Willis Johnson & Associates Blog | Financial Planning and Investments

BMC Employees Can Save More in the BMC 401(k) Plan

Written by Willis Johnson & Associates | Dec 6, 2019 9:15:00 PM
The IRS has recently released the 2020 retirement plan contribution limits. For BMC employees looking to increase their retirement savings,  this is great news. BMC employees can now contribute $19,500 (or $26,000 for those over 50 years old) of pre-tax or Roth savings to the BMC 401(k) Plan and can get $70,500 of retirement savings into tax-efficient vessels in 2020.

How BMC Employees Can Maximize Their Retirement Plan Contributions

It’s important to ensure that you are contributing at least 5% of your pay every pay period to receive the full 5% company match.  At BMC, it is easy to miss the opportunity to receive the company contributions, so make sure you do the math every year! A great resource to assist you is the BMC 401(k) Deferral Calculator.

 

2020 Annual Compensation Limits and Strategic Saving for BMC Employees

The annual compensation limit for 2020 has increased from $280,000 to $285,000. If you make more than $285,000 in base and bonus compensation for 2020, remember to ensure you max out your BMC 401(k) contributions prior to earning $285,000 of income. After you earn $285,000 of income, you can no longer contribute to the BMC Software, Inc. Savings and Investment Plan 401(k).

In addition to the $26,000 of pre-tax or Roth contributions, BMC also allows employees to contribute non-Roth after-tax savings to the BMC Software, Inc. Savings and Investment Plan. If you make $285,000 or more annually, you can contribute up to $23,250 in additional after-tax savings. If you contribute over $23,250, you may reduce the amount of money BMC puts into the plan on your behalf. Lastly, if you are contributing after-tax dollars to BMC’s 401k, remember to roll out the after-tax funds at least annually to a Roth IRA to take advantage of the mega backdoor Roth strategy.

In addition, many BMC employees will be able to take advantage of the backdoor Roth savings strategy. With the IRA contribution limits at $6,000 (and $7,000 if over age 50), it means super-savers at BMC can put away $48,750 (or $56,250 if over age 50) between the BMC 401(k) and backdoor Roths into tax-preferred retirement accounts.

The 2020 limit adjustments will be advantageous for super-savers at BMC and it is important to be sure that you make the most of these changes.

At Willis Johnson & Associates, we work with our clients to ensure they get the full 5% company match, take advantage of backdoor Roth IRAs to ensure they are on track for success, and facilitate after-tax roll-outs from the BMC Software, Inc. Savings and Investment 401(K) Plan to get the maximum amount of savings. If you have any questions about the 2020 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our BMC specialists.