401k company matching

[cenzo]

What is the name of your state? Massachusetts

I am vested in my company's 401k plan. I am 59 years old and my company's literature states it matches 25 % of up to 15% of salary. ( Total yearly salary is in the $50,000 range.)

Since I am over 50 yrs. of age and I believe entitled to a "catch up" provision of $5,000 for calendar year 2006. Does my company have to match the total of the 15% of my salary that I contribute to the 401k plan and the additional $5,000 I contribute ?

(I believe the literature leaves out any mention of the additional "catch up' provision since it would complicate the issue since most of the employees are much younger.)

Thank you in advance for your comments.

Cenzo

 

[kNOwtheLAW]

Since I am over 50 yrs. of age and I believe entitled to a "catch up" provision of $5,000 for calendar year 2006. Does my company have to match the total of the 15% of my salary that I contribute to the 401k plan and the additional $5,000 I contribute ?

To answer your questions multiply your salary ($50,000) by the 15% employer cap. Based on your example they're stating that they will match up to $7500 of pre-tax or Roth contributions to your account.1 The company match is a quarter ($.25) for ever dollar ($1.00) you put into your account. Therefore, the maximum they will match in this example is $.25 x $7500 = $1875 for plan year 2006.

The $5000 catch-up provision applies for those who want to save an additional $5000 amount above the 401k maximum of $15,000 for 2006. So, unless you plan to contribute over 30% of your income to your 401k plan the catch-up provision is not applicable. And, since we already determined the company will match up to 15% of salary we can safely say that they will not be matching any contributed dollars above $7500 in this example.

KTL
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1. Assumes the plan document was amended to accept 'after tax' Roth contributions.