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does your company match 401(k)?
Posted by: space-time
Date: June 15, 2018 07:45AM
Poll
Company contributes
Only registered users are allowed to vote for this poll.
10 votes were received.
2% 3
 
30%
4% 7
 
70%



if they do, how much they match?

and what do you understand when you read this:

"401(k) programs with a 50% company match, capped at 4% of your gross annual pay."


I will asks of course, but I am curious what you make of these words. maybe I should make this a poll.

What is the max they match?

a) You put 4%, they contribute 2%. If you put more, they do not match. Thus the maximum they contribute is 2%

b) You put 8%, they contribute 4%. If you put more, they do not match. Thus the maximum they contribute is 4%.



Edited 2 time(s). Last edit at 06/15/2018 07:46AM by space-time.
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Re: does your company match 401(k)?
Posted by: macphanatic
Date: June 15, 2018 07:52AM
They match your 401k contribution at 50% but not to exceed 4% of your gross salary. So, if you earn $100k/yr, their maximum contribution is $4k. To get the $4k, you would need to contribute 8% of your gross salary.
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Re: does your company match 401(k)?
Posted by: Acer
Date: June 15, 2018 07:58AM
Think of it in dollars rather than percents. On a "50% match, up to 2% total": You earn $100,000 dollars. The most they'll add in any scenario is $2000 dollars (2%). You need to contribute $4000 to get that $2000. Net result is $6000 in the 401K. If you contribute $2000, you'll only get $1000 from the company (because it must be matched to get it). If you contribute $10,000, they'll still cap at $2000.
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Re: does your company match 401(k)?
Posted by: mattkime
Date: June 15, 2018 08:04AM
No



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Re: does your company match 401(k)?
Posted by: archipirata
Date: June 15, 2018 08:16AM
Mine matches half up to 6%. So I pay 6% and they pay 3%.



Athens, OH
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Re: does your company match 401(k)?
Posted by: lost in space
Date: June 15, 2018 08:59AM
At my last job, they matched dollar for dollar up to 10% of my salary. I jumped on that from day one!



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Re: does your company match 401(k)?
Posted by: Ombligo
Date: June 15, 2018 09:15AM
By state law all public sector employees are required to invest 3% of our gross salary into the state retirement plan (not a pension, it is an investment plan similar too but not classified as a 401k). The state then also contributes 3%. Employees are vested at six years.

Pensioned employees were grandfathered in and are now required to also put 3% into the plan with no match since there is a guaranteed payout.

Both provisions were challenged in court as unconstitutional state income taxes, but the state supreme court upheld it.



“No persons are more frequently wrong, than those who will not admit they are wrong.”
-- François de La Rochefoucauld

"WE CALL BS!" -- Emma Gonzalez
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Re: does your company match 401(k)?
Posted by: tenders
Date: June 15, 2018 09:15AM
Your retirement hopefully goes on for decades. You should make every possible effort to max out your 401k contribution regardless of the company match policy. It is more important than kids' college savings, and more important than house down payment savings.

This is because the most important determinant of retirement standard of living, by a long shot, is HOW MUCH YOU SAVED over your working life.
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Re: does your company match 401(k)?
Posted by: graylocks
Date: June 15, 2018 09:26AM
5% match dollar for dollar.



"Success isn't about how much money you make. It is about the difference you make in people's lives."--Michelle Obama
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Re: does your company match 401(k)?
Posted by: raz
Date: June 15, 2018 10:15AM
100% of 2% and 50% of the rest up to a 4.25% match on 7%

I take each new hire aside and try to explain to them that this is free money. They just stare blankly.



--------------

Embarassing myself on the Internet since 1978.
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Re: does your company match 401(k)?
Posted by: Speedy
Date: June 15, 2018 11:33AM
No, it didn't (I'm retired.)



Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.
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Re: does your company match 401(k)?
Posted by: J Marston
Date: June 15, 2018 11:42AM
Yep, and quite generous: 8:5 (that is, they match !.6 times your contribution, up to 13% of total). It has risen over the years from 1:1 to the current contribution. You can contribute addition funds up to the IRS limit of $18, 500, but I don't know anyone who contributes that much. If one were able to do so, a Roth IRA would probably be preferable.
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Re: does your company match 401(k)?
Posted by: Bixby
Date: June 15, 2018 12:46PM
My employer (a non-profit) matches my contributions up to 4% of my salary.
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Re: does your company match 401(k)?
Posted by: Z
Date: June 15, 2018 01:03PM
I put in 1% and they add 9%.
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Re: does your company match 401(k)?
Posted by: Acer
Date: June 15, 2018 01:09PM
Ours is not written as a match per se. Employer will contribute 3% if the employee contributes at least 2%. There is no "up to" match. It's either all or nothing.
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Re: does your company match 401(k)?
Posted by: Lew Zealand
Date: June 15, 2018 01:15PM
Education. I get zilch.
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Re: does your company match 401(k)?
Posted by: Billybob
Date: June 15, 2018 02:08PM
Quote
Ombligo
By state law all public sector employees are required to invest 3% of our gross salary into the state retirement plan (not a pension, it is an investment plan similar too but not classified as a 401k). The state then also contributes 3%. Employees are vested at six years.

Pensioned employees were grandfathered in and are now required to also put 3% into the plan with no match since there is a guaranteed payout.

Both provisions were challenged in court as unconstitutional state income taxes, but the state supreme court upheld it.

Sounds a lot like Florida.

I was pretty upset by the change since when I moved here a quarter Century ago the promise was a 10%+ State contribution without a match. Now, I think, it's under 6% plus the mandatory 3% contribution to a godawful retirement fund vendor with high fund expenses. I'm sure the eligible vendors keep their contributions to the campaigns of elected officials at the max level allowed (what, there's no max?).

Broken promises.
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Re: does your company match 401(k)?
Posted by: Billybob
Date: June 15, 2018 02:13PM
Quote
J Marston
Yep, and quite generous: 8:5 (that is, they match !.6 times your contribution, up to 13% of total). It has risen over the years from 1:1 to the current contribution. You can contribute addition funds up to the IRS limit of $18, 500, but I don't know anyone who contributes that much. If one were able to do so, a Roth IRA would probably be preferable.

I see the value of a Roth IRA, but why is it better than maxing out one's 401? I know I'm going to get a significant tax bite when I start to withdraw, but I'm loving the tax breaks I get today. Also, I think the maximum Roth contribution is significantly less than 401k max, which is over $24k for those over 50 (and won't even raise the topic of 457 accounts...).
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Re: does your company match 401(k)?
Posted by: bfd
Date: June 15, 2018 02:20PM
Quote
Lew Zealand
Education. I get zilch.

A little research shows that at least here in California, teachers contribute 10.25% of their creditable earnings to the STRS while their district contributes 14%. So essentially, they match the employee's 10.25% plus a little more. That amount is rising gradually to 19% by 2020. So by then the match be almost doubled! The state also kicks in an additional 6.8%. So it's more than doubled!!

[www.calstrs.com]

So if you're getting zilched, it may be time to move!
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Re: does your company match 401(k)?
Posted by: Gareth
Date: June 15, 2018 04:07PM
Quote
Billybob
Quote
J Marston
Yep, and quite generous: 8:5 (that is, they match !.6 times your contribution, up to 13% of total). It has risen over the years from 1:1 to the current contribution. You can contribute addition funds up to the IRS limit of $18, 500, but I don't know anyone who contributes that much. If one were able to do so, a Roth IRA would probably be preferable.

I see the value of a Roth IRA, but why is it better than maxing out one's 401? I know I'm going to get a significant tax bite when I start to withdraw, but I'm loving the tax breaks I get today. Also, I think the maximum Roth contribution is significantly less than 401k max, which is over $24k for those over 50 (and won't even raise the topic of 457 accounts...).

Yes, Roth IRA's max out at around $5500/year.

Let's do some simple math:

In any given year, you could put $5k in either a Roth IRA or 401k, and we'll assume a 25% tax bracket.

Roth IRA, year 0: pay $1,250 in taxes.
401k, year 0: save $1,250 in taxes.

Let's assume that in retirement, your 5k has grown to 20k and you're now in a 20% tax bracket for retirement.

Roth IRA, retirement, pay $0 in taxes, total cost: $1,250
401k, retirement, pay $4,000 in taxes, total cost: $2,750

That's a super simplification, but hopefully it illustrates the idea of a Roth.
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Re: does your company match 401(k)?
Posted by: gabester
Date: June 15, 2018 04:23PM
You need an other poll because I've worked at places that did a 50% match of up to 6% of your income (i.e. for every dollar you put in they'd add 50 cents up to, say, $3k on a $100k salary.

I've also worked somewhere with a 100% match on up to 3% (so still $3k on $100k salary, but you'd only have to put in $3k of your own to make the same "extra" income. However, you'd only have $6k total not $9k like above.)
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Re: does your company match 401(k)?
Posted by: space-time
Date: June 15, 2018 04:53PM
Quote
Gareth
Quote
Billybob
Quote
J Marston
Yep, and quite generous: 8:5 (that is, they match !.6 times your contribution, up to 13% of total). It has risen over the years from 1:1 to the current contribution. You can contribute addition funds up to the IRS limit of $18, 500, but I don't know anyone who contributes that much. If one were able to do so, a Roth IRA would probably be preferable.

I see the value of a Roth IRA, but why is it better than maxing out one's 401? I know I'm going to get a significant tax bite when I start to withdraw, but I'm loving the tax breaks I get today. Also, I think the maximum Roth contribution is significantly less than 401k max, which is over $24k for those over 50 (and won't even raise the topic of 457 accounts...).

Yes, Roth IRA's max out at around $5500/year.

Let's do some simple math:

In any given year, you could put $5k in either a Roth IRA or 401k, and we'll assume a 25% tax bracket.

Roth IRA, year 0: pay $1,250 in taxes.
401k, year 0: save $1,250 in taxes.

Let's assume that in retirement, your 5k has grown to 20k and you're now in a 20% tax bracket for retirement.

Roth IRA, retirement, pay $0 in taxes, total cost: $1,250
401k, retirement, pay $4,000 in taxes, total cost: $2,750

That's a super simplification, but hopefully it illustrates the idea of a Roth.


here are my numbers for this scenario:

Roth IRA, year 0: pay $1,250 in taxes.
401k, year 0: save $1,250 in taxes. But that means you can put $6250 in 401(k)

Let's assume that in retirement, your 5k has grown to 20k and you're now in a 20% tax bracket for retirement.

That is a 4x growth. That means the 401(k) would now be 25k.

Roth IRA, retirement, pay $0 in taxes, total cost: $1,250. You withdraw 20k. No tax.

401k, retirement, pay $5,000 in taxes (20% of that 25k). You withdraw 20k after tax.

Both cases seem equal to me, but, I had a very long and hard day and I may be missing something.
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Re: does your company match 401(k)?
Posted by: Gareth
Date: June 15, 2018 05:49PM
This is the scenario I was describing:
Roth IRA, value at Retirement: 20k, withdraw 20k - $1,250 (pre-paid taxes) = Net of $18,750
401k, value at Retirement: 20k, withdraw 20k - $4,000 (at retirement taxes) + $1,250 (saved initially) = Net of $17,250

But, I see where you're going. You're saying to take the extra $1250 and invest it into the 401k at the beginning:
Roth IRA, value at Retirement: 20k, withdraw 20k - $1,250 (pre-paid taxes) = Net of $18,750
401k, value at Retirement: 25k, withdraw 25k - $5,000 (at retirement taxes) = Net of $20,000

But you've exceed the contribution limit of a Roth (unless you're over 50), so it can't compete. So, perhaps you've really shown us the power of a 401k vs any type of IRA, whereas I've shown the power of a Roth IRA vs a Traditional IRA (for people who don't have access to a 401k).

But, as always, everyone should consult an actual financial advisor. Don't take advice from random MRF members on the internet! smiling smiley
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Re: does your company match 401(k)?
Posted by: J Marston
Date: June 15, 2018 06:06PM
Roth IRAs have several advantages, mainly....

1) No minimum distributions at 70 ½

2) No five-year window for dissolving the IRA if you die. Roth IRAs are much simpler to deal with as part of an estate.

3) The tax-deferred element of IRAs and 401ks has been overestimated: most people will still have the same effective tax rate at 70 that they have at 50. (Although this is based on several assumptions, the main one being that you have enough surplus income to pay into an IRA. If you do have that surplus, chances are other pensions + SS will keep you in roughly the same bracket.)

But:

1) No tax deduction, unlike a regular IRA

The big problem is that the $5500 limit ($6500 for 50 and older) applies to both kinds of IRA.

You can use an HSA ($6900 max). This is a great bargain, since tax free money goes in and, if used for medical expenses, tax-free money comes out. If you're not using it for "qualified" expenses, it's taxed at your current rate, just like a regular IRA.

If you've maxed out all these, then

1) You're pretty fortunate

2) You probably have an investment account of some kind. Taxed money goes in, but when you take money out you're only taxed on the gains, currently at 0, 15, or 20%. Still a bargain.
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Re: does your company match 401(k)?
Posted by: space-time
Date: June 15, 2018 07:29PM
there is a back door for Roth IRA, and I also found out (my company's plan) offers a Mega back Door for Roth IRA, I glanced at the numbers and it was something like 35-50K.

[thecollegeinvestor.com]

EDIT: a video about mega backdoor

[www.thestreet.com]



Edited 1 time(s). Last edit at 06/15/2018 07:32PM by space-time.
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Re: does your company match 401(k)?
Posted by: wurm
Date: June 15, 2018 07:36PM
We can contribute up to 5% of salary (I do) and they'll match 4% (they do).
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Re: does your company match 401(k)?
Posted by: Ombligo
Date: June 16, 2018 08:12AM
Quote
Billybob

Sounds a lot like Florida.

I was pretty upset by the change since when I moved here a quarter Century ago the promise was a 10%+ State contribution without a match. Now, I think, it's under 6% plus the mandatory 3% contribution to a godawful retirement fund vendor with high fund expenses. I'm sure the eligible vendors keep their contributions to the campaigns of elected officials at the max level allowed (what, there's no max?).

Broken promises.


You got it.
Broken promises and blatant lies.

Most of my retirement funds are in outside investments. I keep the FRS funding at the minimum, it has returned about half of what I would have made otherwise. I checked on emptying the account to roll into my preferred funds, but that isn't allowed without a hefty penalty before retirement. Essentially the state mandates who we may invest our retirement into.



“No persons are more frequently wrong, than those who will not admit they are wrong.”
-- François de La Rochefoucauld

"WE CALL BS!" -- Emma Gonzalez
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Re: does your company match 401(k)?
Posted by: Lew Zealand
Date: June 18, 2018 01:32PM
Quote
bfd
Quote
Lew Zealand
Education. I get zilch.

A little research shows that at least here in California, teachers contribute 10.25% of their creditable earnings to the STRS while their district contributes 14%. So essentially, they match the employee's 10.25% plus a little more. That amount is rising gradually to 19% by 2020. So by then the match be almost doubled! The state also kicks in an additional 6.8%. So it's more than doubled!!

[www.calstrs.com]

So if you're getting zilched, it may be time to move!

I'm not a teacher, unfortunately. They're paid fairly well in our kids' schools. I'm just staff.
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