This is for those over 50 years of ago. The IRS allows $18K plus $6K catch-up. Do you have to manage these as two separate things or is it accounted for as a total of $24K without a problem? Should the employer’s plan be smart enough to create a catch-up once it is over $18K after it checked the employee’s age? Or does the employee have to closely manage this.
I guess for IRS purposes, I’m not sure how or if any if this is reported to the IRS. Because the IRS would have to know the age of the tax payer to determine if they went over what was allowed or not?
No, it doesn’t have to be accounted for separately or go into a special account. It all goes into the same account together.
Typically when you sign up for a 401(k) plan, you request that a certain amount be taken out of each paycheck. Your employer will not begin taking more out of your paycheck automatically without your authorization. You will need to contact your HR department (or whoever handles this sort of stuff at your company) and tell them that you want more money to be taken out of your pay and put into your 401(k).
Don’t worry about the IRS. The additional deductible amount will be reflected on your W-2. If the IRS has any concerns about your age or eligibility, they will contact you.
At this point, I’m sure someone will remark that they have to enter their birthday when they file their tax return. That is just an identity check for efiling. People who file on paper do not enter their birthdays on their tax returns.
I see. Perhaps the reason it was listed as two different boxes for 401(k) and the other 401(k) catch-up is more of a way the software designers and/or someone in accounting thought it was a good idea.