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Scott asks:

<<Due to a cross-country move, my wife is now on her third job this fiscal year (the trailing two weeks at our previous residence, eight months here, and now two months at the job she wanted in the first place :-). Each of these employers has a 401(k). It's the middle one that I'm concerned about.

When she started, she was not eligible for the 401(k) for the first two paychecks. While working, she received bonus checks for taking on pager duty, which checks had social security, medicare, and state disability taken out, but not income taxes or 401(k) contributions. Lastly, her final check had all taxes taken out, but not 401(k) contributions.

What are our options (from the IRS's standpoint) for maximizing her contributions this year? This is somewhere in the range of $1k of contributions which haven't been made. [I've suggested that if she can't put them in a 401(k), perhaps she should put $750 in a non-deferred investment :-).]

Also, are the contribution limits based on your yearly income, or in your instantaneous income? If you aren't eligible for the first quarter, say, can you raise your contributions for the rest of the year, or do you just lose the tax deferral for income during that quarter?>>

From a 401k standpoint, the total of all her contributions to all 401k plans may not exceed the lesser of 25% of her total annual compensation or $10K. The bonus checks she received count as part of her compensation for the year even if no 401k contribution was deducted from that pay. It's the pay for the entire year that counts, not that of any specific quarter or when she became eligible to participate.

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