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When I retired 2 years ago on June 1, I set up my 401(k) contributions to max out in the first 4 months of the year. And for that company, they trued up their matching for folks who did not do equal contributions over the year in the next year, so I actually got the whole employer match even though it did not show up until almost a year after I had left.

Its been a while so not sure if the rules have changed that much, but as I recall the EPCRS report that measures plan compliance and allows self-fixing and self-reporting, was done quarterly. If highly compensated employees had contributed more than 70% of total contributions, the plan would have exceeded its statutory limits thus requiring correction, such as returning HCE contributions/matching. This could restrict plan contributions, at least for the HCE. So, again as I recall, contributions as % of salary, were made monthly, although I'm sure there would have been exceptions.

The used to be a Federal law limiting the % of income that could be contributed to 25%, which is why many plans based their limits on a % of income. When the EGTRRA* (Economic Growth and Tax Relief Reconciliation Act) was passed in 2001, the legal limit on % of income was lifted, and just required that SS and Medicare taxes be withheld - which effectively limits anyone who makes less than the SS tax cap to 92.35%

Actually, prior to EGTRRA, the maximum deductible contribution was 15% of eligible salary, calculated after any salary deferral. EGTRRA changed the employer’s max deduction for contributions to a profit sharing or stock bonus plan by increasing from 15% to 25% of the participants’ aggregate compensation before deferral. IOW, 401(k) deferrals are not counted for purposes of the deduction limits. However, 401(k) deferrals were still included for purposes of calculating the compensation on which this limit is based. Prior to this, the only way to contribute up to 25% of eligible salary was through a money purchase pension plan. This was effective for taxable years beginning after 2001. This significantly increased the max amount that could be contributed to one's employer sponsored retirement plan.

Employment tax is calculated on entire salary prior to any deductions, with SS Tax up to salary max and Medicare tax on all of salary. Not sure, but I don't think EGTRRA changed this.

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