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Author: CMvcp Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25223  
Subject: bonus contributions? Date: 1/6/1999 6:33 PM
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In addition to the company's regular matching contributions, is there any reason why, or rules against, the employer directing any bonuses throughout the year to employees' 401k plans (if the employee so desires, and no limits are exceeded)?
Thanks,
CM
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Author: tbarron One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 562 of 25223
Subject: Re: bonus contributions? Date: 1/8/1999 6:18 AM
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CM wonders, "In addition to the company's regular matching contributions, is there any reason why, or rules against, the employer directing any bonuses throughout the year to employees' 401k plans (if the employee so desires, and no limits are exceeded)? "

Interesting idea. A couple questions come to mind for me.

It sounds like your employer offers a match on your regular paycheck contribution. If so, they may be reluctant to let you put bonuses into the 401k because they may not want to cough up matching funds. "But I don't expect you to match the bonus!" "No, but our software is set up to match everything that goes into that account and we don't want to have to fuss with it." "Rrrrr..."

One of the rules about the tax deferred vehicles in general (per my understanding, which is not perfect :) is that only "earned income" may be contributed. Does the bonus qualify as "earned income"? "Why did you pay it to me if I didn't earn it?" "Oh, it's our way of allowing you to participate in the good fortune of the company. What you *earn* is your paycheck." "Grrrrr..."

I guess my take is that from the employee's point of view, there aren't any good reasons, but the employer may well resist the idea out of inertia. Often, I've observed that what an employer is unwilling to do for one person, they may do gladly for a larger group. Have you considered enlisting the support of any of your co-workers?

hth...
Tom

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Author: Actuarystdtjk One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 593 of 25223
Subject: Re: bonus contributions? Date: 1/12/1999 10:19 AM
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CM wonders, "In addition to the company's regular matching contributions, is there any reason why, or rules against, the employer directing any bonuses throughout the year to employees' 401k plans (if the employee so desires, and no limits are exceeded)? "

At my company, we get a few shares of company stock added to our 401(k)'s at the end of each year as a christmas bonus - type thing, so it is possible. Of course, they give us company stock, not free funds to invest anywhere we want, but hey, its something.

FWIW---
jk

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