Yep being informed, having a plan, and then executing that plan with intentional behavior is how you get ahead. I didn't really start saving until around 28 as well. It's amazing how quickly the money piles up once you start getting spending under control and executing that plan without fault.
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401k-Roth IRA- company doesn't have matching.....????
- Thread starter jpm2953
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Yep being informed, having a plan, and then executing that plan with intentional behavior is how you get ahead. I didn't really start saving until around 28 as well. It's amazing how quickly the money piles up once you start getting spending under control and executing that plan without fault.
Bump.
I've got a question for the experts. For this year my company has decided not to match until after the end of the year. So as long as I'm still employed the last day of the year they'll deposit the match next January.
Right now they match up to 6% but only $.50 per dollar. I've been doing 10%. However this year we have the option to also contribute to a Roth IRA in the same account. So I can adjust contributions to and from both.
What should I do? Change my 401k back to 6% for the match at the end of the year and put the remaining 4% into the Roth? I suppose I can go up to 12% total comfortably so was thinking 6% each for now.
thanks.
I've got a question for the experts. For this year my company has decided not to match until after the end of the year. So as long as I'm still employed the last day of the year they'll deposit the match next January.
Right now they match up to 6% but only $.50 per dollar. I've been doing 10%. However this year we have the option to also contribute to a Roth IRA in the same account. So I can adjust contributions to and from both.
What should I do? Change my 401k back to 6% for the match at the end of the year and put the remaining 4% into the Roth? I suppose I can go up to 12% total comfortably so was thinking 6% each for now.
thanks.
Sounds like a safe harbor match? It can be typical not to match until after the year is over. It just has to be matched by the time they file their taxes, so it could be as late as September or August (I forget the corporate extension deadline).
Is this a traditional 401k plan? Do they offer a Roth option? Either way your match will be the same. If you deferred 10% of your income, they will match 50% up to 6% of your income for an effective 3%(of your income) match if you deferred at least 6% of your check towards the traditional 401k or Roth 401k, if you are enrolled on the Roth option you already paid your taxes on your portion you deferred. Do you know what your company's vesting period is?
Yeah it does sound like a safe harbor match. It's a traditional 401k, not Roth 401k. We now have the option to contribute to a Roth IRA from the same company, Prudential. So I was wondering if it would make sense to take the extra I was putting in the 401k that they aren't matching and just that in to the Roth IRA? I'm vested, long term employee.
I know more about the technicalities of how the plans operate than good financial planning, but I would think since your maximizing the match and getting the free money, it might be a good idea to go ahead and reduce your future tax liability by contributing to the Roth IRA since the 401k is a traditional plan and not a Roth 401k?
Save as much as you can.....in retirement, you can NEVER have TOO MUCH MONEY.
Nobody ever complained that they saved too much.
Nobody ever complained that they saved too much.
Just a thought,
I would put as much as you can (to match your company match) into your 401k. Vested does not matter your 401 is yours, they cannot take that away from you. As far as a Roth, I think the limit is 5500 (somewhere around there). I would look at vanguard for this.
A Roth if used correctly can be used for a emergency fund, look at the 5 year rule for this. You could also reclassify some of your 401 into a Roth but pay taxes on it.
A Roth is great, no taxes on interest. Compounding is great over thirty years.
I would put as much as you can (to match your company match) into your 401k. Vested does not matter your 401 is yours, they cannot take that away from you. As far as a Roth, I think the limit is 5500 (somewhere around there). I would look at vanguard for this.
A Roth if used correctly can be used for a emergency fund, look at the 5 year rule for this. You could also reclassify some of your 401 into a Roth but pay taxes on it.
A Roth is great, no taxes on interest. Compounding is great over thirty years.
I like index funds, they change allocations between stocks and bonds as you age, you don't have to figure out when to move funds, you might want to use more than one index fund. Vanguard funds have low expense ratios. 401k's and IRA's defer taxes until you take the money out that can be a 30% savings on the front end depending on your tax rate. When you retire and draw the monies out maybe your tax rate will be less since you may not have earned income.
Yes that's what I was thinking about doing. Drop my traditional 401k contribution down to 6% to get the free money/company match. Put the extra I was putting in to 401k in to the Roth IRA. Should work out well I'd hope?
