To help avoid excess contributions from occurring, OctaveWealth may automatically adjust your contribution rate as you approach the limit or stop your contributions once you've reached the limit. To calculate the new rate, we’ll use your estimated base annual salary based on your compensation history to date.
However, even with these preventative measures in place, it is still possible for excess contributions to occur, especially in the following scenarios:
External contributions: The annual IRS limit measures contributions made to all your deferred compensation retirement accounts, including 401(k) and 403(b)s. If you made a contribution to an external 401(k) account, it is vital to notify us of all contributions for the year. Reporting external contributions will help OctaveWealth ensure you don’t exceed the limit.
To report external contributions, go to the Elections section of your account, click on Previous 401(k) Contribution, and enter the amount you contributed to the external account for the year.
Fluctuations in pay: While OctaveWealth collects your estimated annual salary, we will not know how much you actually earn throughout the year. Fluctuations may occur for several reasons, including additional pay for bonuses or commission, a change in hours worked, or adjustments to your salary. Therefore, it’s possible the automatic contribution rate adjustments will not be calculated accordingly.
If you happen to exceed the contribution limit in the plan serviced by OctaveWealth, we notify you by email. You will then be asked to complete a form to request a refund via check or ACH by March 1.