Does an employer's unvested 401k match count towards my total contribution limit?

Blimpy said:
My employer offers a 401(k) match, but it doesn’t fully vest until I’ve been with the company for a certain number of years, which I haven’t hit yet. Do those unvested matching contributions count toward my total contribution limit for the year they’re made? If I leave before I’m vested, I lose the match entirely.

I’m planning to contribute the maximum this year and next, but I want to avoid any penalties for exceeding the limit if I should be including the unvested match.

If they don’t count now, would they count later in the year they actually vest, since that’s when I technically ‘earn’ them?
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No, employer contributions and matches don't count toward the employee elective deferral limit. However, they do count toward the overall contribution limit.

For more details, check the IRS Retirement Topics on 401(k) and Profit-Sharing Plan Contribution Limits.

Retirement topics - 401(k) and profit-sharing plan contribution limits | Internal Revenue Service

Learn the contribution limits for your 401(k) and Profit-Sharing retirement plans.
www.irs.gov www.irs.gov
 
Thanks, everyone! Here's a quick recap:
  1. The employee deferral limit is $22,500, and this does not include employer matches.
  2. The per-plan contribution limit is $66,000, and this does include employer contributions, whether vested or not.
For my situation with two plans (one of which supports in-plan Roth conversions from post-tax contributions), I can contribute:
  • $22,500 total between both pre-tax 401(k) plans
  • Up to $66,000 per plan (or my total earnings, if less than $66k), including employer matches
So for my full-time job, I can contribute up to $66,000. For my part-time job, assuming I earn $10,000 this year, I can contribute up to that amount. I just need to keep track to ensure I don't exceed $22,500 in total pre-tax contributions (not counting employer matches) and no more than $66,000 in total contributions for my full-time plan, including employer match.
 
Blimpy said:
I’d agree with you, but HR isn’t exactly our area of expertise. :)

It gets a bit trickier for me since I have both a full-time and part-time job, and both match 401k contributions, so I’m keeping track of everything in Excel.

Here’s what it looks like for the year, combining both plans:

  • Pre-Tax Contributions: $20,337.69 (The limit is $20,500, and this only includes the payroll deducted contributions.)
  • Employer Match: $3,955.18 (I’m tracking this separately since it doesn’t count toward the $20.5k limit.)
  • After-Tax Contributions (MBR): $36,685.37 (This is the amount I convert from after-tax 401k to Roth 401k each pay period.)
  • My Total Contributions: $57,023.06 (This doesn’t include the employer match, just my contributions.)
  • Total Contributions: $60,978.24 (This is the total, including the unvested match. The cap is $61,000.)
If the unvested employer match counts toward the limit, I’ll be about $4k over and will need to talk to payroll in January to sort out the excess deferral and avoid the 10% penalty.
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I am curious as to why After-Tax Contributions (MBR) don't count toward the 20,500 limits.
 
BanjoSlip said:
I am curious as to why After-Tax Contributions (MBR) don't count toward the 20,500 limits.
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The $20,500 limit applies to tax-advantaged contributions. Some plans also allow after-tax contributions, which can then be converted to a Roth within the plan.
 
"After-tax" contributions are different from Roth employee contributions. If your plan permits it, you could potentially reach the full $6X,000 contribution limit with just your own contributions, including after-tax ones.
 
I didn’t mention anything about an initial Roth. Essentially, I do contribute the full $66,000 to my plan.

Just to clarify: I have two plans, but I reach the $66,000 limit through my full-time plan alone.
Florty87 said:
"After-tax" contributions are different from Roth employee contributions. If your plan permits it, you could potentially reach the full $6X,000 contribution limit with just your own contributions, including after-tax ones.
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Blimpy said:
I didn’t mention anything about an initial Roth. Essentially, I do contribute the full $66,000 to my plan.

Just to clarify: I have two plans, but I reach the $66,000 limit through my full-time plan alone.
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Sorry about that. I should have clarified that I was responding to a quoted reply. It was clear you (OP) already understood this since you're using it. When I wrote the comment, I was referring to the question about why After-Tax contributions don't count toward the $2X,500, asked by BanjoSlip.

BanjoSlip said:
I am curious as to why After-Tax Contributions (MBR) don't count toward the 20,500 limits.
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