just trying to get by here.
Btw, nobody really can live on $18k/yr in LA, $60k-70k is the absolute minimum to be self supporting. Rents have gone to the stratosphere in recent years and even that may not be enough to survive. My point again is that due to cost of living disparities the $120k/yr classification as "high income" for an area like LA is laughable.
The reference to Mitt Romney was the tax subsidy loopholes freely available in an unchecked fashion to people like him while those subsidies are aggressively policed for the middle class. I did not imply he did anything illegal, it's the flawed tax code that allows evasion of taxes on non wage income.
Not quite sure what is so unusual. I live in the LA area, six figure incomes are pretty common here and are not considered high incomes at the IRS threshold for HCEs. Infact I believe FHA recently classified $90k/yr for the area as low income. Obviously the $120k/yr threshold has not been indexed for geographical area... LA in general has an absolutely astronomical COL so yes, while $120k/yr in Omaha, Nebraska may be a ton of money, it's just trying to get by here.
120k isn’t the only allowable measure for HCE, your company can elect to make their mark 120k or top 20% of their earners. Maybe you should suggest they reevaluate that. It would also open up options like after tax non roth contributions to your plan should they decide to offer it to employees
Strange 120k is just trying to get by however the median hh income is around 60k I believe
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