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Maximizing GM Company Match After EVP Contribution

Many GM salaried employees elected to have a portion of their Enhanced Variable Pay (EVP) contributed to their Retirement Savings Plan (RSP). 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 payroll contributions, up to 4% of eligible pay for salaried employees, are matched by GM per pay period. Therefore, in order to maximize the company’s matching contribution, it is essential to elect at least a 4% payroll contribution for the entire year.

Keep in mind that the IRS limit for pre-tax contributions can not exceed $17,000 for 2012. However, participants may still contribute to the RSP after reaching the $17,000 threshold. The pre-tax contributions automatically spill over as after-tax once the IRS limits are reached. GM will continue to match dollar-for-dollar up to 4% of base salary as long as contributions are maintained. In addition, the company match will continue to go into the RSP 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 4% 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 $50,000 (or $55,500 if over age 50) for 2012.

It is also important to note that although the EVP may have exhausted the pre-tax dollars a participant was able to contribute, the EVP did not spill over as a catch-up contribution. Therefore eligible participants that are at least age 50 will want to continue funding the RSP with catch-up contributions to maximize pre-tax allowed to be contributed to the plan. Once participants have reached the $5,500 cap for the catch-up contributions this election will cease, there is no spill over feature for catch-up contributions.

For questions on how the election of EVP to the RSP could impact your contributions for the remainder of 2012 or if you want to ensure that you don’t miss out on GM’s contribution match, contact Mainstay Capital Management toll-free at 1-866-444-6246.