topic Re: How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution? in Retirement tax questions

How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution?

samtx — Wed, 27 Oct 2021 00:13:14 GMT

I used to work for a state agency. I had accrued $9K worth of PTO from 2019 to 2021 September, which I was given an option to put into 401K on termination.

My new employer also offers 401K. My question is, how does PTO cash out into 401K impacts how much I can contribute in my new employer's 401K. Can I still contribute full $19,500 + $9K or is it $19,500 - $9K, or something else? Thanks

Re: How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution?

macuser_22 — Wed, 27 Oct 2021 00:31:36 GMT

If reported in box 12 on your 2021 W-2 as it should be if they treated it as salary , then it is part of your contributions and applies to the yearly limit.

Be sure to notify your new employer so that you do not have excess deferrals.

Re: How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution?

samtx — Wed, 27 Oct 2021 01:18:02 GMT

2021 W2s are not ready that is why i am asking this question here.

Re: How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution?

macuser_22 — Wed, 27 Oct 2021 01:59:36 GMT

@samtx wrote:

2021 W2s are not ready that is why i am asking this question here.

Ask you prior employer how they will report it. Nobody here knows.

Re: How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution?

samtx — Wed, 27 Oct 2021 02:05:17 GMT

Already did. Waiting for their response.

I was hoping somebody here may know the answer.

Re: How is PTO cash out from previous employer into 401K impacts my yearly 401K contribution?

macuser_22 — Wed, 27 Oct 2021 03:18:40 GMT

How would strangers know how your employer will report it? However, I would assume that it will be reported as wages and count towards your years total 401(k) contribution limits.