You put money in and you expect to get money back later on. That sounds like an investment to me.

I skimmed the article. If companies had the balls to actually suggest funds to their employees this would not be a problem. Foolish investors most likely receive poor returns because of an unbalanced portfolio or they probably left the 401K default choice selected (money market) thereby reducing all risk but highly limiting returns.

1/23/2007 2:45:46 PM

I talked to my Dad the other day about his 401k. Fortunately he has a pension, so it's not a bid deal, but here's his portfolio:

1/3 Energy Services
1/3 Latin America
1/3 Natural Resources

Needless to say, you'd do good to create a less balanced portfolio. All three are mostly energy. You'd think his broker would say something.

1/23/2007 2:51:52 PM

Quote :

"that might mean your kid going to daycare at least a few days per week and your wife getting a job (if that's a viable option)."

Not an option. We can swing it so the wife stays at home and we believe that's best for our child. When the children are in school she'll probably do something for some $. What I should have done is save more for a house up front. Within the next year my money woes should sizzle out. I have no credit card debt but I'm not going to save more than the company match until the car (not an expensive one) and student loans are paid off.

1/23/2007 8:46:39 PM

5% and CU matches that with 8% so that is a 13% total

1/28/2007 7:55:42 PM

10% + 4% match, i plan to bump it up to the 15k/year max by jan of next year

1/29/2007 7:27:21 AM

max 401k - 25% company matches 6% 1 for 1
max roth IRA lump sum each year

1/31/2007 5:21:21 PM

Quote :

"15% in 401k is still stupid, regardless of your ROTH. it wasn't an assumption; there are better investment options out there."

-eleusis


Can someone please explain this to me?

2/6/2007 5:14:05 PM

my company gives us 3% into our 401k, then matches the first 6% you contribute, so i'm putting in 10%, and they're matching with 9%.

2/7/2007 9:15:46 AM

Damn, that's nice. I never heard of companies giving you money for your 401K with no contribution required.

2/7/2007 9:27:14 AM

Really?

It's becomming standard david.

For companies moving away from pensions and towards 401ks, they cant really "force" you to invest in a 401k for matching, so many use a contribution and matching.

well, ill use where i work for an example. they are doing away with pensions for all new employees all together. however, for existing empoloyees your pension rights will not increase from a certian point in time on. they then begin doing a contribution, with a matching, of which an apporpriate percentage had been derrived that they feel apporpriately approximates the pension additions that the contribution supposively replaces.

so, ~doubling the matching percentage, and adding some contributed with no personal additions required, works out well for a newer employee who has the ability to maximize on the potential over the course of many years.

[Edited on February 7, 2007 at 9:50 AM. Reason : e]

2/7/2007 9:47:08 AM

Understood, but why should they have to force you to invest in your 401K?

2/7/2007 10:02:21 AM

nm

[Edited on February 7, 2007 at 10:17 AM. Reason : nm]

2/7/2007 10:16:30 AM

Quote :

"Understood, but why should they have to force you to invest in your 401K?"

they dont.

a 401k has never been manditory, nor has contributions...

you cant just take away all retirement benefits from a workforce without some sort of replacement.

now, take a good guess as to how many people across the us that have matching available actually take full advantage of the situation.

you know how poorly americans traditionally plan financially

2/7/2007 10:39:20 AM

Well perhaps Americans should learn how to plan better.

2/7/2007 10:48:56 AM

david is a little crazy this morning - the company he works for will be doing this starting in 2008

2/7/2007 10:51:09 AM

They are taking away the same % from the match though so it doesn't help me too much.

2/7/2007 10:54:56 AM

^^,^
One of you PM me and explain to me plz.

Btw, how much long-term historical data is there for 401k performance? From what I can tell, you have at most ~25 years on the table right now, but not much more.

2/7/2007 7:28:43 PM

sent

2/7/2007 7:52:44 PM

Town puts 5% into 401K, we are not required to put anything into it, but I add an additional amount per paycheck, not much
I also have State Retirement fund that they put 6% into and that I put 6% into (forced no choice here)
In addition to that is the State Fireman's Association Pension fund that I put nothing into (my department does, it's 10 a month) and after a certain age and 20 years of service I can draw from, it's not much but it's something.

Considering doing a Roth shortly as this year will be large for raises and I'll be able to put more aside.

The state/local gov't actually has a bunch of options for retirement stuff. We consulted with a planner a couple years back and she said everything we had was on track. We are also moving over some life insurance from term to whole as well.

Probably in 09 we'll revisit and make whatever needed adjustments need to be made.

[Edited on February 8, 2007 at 10:53 PM. Reason : ]

2/8/2007 10:51:40 PM

I've got a decision to make. I left the last company I was at and had a 401k. I only had it for a couple of years so it only has like 15k in it. Wifes retirement plan from teaching 1 year is about 2k. Here are my choices...

1. Do I roll everything over into Traditional IRA accounts? If I use the same company for the IRA that does my 401k there is a $50/year charge that includes a "personal financial consultant"

2. There is a better deal out there and the $50/year thing is bullshit.

3. Do I just leave it all where it is and let it just do it's thing?

4. Cash it all out and put that amount in a roth IRA?

5. Combintaion of 1-4

[Edited on February 8, 2007 at 11:00 PM. Reason : yes I know #4 would be heavily taxed but in the end would it be worth it?]

2/8/2007 10:59:37 PM

Quote :

"We are also moving over some life insurance from term to whole as well."

WTF???


If your tax bracket currently isn't too high I would do #4. Don't cash it out. Do a rollover and then a conversion. You want to have a good tax diversification.

2/9/2007 12:11:53 AM

what moving some of our life insurance from term to whole life? gives us access to that money before croaking... more of an investment from how I understand it rather than just throwing money away. I could be wrong but that was how it was explained to us. You can borrow money from it, or leave it alone, or do whatever you want as it's your money that the insurance company invests.

2/9/2007 12:36:23 AM

I'll be opening mine up post-merger (in about a month) and will be contributing 6% of my income, the company will match 3% so it will be a total of 9%.

2/9/2007 9:20:35 AM

shevais, I assume your monthly rates are higher? You have to take into account the opportunity cost of the extra money you are paying each month.

2/9/2007 9:37:07 AM

yeah the monthly rates for whole are dramatically higher, that's why we haven't moved more than we have. I'm also beginning to look into other things now, as I've started doing more and more research into investment strategies.

2/9/2007 11:14:09 AM

You can most likely take the difference between whole and term, invest it, and come out ahead.

2/9/2007 11:25:32 AM

cool, that's good to know...

when you say investments what would you recommend, IRA, mutual funds, etc...?

2/9/2007 12:46:37 PM

Mutual funds in an IRA.

2/9/2007 12:55:03 PM

what about a Roth 401(k) that they are now offering to state/local gov't employees?

what do you know about that?

2/9/2007 1:26:15 PM

It's like a roth ira except the money comes directly out of your paycheck and you can contribute 15K instead of 4K.

2/9/2007 1:29:28 PM

I do 6% right now, but I'm going to increase that once debt gets knocked off. Company doesn't currently do matching, but they do make contributions from time to time. (profit-sharing scheme)

This summer, after I get more control over my nonsecured debt I'm going to max out a Roth IRA.

2/11/2007 9:31:17 AM

cornbread - Roll it over into an IRA, you'll get better fund selection at lower cost. You don't see the costs in your 401k as easily, but there are MUCH better deals out there. Plus, you'll have a full range of investment options. Make sure that whomever you choose to do this with, rolls it trustee-to-trustee.

DO NOT CASH IT OUT, lest you incur taxes *and* 10% penalty. That's why the "trustee-to-trustee" bit is important.

shevais Roth 401k could be a good thing. There's no tax shield on those contributions like with a regular 401k, but if you expect your tax bracket to be higher later, pay the taxes now. Personally, I like the tax diversification offered by combining the regular 401k & the Roth IRA.

2/11/2007 12:39:40 PM

Who do some of you people use for your IRA rollovers? My 401K is through ML. They will roll it to an IRA for $50/year because I don't meet their minimum rollover to qualify for free IRA. $50 a year isn't much but it is money that I would have otherwise. I question wether $50/year would payoff in the longrun, wether I can negotiate that $50/year or if rolling it to another IRA company that doesn't charge a fee would be better.

Any suggestions of who to look into, or who NOT to look into?

3/12/2007 9:51:07 PM

Quote :

"My 401K is through ML."

You mean your old 401K, because last I checked you couldn't roll it over if you stilled worked there?

I'd save up some cash to contribute to your ira for this year so that plus the rollover is above their min amount.

3/12/2007 9:56:54 PM

I still have the 401K and I can leave it there, I just can't contribute to that one anymore. I know I can just do more with IRA if I roll it.

3/12/2007 10:02:06 PM

So, you don't work for the company any more, right?

How much is in it?

$50 is a ripoff

3/13/2007 7:51:07 AM

10%, plus a match, and my company gives an additional 7% as part of a keogh plan, which can be invested through the 401(k)

3/13/2007 9:16:57 AM

I've got in 8% for my 401(k), which maxes out the .75 to the dollar that my company contributes, a maxed out Roth IRA, and the pension that I theoretically have coming to me at retirement (though I don't expect any of that).

3/13/2007 4:04:56 PM

my company does a wierd match depending on a lot of variables so i just dump 10% in my 401k for now. put the rest in an online MMA for quick saving and dump any extra i feel into other investments.

3/13/2007 5:06:13 PM

Get the funds sent to a rollover IRA. Don't allow the $50/year charge, that is crap, find another company ... Vanguard/Fidelity are safe bets for starting out. From there, you can do as you please with it. If you want to put it into a Traditional IRA from there, you can. If you want to convert it to a Roth, you can, but there's a waiting period of 5 years before you can touch it. If you want to let it sit and grow in the Rollover IRA, you can.

I've got some funds being transferred over from my previous employer. Takes some phone calls and paperwork, but all in all, it'll sit in a Rollover IRA account short-term and average 10% per year. I'll convert it to a Roth when I'm ready to take the tax hit.

3/13/2007 6:03:12 PM

^ thanks, I'll look into vanguard/fidelity. I assume when I tell ML that I'm planning to do this they'll waive the $50/year fee

3/13/2007 7:05:54 PM

10%
well, 10% of my starting salary.
i got a raise, and apparantly they didnt think to recalculate what they automatically put in my 401k each month to make it 10%

i should probably talk to someone about that, but i keep forgetting

3/28/2007 10:55:56 PM

you cant change your contributions or direction online?

that sucks

3/29/2007 8:07:47 AM

10% in 401k
5% in Roth IRA (though I really should be maxing)

3/29/2007 8:14:11 AM

im doing 10% with rest into a savings account until i get a bigger cushion here, then i might bump up a bit.

3/29/2007 7:13:02 PM

Max that shit out as much as the company will match.

4/23/2007 10:02:23 AM

Why stop there?

4/23/2007 11:39:10 AM

I see people here tied in IRAs and also maxing 401ks but I preferably like to have money in liquidation for immediate investment without withdrawing penalties. The money in IRAs wont be available till retirement.. thats decades away for most of us and borrowing from a 401k is like borrowing from a credit agency... except its your own money! The last thing i'd want to do is need money and have it tied up in some fund i cant touch. Anyways i contributed 16% which is the max pre-tax contribution and i saved easily 1,000USD on taxes as opposed to the company match at 6% but I am going to switch to 6% for alternate investing options in the near future. Im dumping what I can into the 401k allowing it to grow early on.

4/25/2007 10:35:27 PM

Quote :

"The money in IRAs wont be available till retirement"

Not if you get a roth.

4/26/2007 12:02:50 AM

it is safe to assume you should never listen to ducksauce's advice regarding anything financial

4/26/2007 2:31:39 AM