Wednesday, October 17, 2012

WWYD- Husbands craptastic 401k plan - Early-Retirement.org

WWYD- Husbands craptastic 401k plan

Old Yesterday, 04:19 PM ? #1

Recycles dryer sheets

?

Join Date: Apr 2012

Location: San Diego

Posts: 307

WWYD- Husbands craptastic 401k plan


My husband works for a firm that is based in another state. He's the only employee in this state.
They offer a 401k to employees who have been there a year.
They offer a match of $1 for every $1 up to $1000/year.
That all sounds good.

Up till now, since he's worked for small firms, he's just been doing IRAs w/catchup... And I've born the brunt of the tax advantaged savings by maxing my 401k and catchup.

The problem with the 401k he's being offered - it's 100% full of load funds.
The loads vary from 5.75% (stock funds) to 3.75% (bond and/or money market funds.)

I think the $1k/year match is still worth it... And if he participates in the 401k, he can't do the IRA. So I told him to do $6k /year into the 401k, and any money left over can go into taxable savings (same as before.)

I suggested he put it in the bond fund - and I'll adjust my asset allocation to account for this 100% bond allocation on his side. I just can't see giving up 5.75 cents for every dollar to loads. It's bad enough giving up almost 3.75 cents/dollar.

Should we have just stayed with IRA?

FWIW - he's retiring in Jan 2014... so we only have to deal with this craptastic plan for 1 year.


' + '?' + google_ads[i].line2 + '?' + google_ads[i].line3 + '?' + '' + google_ads[i].visible_url + '

'; } } '' } if (google_ads[0].bidtype == "CPC") { /* insert this snippet for each ad call */ google_adnum = google_adnum + google_ads.length; } document.write(s); return; } google_ad_client = 'ca-pub-7757781251671730'; google_ad_channel = '3711355403'; google_ad_output = 'js'; google_max_num_ads = '6'; google_ad_type = 'text'; google_feedback = 'on'; // -->

__________________

rodi is offline ? Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old Yesterday, 04:25 PM ? #2

Moderator

?

Join Date: Jan 2008

Location: Chicagoland!

Posts: 8,246

My husband works for a firm that is based in another state. He's the only employee in this state.
They offer a 401k to employees who have been there a year.
They offer a match of $1 for every $1 up to $1000/year.
That all sounds good.

Up till now, since he's worked for small firms, he's just been doing IRAs w/catchup... And I've born the brunt of the tax advantaged savings by maxing my 401k and catchup.

The problem with the 401k he's being offered - it's 100% full of load funds.
The loads vary from 5.75% (stock funds) to 3.75% (bond and/or money market funds.)

I think the $1k/year match is still worth it... And if he participates in the 401k, he can't do the IRA. So I told him to do $6k /year into the 401k, and any money left over can go into taxable savings (same as before.)

I suggested he put it in the bond fund - and I'll adjust my asset allocation to account for this 100% bond allocation on his side. I just can't see giving up 5.75 cents for every dollar to loads. It's bad enough giving up almost 3.75 cents/dollar.

Should we have just stayed with IRA?

FWIW - he's retiring in Jan 2014... so we only have to deal with this craptastic plan for 1 year.

Crapastic! What a great word. Very descriptive.

Even though you are paying excessive fees, for the $1000 you put in you get an immediate additional $885 - the employer match minus all the fees. Grit your teeth and do it. When he leaves, roll it over into an IRA.


' + '?' + google_ads[i].line2 + '?' + google_ads[i].line3 + '?' + '' + google_ads[i].visible_url + '

'; } } '' } if (google_ads[0].bidtype == "CPC") { /* insert this snippet for each ad call */ google_adnum = google_adnum + google_ads.length; } document.write(s); return; } google_ad_client = 'ca-pub-7757781251671730'; google_ad_channel = '3568142076'; google_ad_output = 'js'; google_max_num_ads = '6'; google_ad_type = 'text'; google_feedback = 'on'; // -->

__________________
It's not the cards you're dealt in life but what you do with them that matters

MichaelB is offline ? Reply With Quote
Old Yesterday, 04:36 PM ? #3

Recycles dryer sheets

?

Join Date: Apr 2012

Location: San Diego

Posts: 307

Actually our plan is to have him put $6000 in. That's what would go into an IRA. He isn't allowed to do both a traditional IRA and a 401k.

His employer is relatively small - around 50 people. But they're all highly educated... you'd think they'd want to avoid the fees. Not sure if it's possible to get a no-load 401k plan set up for 50 employees or less.

__________________

rodi is offline ? Reply With Quote
Old Yesterday, 05:42 PM ? #8

Recycles dryer sheets

?

Join Date: Apr 2012

Location: San Diego

Posts: 307

Hmm. I thought we were above the income caps for Roth. That turbo tax calculator suggests other wise.

Off to go read some more.

__________________

rodi is offline ? Reply With Quote
Old Today, 01:45 AM ? #19

Dryer sheet aficionado

?

Join Date: May 2012

Posts: 46

If your husband is 59 1/2 of age, can't he transfer his money out to an IRA ?

I would leave a small amount and capture the company's match of $ 1K. I know this is an early retirement forum, so you and he maybe alot younger than the 59.5....

__________________

Cessna5354 is offline ? Reply With Quote
Old Today, 05:27 AM ? #20

Recycles dryer sheets

?

Join Date: Jun 2012

Location: Austin

Posts: 77

You may not be able to deduct it, but as I understand it, you can still contribute, and the earnings from that point on are still tax-deferred.

I've always wondered about this myself, since we both contribute the max to our 401(k)s and our household income exceeds the amount that would allow us to contribute to individual retirement accounts outside of those company 401(k)s.

But if that limitation is only for "tax deductable" contributions and still allows after-tax dollars to be contributed, is there a maximum of after-tax dollars that can be contributed each year and does it make financial sense to do that instead of putting the money into regular after-tax investment accounts?


' + '?' + google_ads[i].line2 + '?' + google_ads[i].line3 + '?' + '' + google_ads[i].visible_url + '

'; } } '' } if (google_ads[0].bidtype == "CPC") { /* insert this snippet for each ad call */ google_adnum = google_adnum + google_ads.length; } document.write(s); return; } google_ad_client = 'ca-pub-7757781251671730'; google_ad_channel = '2895579729'; google_ad_output = 'js'; google_max_num_ads = '6'; google_ad_type = 'text'; google_feedback = 'on'; // -->

__________________

LakeTravis is offline ? Reply With Quote


Currently Active Users Viewing This Thread: 12 (4 members and 8 guests)
allen76, KingB, TrvlBug


Source: http://www.early-retirement.org/forums/f28/wwyd-husbands-craptastic-401k-plan-63390.html

beezow doo doo zopittybop bop bop cordova demaryius thomas transtar 316 william daley truffles

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.