Retirement Weekly: I just got a raise. How can I max out my 401(k)?

by | Oct 6, 2023 | Stock Market

Dear Dan, I found out I will get a nice raise starting in November. Since I’m not used to getting that much pay, this seems like a good time to increase my savings. I can save more and won’t even feel it. I also have some cash saved at my bank. I’d love to max out my 401(k). With the raise not kicking in for a while, do I just write a check to the plan?

— Todd Dear Todd, Congrats on the raise, and I love your thinking here! Saving all or part of a raise is one of the easiest ways to boost savings because you haven’t been used to spending the new income. “Employee deferrals,” that’s what you contribute from your pay, must be done through payroll. You can’t just cut a check. To max out your contributions to the 401(k), you must navigate some limits. First, the dollar limit maximum for employee deferrals in 2023 is $22,500. If you are over age 50, you may also contribute an additional “catch-up” amount of up to $7,500 for a total of $30,000. However, you’ve probably been asked by your employer what percentage of your pay you want to contribute not a dollar amount. Techn …

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