Many Ford salaried employees elected to have a portion of their Annual Incentive Compensation Plan (AICP) contributed to their Savings Stock Investment Plan (SSIP). Because of this one-time, potentially sizeable election, employees may be considering reducing or suspending their payroll contributions for the remainder of the year.
It is important to remember that salaried employee payroll contributions are matched by Ford per pay period. Therefore, in order to maximize the company’s matching contribution, it is essential to elect at least a 5% payroll contribution for the entire year.
Keep in mind that the IRS limit for pre-tax contributions can not exceed $18,000 for 2017, or $24,000 if age 50 or older. However, participants may still contribute to the SSIP after reaching the $18,000 threshold. The payroll contributions automatically spill over as after-tax once the IRS pre-tax limits are reached. Ford will continue to match $.90 on the dollar up to 5% of base pay as long as contributions are maintained. In addition, the company match will continue to go into the SSIP on a pre-tax basis. Continuing to contribute throughout the year will allow participants to take advantage of the match even if they have reached the pre-tax limit. To receive the full match, the participant must continue making payroll contributions throughout the entire year. There is a total contribution limit, which includes employee contributions and company match, of $54,000 for 2017, or $60,000 if age 50 or older.
It is also important to note specifically for catch-up contributions, that although the AICP may exhaust the pre-tax dollars a participant is able to contribute, the AICP contribution will not spill over as a catch-up contribution. Therefore, eligible participants that are at least age 50 will want to continue funding the SSIP with catch-up contributions to maximize the pre-tax allowed. Once participants have reached the 2017 cap of $6,000 for catch-up contributions this election will close as there is no spill over feature for catch-up contributions.
For questions on how the election of the AICP to the SSIP could impact your contributions or if you want to ensure that you don’t miss out on Ford’s matching contribution, contact Mainstay Capital Management toll-free at 1-866-444-6246.