When you set a savings rate with us, this rate is set up in your company payroll system. This allows you to contribute directly to your 401(k) account from each paycheck - often referred to as a “salary deferral” - essentially waiting until later to access your salary. When payroll is processed, 401(k) deferrals (pre-tax and/or Roth) are deducted from your paycheck along with tax withholding and other deductions, and the net amount is paid to you via check or direct deposit.
Other deductions take priority before your 401(k) deductions can be carried out of your gross pay. These may include Social Security and Medicare taxes, Federal and state income taxes (including on amounts deducted as Roth deferrals), medical premium deductions, and State Disability Insurance, such as California SDI. Suppose your gross pay amount for a pay period, less these prioritized deductions, is less than your 401(k) elected savings rate. In that case, some payroll systems may fail to process your election - meaning instead of saving close to your chosen rate, your paycheck will reflect 0% in 401(k) savings.
Note that some payroll providers can automatically adjust your pre-tax or Roth deferrals (based on the savings rates communicated) to process prioritized deductions first and process as much of your 401(k) savings rate as possible.
To avoid the potential of ignored 401(k) elections, our platform limits your savings rate to 90% for pre-tax 401(k) deductions and 60% for Roth 401(k) deductions, or 75% across both.
If you are still looking to increase your election settings above the rates described above, don't hesitate to contact us directly; keep an eye on your payroll deductions to determine if such adjustments work as intended in your payroll. If you have any further questions, about withholding and your 401(k) elections, we recommend you check with your payroll provider or tax advisor to inquire more about how your situation and payroll settings may impact your 401(k) withholdings and taxation.
US Department of Commerce page on order of precedence from gross pay: https://www.commerce.gov/hr/practitioners/compensation-policies/general-pay/order-of-precedence-from-gross-pay