Biggest crash in stock market history?

[shrpshtr325]

but they dont match all of your money, after you hit that matching amount the % of their match goes down.

my company contributes 1% no matter what, the first 3% 1:1 and the last 2% 1:2 (so if you put in 5% they put in 5%, but if you put in 4% they put in 3.5%) but once you get beyond that the % contributed thats 'free' goes down (at 5% you double your money, at 10 your 1.5x example is valid, at 15% its 1.33, this works up to the 19500 limit)

if you are already seeing that full match patricks math is giving you an example of ADDITIONAL benefit to uping your contribution, not the benefit of your TOTAL contribution

 

[Patrick]

Wow, I thought you were the math guy. You blew it right off the bat - you have to compare X post-tax dollars (roth) to 1.5X pre-tax dollars (401K). Company match gives you an instant 50% return!

They match roth 401k at the same rate - so it is moot.

now even better - consider at the beginning of a career, you are in the 12% tax bracket, but will make more money
as the career advances - and you retire in a higher tax bracket than when you started savings. it cost you money to save pre-tax.

has your CFP had you doing roth conversions on the gap to your next tax bracket?
since there are no more "free" money contributions, it should be siphoned efficiently and be another
item in your portfolio - there is also no RMD on a roth, and it is tax free to the beneficiary.

 

[THATmanMANNY]

if i never actually charge anyone to do actual financial planning, do you think I'll gain...

of course, it might be like having a coach - just someone that keeps ya honest, tells ya you're doing ok, and yells a bit if ya go
off-course, but sets up a new path. also settles the disagreement between couples. probably a big one.

free?! sign me up.
just a heads up you will do a lot of yelling

 

[pkovo]

They match roth 401k at the same rate - so it is moot.

now even better - consider at the beginning of a career, you are in the 12% tax bracket, but will make more money
as the career advances - and you retire in a higher tax bracket than when you started savings. it cost you money to save pre-tax.

has your CFP had you doing roth conversions on the gap to your next tax bracket?
since there are no more "free" money contributions, it should be siphoned efficiently and be another
item in your portfolio - there is also no RMD on a roth, and it is tax free to the beneficiary.

If I am in a 12% tax bracket I can start participating in the 401k plan by making Roth 401k deferrals. Once my comp goes up enough to push me into the next tax bracket, I change all or some of my deferrals to traditional pre-tax 401k deferrals to keep that from happening. I can defer to the 401k on a Roth basis and a pre-tax basis simultaneously if I want, as long as I don't exceed the annual limit 19,500 if under 50.

Add to all of this, in the 401k plan I will receive my companies matching contribution if they offer one.

 

[Bike N Gear]

Of course but most do.

According to the Bureau of Labor Statistics, the typical or average 401K match nets out to 3.5%. Their National Compensation Survey found that of the 56% of employers who offer a 401K plan (a sad statistic in itself):

• 49% of employers with 401K plans match 0%
• 41% match a percentage of employee contributions between 0-6% of salary.
• 10% match a percentage of employee contributions at 6% or more of salary.
• The median is a 3% match.

 

[Santapez]

According to the Bureau of Labor Statistics, the typical or average 401K match nets out to 3.5%. Their National Compensation Survey found that of the 56% of employers who offer a 401K plan (a sad statistic in itself):

• 49% of employers with 401K plans match 0%
• 41% match a percentage of employee contributions between 0-6% of salary.
• 10% match a percentage of employee contributions at 6% or more of salary.
• The median is a 3% match.

This falls in line with the Safe Harbor aspect. Many companies (mine included) do 4% match to get around the Safe Harbor issues of the higher-paid employees contributing more. By design 401k contributions aren't supposed to skew heavily towards the higher performers in the companies, therefore they have the Safe Harbor. Larger companies push the lower paid employees to contribute through reminding them constantly about it to not run into penalties.

The 49% that match 0% most likely have a workforce that is paid within the same compensation bounds and don't skew heavily towards high earners.
The 41% that match 0-6% is mostly like at the 4% for Safe Harbor for most of them.
The 10% that that contribute 6% or more sounds awesome. Who are they so I can apply?

And on Roth vs Traditional, early on I was Roth, then Traditional once my salary went higher. NJ is a heavily taxed state and I figure when I'm pulling money out of those accounts my actual tax rates will be much lower. Also having both Roth & Traditional at that time will allow flexibility. IE pulling from both may keep me in a lower tax bracket.

 

[Cassinonorth]

Yeah, I'm not referring to places like Wawa or Quick Check. They're big companies.

But think of all the family owned bodegas, or basically every gas station, small cleaning company, any restaurant that isn't part of a chain, landscapers, etc. Basically any company that's 30 employees or less, that isn't very high paying a 401k is either going to be non-existant or possibly worse, some high-fee plan that is possibly worse than saving in a taxable account. Any small company that doesn't have a health insurance plan certainly won't have a 401k. And those will be skewed towards lower paid employees.

If you're looking at a 401k, we found Guideline to be pretty good after looking at most of the newer companies offering them. They use Vanguard funds and their fees are low. They are a bit bare-bones in their interface which realistically isn't the worst thing in the world. This was after actual meetings with Guideline and their closest competitors.

Fair enough. Solo 401k's exist though. Our company ended up with ADP, they're alright. I'd much rather have Vanguard (where my IRA is) but we have decent options and their interface/app is pretty nice. Stupid easy to change contributions.

Just for shits and giggles here's my list for the major retailers:

Company	401k Available	Matching
Wawa	Yes	100% match first 3%, 50% match next 2%
Quick Chek	Yes	100% match first 3%, 50% match next 2%
CostCo	Yes	50% match up to $500 company contribution, % increases with years of service
Target	Yes	5% match
Aldi	Yes	5% match
Ikea	Yes	5% match
REI	Yes	6% match+incentive plan
Best Buy	Yes	5% match
Shop Rite	Yes	3% First Year 4% following years
Total Wine	Yes	50% match
Wine Library	Yes	Match offered, unknown amount
Walmart	Yes	6% match
Kroger	Yes	1 or 2% automatic contribution
Home Depot	Yes	5% match
Dicks Sporting Goods	Yes	50% match up to 10% of salary

 

[Fire Lord Jim]

Here's the strategy I push. Know your marginal tax bracket. If your employer has a company match contribute enough to get the max match. The minimum to get the maximum match.

If your marginal tax bracket is over 24% then max out your 401k contribution. If lower, pause 401k contributions, and max out Roth IRA contributions. Once the Roth is maxed out, go back to contributing to your 401k. And lobby your employer to offer a Roth 401k.

I view a Roth contribution as a tax-exempt investment with a front-end load. I view Traditional IRAs and 401ks as partnerships between you and the government, where you don't yet know your partner's share.

 

[Magic]

Who are they so I can apply?

Stryker.

 

[Santapez]

Fair enough. Solo 401k's exist though. Our company ended up with ADP, they're alright. I'd much rather have Vanguard (where my IRA is) but we have decent options and their interface/app is pretty nice. Stupid easy to change contributions.

Just for shits and giggles here's my list for the major retailers:

Company	401k Available	Matching
Wawa	Yes	100% match first 3%, 50% match next 2%
Quick Chek	Yes	100% match first 3%, 50% match next 2%
CostCo	Yes	50% match up to $500 company contribution, % increases with years of service
Target	Yes	5% match
Aldi	Yes	5% match
Ikea	Yes	5% match
REI	Yes	6% match+incentive plan
Best Buy	Yes	5% match
Shop Rite	Yes	3% First Year 4% following years
Total Wine	Yes	50% match
Wine Library	Yes	Match offered, unknown amount
Walmart	Yes	6% match
Kroger	Yes	1 or 2% automatic contribution
Home Depot	Yes	5% match
Dicks Sporting Goods	Yes	50% match up to 10% of salary

Solo 401ks and Simple IRAS still suck. Solo 401k still has all the complications, Simple IRA has a much lower contribution limit than a 401k.

If our federal government didn't run this shit like NJ runs the DMV, they'd just make IRA contribution limits the same as 401k and do it outside the employer, and if you contribute to a traditional 401k you just write it off the taxes like a Traditional IRA.

The match thing while nice, is still helping the higher paid employees more. The huge downside with this of course is people don't have an employer pushing a retirement account, people would need to do it themselves. I'm willing to bet most people in their 20s don't even think about IRAs.

 

[Santapez]

Stryker.

Fuck that. I saw REI up there at 6%. And they do healthcare for part time employees.

 

[Cassinonorth]

The match thing while nice, is still helping the higher paid employees more. The huge downside with this of course is people don't have an employer pushing a retirement account, people would need to do it themselves. I'm willing to bet most people in their 20s don't even think about IRAs.

I didn't start my IRA until I had my student loans paid off when I was 27. Hard to think about retirement when you're swimming in debt tbh.

 

[Santapez]

I didn't start my IRA until I had my student loans paid off when I was 27. Hard to think about retirement when you're swimming in debt tbh.

Well yeah. You get slammed to go into debt at an early age, but don't get slammed with savings/retirement options.

An 18 year old gets more info about Sally Mae than they do Fidelity. More likely to have a dealership employee go over how they can finance a car, but you gotta know to seek out the information on how to open an IRA and invest.

I think @Dave Taylor was making that point like 50 pages ago in this thread...

 

[Patrick]

Stryker.

 

[Patrick]

Solo 401ks and Simple IRAS still suck. Solo 401k still has all the complications, Simple IRA has a much lower contribution limit than a 401k.

If our federal government didn't run this shit like NJ runs the DMV, they'd just make IRA contribution limits the same as 401k and do it outside the employer, and if you contribute to a traditional 401k you just write it off the taxes like a Traditional IRA.

The match thing while nice, is still helping the higher paid employees more. The huge downside with this of course is people don't have an employer pushing a retirement account, people would need to do it themselves. I'm willing to bet most people in their 20s don't even think about IRAs.

I used a SEP but that is employer contribution and applies to anyone there 3 of 5(??) Years. I think the employees can be classified for different rates, but don't remember the specifics. Kinda like profit sharing pre tax

The other bit about the 401k is that there is a schedule of eligibility, and then a schedule of vesting. For those that have a hard time with that type of planning, it is a problem. Or Reducing pay check after 3 months?

Ever look what happens to unvested cash in a 401k when someone leaves? Fun accounting! Use it again!

 

[Santapez]

I used a SEP but that is employer contribution and applies to anyone there 3 of 5(??) Years. I think the employees can be classified for different rates, but don't remember the specifics. Kinda like profit sharing pre tax

The other bit about the 401k is that there is a schedule of eligibility, and then a schedule of vesting. For those that have a hard time with that type of planning, it is a problem. Or Reducing pay check after 3 months?

Ever look what happens to unvested cash in a 401k when someone leaves? Fun accounting! Use it again!

Exactly. The whole thing is a nightmare. SEP/Simple-IRA/Solo-401k/401k/IRAs

They really should just drop the whole aspect of it being tied to the employer, and increase the IRA limits to the 401k limits. It loses out on the matching and the taxes are paid in the paycheck, but given back after filing.

 

[rick81721]

They match roth 401k at the same rate - so it is moot.

now even better - consider at the beginning of a career, you are in the 12% tax bracket, but will make more money
as the career advances - and you retire in a higher tax bracket than when you started savings. it cost you money to save pre-tax.

has your CFP had you doing roth conversions on the gap to your next tax bracket?
since there are no more "free" money contributions, it should be siphoned efficiently and be another
item in your portfolio - there is also no RMD on a roth, and it is tax free to the beneficiary.

Haha changing the goal posts. The discussion was traditional Roth vs 401K - when I worked 401K roth wasn't an option. My work vs retirement tax rates were totally irrelevant - when the company was giving me 4.5% of my pretax salary every year into the account - no brainer!

 

[rick81721]

has your CFP had you doing roth conversions on the gap to your next tax bracket?
since there are no more "free" money contributions, it should be siphoned efficiently and be another
item in your portfolio - there is also no RMD on a roth, and it is tax free to the beneficiary.

Haven't even thought about it yet as there is no need to make any withdrawals from the IRAs. Maybe in a few more years to buy a boat!

 

[rick81721]

but they dont match all of your money, after you hit that matching amount the % of their match goes down.

my company contributes 1% no matter what, the first 3% 1:1 and the last 2% 1:2 (so if you put in 5% they put in 5%, but if you put in 4% they put in 3.5%) but once you get beyond that the % contributed thats 'free' goes down (at 5% you double your money, at 10 your 1.5x example is valid, at 15% its 1.33, this works up to the 19500 limit)

if you are already seeing that full match patricks math is giving you an example of ADDITIONAL benefit to uping your contribution, not the benefit of your TOTAL contribution

Yes so in your case, for a low earner contributing 5% of their salary, they are starting with 2X - even better!

 

[JDurk]

Maybe in a few more years to buy a boat!

Might as well just take that money and throw it into the ocean.