That raise you got might complicate saving for retirement, but advisors have workarounds
Supoj Buranaprapapong | Getty ImagesIt's always nice getting a raise, but it could affect your ability to save for retirement through your 401(k) plan.Highly compensated employees — those making more than $ 130,000 annually — may not be able to contribute the maximum to their tax-deferred retirement plan if their lower-paid colleagues aren't diligently socking funds away, too.The 2020 and 2021 limits for deductible contributions to a 401(k) plan are $ 19,500, or $ 26,000 including a $ 6,500 optional catch-up contribution for people over age 50.Highly compensated employees, however, may not be able to contribute those maximum amounts. HCEs are defined as anyone who makes more than the $ 130,000 income threshold or who — along with their spouse and/or family members — owns more than 5% ...
