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0 pointsbeembeem3y ago0 comments

Many plans I've participated in cap contributions well before the theoretical 25k limit. Current employer has a very interesting plan that leaves much of the limits up to you which is a double edged sword. If you can figure out how to model the limit, you can make informed decisions when the price falls but for the average employee it's complicated and can cap their contributions way too early.

To effectively figure out the 25k limit you need a history of prior contributions to know how much limit is left in each tax/calendar year.

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codingmatty3y ago

The problem really lies in the way the IRS limit works. It limits the amount of shares you can purchase based on the FMV of the stock on the offering date. So if your stock goes down then you may well hit the limit and not realize it.

But you are correct, the 25k limit is based on all of the purchases made in the calendar year. And the $25k carryover complicates things as well.

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