|
Motronic posted:That's not what I've seen, but I suppose it's a thing. Fidelity can also do a different % for your bonus if your plan administrator signs up for it. I liked having more of my bonus go into the 401k as it helps level off my salary. Never heard of a single employer letting you got past the individual contribution limit. I've used Fidelity, ADP, and ING Direct managed 401k's where that has come up, all handled it correctly. Sounds like a lazy payroll department. Thanks thread, opened a Vanguard account and moved our excess cash savings into VCAIX (  ) in a taxable account.
|
#
?
Oct 16, 2017 23:49
|
|
|
|
| # ? Jun 4, 2024 15:46 |
|
|
Xenoborg posted:The other thing to make sure of is that you keep getting your company match if you max out before the end of the year. I had one company that stopped since I stopped, despite being on average well over the 5% or whatever to get the match. Next year I had to get close and the dribble in the rest of the year at 5%. Good call. I verified with HR that this is the case. I ended up just working out what percentage puts me closest to 18K without going over. The sweet old lady that does payroll did this for me on a post-it but I don't think she realizes you can enter a decimal percentage. All of this seemed foreign to the entire department which is crazy. There are tons of people that make more than me here I can't be the only one maxing.
|
|
#
?
Oct 17, 2017 15:14
|
|
|
ManDingo posted:Good call. I verified with HR that this is the case. I ended up just working out what percentage puts me closest to 18K without going over. The sweet old lady that does payroll did this for me on a post-it but I don't think she realizes you can enter a decimal percentage. All of this seemed foreign to the entire department which is crazy. There are tons of people that make more than me here I can't be the only one maxing.
|
|
#
?
Oct 17, 2017 15:20
|
|
|
Tdameritrade is changing up their commission-free etf list and it seems Vanguard is off. Lame. Guess it is time to revisit choices for the few accounts we have there, such as the HSA.
|
|
#
?
Oct 17, 2017 15:25
|
|
|
ManDingo posted:All of this seemed foreign to the entire department which is crazy. There are tons of people that make more than me here I can't be the only one maxing. You are. And you are one of the few people even contributing. Retirement program participation numbers at most companies are horrifyingly bad. We are heading for a not-retired-retiree crisis.
|
|
#
?
Oct 17, 2017 15:37
|
|
|
waloo posted:Tdameritrade is changing up their commission-free etf list and it seems Vanguard is off. Lame. Guess it is time to revisit choices for the few accounts we have there, such as the HSA. TDA is so good for everything I'll pay them $10 for a few vanguard ETF purchases
|
|
#
?
Oct 18, 2017 02:39
|
|
|
ManDingo posted:Good call. I verified with HR that this is the case. I ended up just working out what percentage puts me closest to 18K without going over. The sweet old lady that does payroll did this for me on a post-it but I don't think she realizes you can enter a decimal percentage. All of this seemed foreign to the entire department which is crazy. There are tons of people that make more than me here I can't be the only one maxing. I knew someone that was approaching the 39.6% bracket that only did up to the match. Granted that was almost the $18,000 but still.
|
|
#
?
Oct 18, 2017 03:19
|
|
|
I started a new job yesterday and during the orientation, the HR person told me that I'd be auto-enrolled to our 401k with a 5% contribution if I don't make a custom election within 60 days. She wanted to "warn" me because a lot of employees get upset when the company "starts taking more money" from them. People really don't want to save for retirement. 
Good-Natured Filth fucked around with this message at 13:11 on Oct 18, 2017 |
|
#
?
Oct 18, 2017 12:48
|
|
|
ManDingo posted:Good call. I verified with HR that this is the case. I ended up just working out what percentage puts me closest to 18K without going over. The sweet old lady that does payroll did this for me on a post-it but I don't think she realizes you can enter a decimal percentage. All of this seemed foreign to the entire department which is crazy. There are tons of people that make more than me here I can't be the only one maxing. I run these numbers every year. It's kind of a pain in the rear end, but the fact that it is a pain the rear end illustrates how few people are doing it. If it was common, they'd change the way the match is structured so that you could still get your full match whenever you hit the limit. I'd like to just contribute a shitload and hit my limit as soon as possible, alas I want the free money.
|
|
#
?
Oct 18, 2017 13:55
|
|
|
Good-Natured Filth posted:I started a new job yesterday and during the orientation, the HR person told me that I'd be auto-enrolled to our 401k with a 5% contribution if I don't make a custom election within 60 days. She wanted to "warn" me because a lot of employees get upset when the company "starts taking more money" from them. People really don't want to save for retirement. I wish my old job had done this. I had no idea what I was doing, so I did nothing and missed out on a nice match.  My wife's old job did do this, though, and never looked at it and last year (when I grew up) I looked at it and, hey, there's $20,000 you didn't know about. 
|
|
#
?
Oct 18, 2017 16:25
|
|
|
I'm just starting to take a more serious interest in investing, so please forgive anything foolish I might be asking... I have a TIAA 403b through my employer where matching won't kick in for another eight months or so. Most of my fund options have an ER of ~.7%. Is it possible and/or advisable to start a Roth IRA at Vanguard and to roll my money over into that and then put the money into ~.2% fee funds? Would I get hosed by fees by moving money into a different account while I'm still employed by the company whose plan it is? Is all of that even worth doing?
|
|
#
?
Oct 18, 2017 16:27
|
|
|
More than likely your 403b is a Traditional account and rolling it into a Roth IRA would trigger a conversion wherein you would pay taxes on the converted funds. Don't do this. <1% isn't great but it's better than nothing and the tax advantaged space is more important than anything. You could open a Traditional IRA and attempt to do rollovers into that, but there's a slim chance you can do what's called an "in-service rollover" and would have to wait until you change jobs. In the meantime, just max your Roth IRA and contribute as much as you can to your 403b until you can roll over into something better.
|
|
#
?
Oct 18, 2017 16:39
|
|
|
Spoderman posted:I'm just starting to take a more serious interest in investing, so please forgive anything foolish I might be asking... Really big difference corrected above. VFIAX if you have $10k.
|
|
#
?
Oct 18, 2017 16:46
|
|
|
Thank you. I knew something seemed slightly off about that idea. I'll just start a Roth IRA and max it out before the end of the year. And I'll pick more of the lower possible fees I have available in my 403b, including one Vanguard product, VEXAX they had hidden away.
Spoderman fucked around with this message at 16:55 on Oct 18, 2017 |
|
#
?
Oct 18, 2017 16:51
|
|
|
Spoderman posted:Thank you. I knew something seemed slightly off about that idea. I'll just start a Roth IRA and max it out before the end of the year. And I'll pick more of the lower possible fees I have available in my 403b, including one Vanguard product, VEXAX they had hidden away.
|
|
#
?
Oct 18, 2017 17:21
|
|
|
ManDingo posted:Good call. I verified with HR that this is the case. I ended up just working out what percentage puts me closest to 18K without going over. The sweet old lady that does payroll did this for me on a post-it but I don't think she realizes you can enter a decimal percentage. All of this seemed foreign to the entire department which is crazy. There are tons of people that make more than me here I can't be the only one maxing. I'm on the 401k committee at my small company, and I see only anonymized data but it's pretty surprising/sad how many people are only contributing 5-6% to their 401k (which is enough to get the full company match) considering that most everyone is a well-educated, experienced professional that gets paid pretty well. It's also disheartening to see how many people are just sitting in cash/money market in their 401k. We've got a great plan now, too. Most people just seem to not know/realize/care. Over the past couple years we've worked to get the company to cover all plan fees, do away with all "revenue sharing" (i.e. inflated ERs to cover plan fees) class funds, introduce a menu of passive index funds, passive target date funds, a Roth option, and even increase the company match another percentage point. Plus all the matching vests immediately. All-in-all we're talking thousands, if not tens of thousands, of dollars of benefit over the course of, say, a 5 year tenure at the company, let alone the life of your investments. Still those sorts of announcements are met with mostly indifference and blank stares. People get more excited about a one-time $200 bonus.  Edit: Also we introduced true-ups for matching this year now, too, so you don't have to worry about contributing every pay period to maximize your match. This is apparently a pretty rare feature. Guinness fucked around with this message at 17:44 on Oct 18, 2017 |
|
#
?
Oct 18, 2017 17:35
|
|
|
If they're doing enough to get the match they might be putting the rest in a Roth or otherwise doing their own retirement things (rental property or something) I think a majority getting company match is quite successful, really.
|
|
#
?
Oct 18, 2017 17:44
|
|
|
Xguard86 posted:If they're doing enough to get the match they might be putting the rest in a Roth or otherwise doing their own retirement things (rental property or something) For sure, it's a better situation than at a lot of places. And I can't know all of their life circumstances or plans, but based on the general apathy it seems like most people don't have alternative plans... they just have no plans. A lot of people are in the 100-150k salary range, so even a 5% 401k contribution and a maxed IRA is still a kind of low retirement savings rate, especially considering the lifestyle they would presumably want to keep up. At least they are doing something, just a shame to see such a good plan get so underutilized by so many people with the means (probably) to take full advantage of it. At least the handful of people maxing it out are getting good benefits. 
Guinness fucked around with this message at 17:53 on Oct 18, 2017 |
|
#
?
Oct 18, 2017 17:48
|
|
|
Guinness posted:A lot of people are in the 100-150k salary range, so even a 5% 401k contribution and a maxed IRA is still a kind of low retirement savings rate, especially considering the lifestyle they would presumably want to keep up. At least they are doing something, just a shame to see such a good plan get so underutilized by so many people with the means (probably) to take full advantage of it. The BWM thread is BACK baby! What is your participation rate, even if it's at the "low" match only rate? My last company in an attempt to shore up their abysmal participation rates added an auto enrollment and auto increase program. It just led to a bunch of angry people processing the de-enroll forms. The majority of people at that company were in the first 10 years of their career. Later on because so many people were earning index fund returns in 1% ER funds they decided to fund lowering the ER by adding a quarterly fee onto the 401k. Pissed off the apparently 5% of us in purely index funds.
|
|
#
?
Oct 18, 2017 18:13
|
|
|
H110Hawk posted:The BWM thread is BACK baby!
|
|
#
?
Oct 18, 2017 18:35
|
|
|
Spoderman posted:Thank you. I knew something seemed slightly off about that idea. I'll just start a Roth IRA and max it out before the end of the year. And I'll pick more of the lower possible fees I have available in my 403b, including one Vanguard product, VEXAX they had hidden away. I'd look carefully at your TIAA options. We have TIAA and they offer us funds that are as low an ER as Vanguard or Fidelity (maybe .09 instead of .07 but in the same range). TIAA Traditional and TIAA Real Estate are also unique offerings that are worth reading up on so that you understand why they may (or may not) be beneficial to you.
|
|
#
?
Oct 18, 2017 18:52
|
|
|
H110Hawk posted:The BWM thread is BACK baby! Ouch, that's a real crappy way to "incentivize" more participation. I don't recall exactly offhand, but I think our overall participation rate is quite good, about 85-90%. So at least there is that. It's just that many of the participants are doing low contributions relative to their salary/lifestyle, and then leaving their money in cash or our legacy crap active funds. At least for new employees we got the go-ahead from our fiduciary to default enroll people into a passive index fund-based target-date funds based on their age instead of cash. But trying to inform/convince people with old selections to change them is like pulling teeth. Some people just don't want to think/care about it, despite it being many thousands of dollars of their money. 
|
|
#
?
Oct 18, 2017 19:12
|
|
|
My work does a true-up at the end of the year which I'm super happy I discovered, means we can just set it to be a bit over and forget about it.
|
|
#
?
Oct 18, 2017 19:12
|
|
|
Guinness posted:For sure, it's a better situation than at a lot of places. And I can't know all of their life circumstances or plans, but based on the general apathy it seems like most people don't have alternative plans... they just have no plans. I mean. If you and your spouse both make 100-150k (call it 250k total), and contribute 5% for a 4% match, you're putting in 22500 per year. At 4% real growth, that's 1.2 million after 30 years. If you assume they start with say 200k from their first 15 years of work (retiring at 65), it's $1.9m. 4% real rate of return is less than three random periods I looked at. The lowest of those is 5%. At 5%, the second scenario is 2.3m at retirement. Even ignoring social security, 2.3m is a good amount to retire on. 93k per year safe draw down, and presumably a paid off house. And that's WITHOUT any IRA contributions. It might not let you retire early, but even if there was no prior savings for retirement, if you did that match and paid off your house, and social security died, you wouldn't be rich in retirement, but you'd be fine. You have to remember, it's likely they're paying 30% of their gross on a house. Remove that cost and likely the safe draw down is comparable to current monthly expenses. I'm actually having this conversation with my wife now - I think we have over saved for retirement, and we are looking at going down to just our match.
|
|
#
?
Oct 18, 2017 19:15
|
|
|
Zauper posted:I mean. Working uninterrupted at 250k+ over the next 30 years seems very optimistic. 4% or higher real return on investments seems fairly optimistic going forward. A 4% safe withdrawal rate is optimistic even today, let alone in 30-60 years from now when global growth has (almost certainly) continued to slow. You could have written the same thing about a person in the United States in the 1950's. The largest employers back then were GM, Chrysler, US Steel, Standard Oil and Goodyear. How many of those guys got to work continuously at a high salary for more than 30 years?
|
|
#
?
Oct 18, 2017 19:31
|
|
|
Zauper posted:I mean. Fair enough, though I still think that's a bit of an optimistic projection for total working years with dual high incomes. Plus $2m in 2050 is only worth about $800-900k in 2017 dollars, figuring 2.5-3% inflation. Also not all of these people are dual high income households, or even dual income at all. You might not be destitute, but that'd be a hell of a lifestyle shrinkage to live on 4% of the equivalent of today's 800k (32k/yr) when you're used to being a 250k/yr household with a <10% savings rate. My perception may be skewed, though, as I am an aggressive saver. But I think most people will still say you should be doing at least 15% toward retirement, and obviously more if you want to retire early or sustain an expensive lifestyle. Guinness fucked around with this message at 20:02 on Oct 18, 2017 |
|
#
?
Oct 18, 2017 19:56
|
|
|
Guinness posted:Fair enough, though I still think that's a bit of an optimistic projection for total working years with dual high incomes. Plus $2m in 2050 is only worth about $800-900k in 2017 dollars, figuring 2.5-3% inflation. A 5% real rate of return (after inflation) is the lowest of 1960-1989, 1970-1999, and 1980-2009. (5.07, 8.24, and 7.52 real rates of return, respectively). As for your comment on income (and Droo's), I'd still rather have after tax money now in case of problem (eg termination, company going under), or a desire to return to lower paying nonprofit work, etc. Even with 6 months of expenses already on hand. One income at 150k could ultimately keep the same contribution (4% match and 18k gives 24k max contribution), if you were willing to sacrifice lifestyle some with the smaller salary / etc. Obviously it's different if you don't have dual income, but if you do, contributing to match doesn't seem entirely reasonable to me. Especially if you are also contributing to an IRA, and doing some after tax savings.
|
|
#
?
Oct 18, 2017 20:04
|
|
|
Zauper posted:As for your comment on income (and Droo's), I'd still rather have after tax money now in case of problem (eg termination, company going under), or a desire to return to lower paying nonprofit work, etc. Even with 6 months of expenses already on hand. Over 30 years, a taxable account invested in the S&P will end up with about 14% less than a tax advantaged account to extra taxes assuming that tax rate now is the same as tax rate later. At $250k income it should be easy to increase that 14% number by deferring taxes now and paying when you withdraw in retirement, but obviously that's just about impossible to forecast. There are various ways to withdraw your money penalty free (although note that even if you pay a penalty, the current 10% penalty is less than 14%, and in that case you are probably withdrawing money because your salary has decreased substantially so you would pay substantially less in income tax on the deferred withdrawals, which would further compensate for the penalty).
|
|
#
?
Oct 18, 2017 20:20
|
|
|
Droo posted:Over 30 years, a taxable account invested in the S&P will end up with about 14% less than a tax advantaged account to extra taxes assuming that tax rate now is the same as tax rate later. At $250k income it should be easy to increase that 14% number by deferring taxes now and paying when you withdraw in retirement, but obviously that's just about impossible to forecast. If there were a problem with sustaining the income - whatever it may be - better to have money available than eat a 10% penalty. You wouldn't net be positive until after 20 years, which is a fairly long horizon for risk. Plus then it adds marginal tax dollars at the top, and like I said, I'd bet on rates going up. quote:There are various ways to withdraw your money penalty free (although note that even if you pay a penalty, the current 10% penalty is less than 14%, and in that case you are probably withdrawing money because your salary has decreased substantially so you would pay substantially less in income tax on the deferred withdrawals, which would further compensate for the penalty). The ways are what - first time home purchase, education, and medical expenses over 10% of AGI? Plus 72t. None of those are going to help if you lose a job or take one that pays less. I suppose what I'm saying is that to me, when my downside risk is 14% (cap gains) over 30 years, that's fine. Especially since at that point you're talking about money that would likely go to charity (no tax on the gains and full credit for value) or heirs (gift tax exemption, estate tax caps) ultimately as it's not necessary for retirement.
|
|
#
?
Oct 18, 2017 20:51
|
|
|
I recently joined a large firm that has its own stock as an investment option in its 401k. Also, it looks like the only dividend reinvestment option is to reinvest dividends back into the company stock. If that is the case, and I always reinvest dividends, is there a point to contributing a portion of my 401k directly to the stock itself, since all dividends would be going into the stock anyway?
|
|
#
?
Oct 18, 2017 20:53
|
|
|
Droo posted:4% or higher real return on investments seems fairly optimistic going forward. A 4% safe withdrawal rate is optimistic even today, let alone in 30-60 years from now when global growth has (almost certainly) continued to slow. Dividends + Buybacks on the S&P500 have been at or near 5% every year for like 7 years, despite massive increases in asset prices in that time (ie the market is probably priced to this metric and not bullshit accounting metrics). Returns attributed to real economic growth are/have been generally backseat to profit returned to investors. Unless you think profits will go down or the economy will shrink, on an expected basis, it's kinda hard to rag on 4% if we're talking 60yr time periods to iron out the volatility.
|
|
#
?
Oct 18, 2017 21:08
|
|
|
Fhqwhgads posted:I recently joined a large firm that has its own stock as an investment option in its 401k. Also, it looks like the only dividend reinvestment option is to reinvest dividends back into the company stock. If that is the case, and I always reinvest dividends, is there a point to contributing a portion of my 401k directly to the stock itself, since all dividends would be going into the stock anyway? Is there no further discount? If not, I wouldn't. A large portion of your eggs are already in that basket in the form of your salary. If the company tanks it takes your retirement with it. Let it ride on the dividends or set it to a very low %.
|
|
#
?
Oct 18, 2017 21:11
|
|
|
Rebalance out of your company stock quarterly. You have your human capital tied up in the company, don't take a double whammy unless there's a discount to be had.
|
|
#
?
Oct 18, 2017 21:20
|
|
|
H110Hawk posted:Is there no further discount? If not, I wouldn't. A large portion of your eggs are already in that basket in the form of your salary. If the company tanks it takes your retirement with it. Let it ride on the dividends or set it to a very low %. Currently only 5% of my contribution is going to the stock. I'd like to think the company isn't going anywhere for a while, but I was around for the last crash. TraderStav posted:Rebalance out of your company stock quarterly. You have your human capital tied up in the company, don't take a double whammy unless there's a discount to be had. That I hadn't thought of.
|
|
#
?
Oct 18, 2017 21:26
|
|
|
Eyes Only posted:Unless you think profits will go down or the economy will shrink, on an expected basis, it's kinda hard to rag on 4% if we're talking 60yr time periods to iron out the volatility. I personally think that GDP growth is a major factor in the real returns of equities, and GDP growth over the next 50 years is not going to be the same as GDP growth for the last 50 years. On top of that, a much higher percentage of people have access to equity investments now than in 1950 because of computers and online brokerages, so I think there is generally more demand for stocks which has resulted in higher prices and therefore lower relative returns via capital appreciation and dividends (this effect has been seen in generally larger PE values, which some people also attribute to more stocks being "growth" stocks nowadays).
|
|
#
?
Oct 18, 2017 21:27
|
|
|
Fhqwhgads posted:Currently only 5% of my contribution is going to the stock. I'd like to think the company isn't going anywhere for a while, but I was around for the last crash. To dive a tiny bit deeper. The reason we're mentioning a discount here is that many stock purchase plans offer a discount, meaning free money. So if they let you purchase it for 15% lower than market, you can turn around and sell it immediately for guaranteed gain. That may be worth the risk mentioned above for the reward. However, if it's not offered at a discount, there's no shortage of opportunities to deploy capital and get a reasonable return.
|
|
#
?
Oct 18, 2017 21:30
|
|
|
TraderStav posted:To dive a tiny bit deeper. The reason we're mentioning a discount here is that many stock purchase plans offer a discount, meaning free money. So if they let you purchase it for 15% lower than market, you can turn around and sell it immediately for guaranteed gain. That may be worth the risk mentioned above for the reward. However, if it's not offered at a discount, there's no shortage of opportunities to deploy capital and get a reasonable return. Right, this isn't an ESPP. It's just another investment option within the 401k plan.
|
|
#
?
Oct 18, 2017 22:00
|
|
|
Fhqwhgads posted:Right, this isn't an ESPP. It's just another investment option within the 401k plan. Just pick more index funds. Rebalance out any profit you make on whatever small % you decide to directly invest or are dividended.
|
|
#
?
Oct 18, 2017 23:23
|
|
|
So Vanguard officially announced its global Wellington/Wellesley funds. I have to say, I love the idea of the Wellesley fund. I know the performance numbers are lackluster, and for optimal outcomes I should just do VTSAX/VTIAX/a smattering of some kind of bond (and that's currently where almost all of my money is going), but...I'm tempted to buy in to the global Wellesley as a minor component of my investments going forward 
|
|
#
?
Oct 19, 2017 02:28
|
|
|
|
| # ? Jun 4, 2024 15:46 |
|
|
Guinness posted:Fair enough, though I still think that's a bit of an optimistic projection for total working years with dual high incomes. Plus $2m in 2050 is only worth about $800-900k in 2017 dollars, figuring 2.5-3% inflation. Also not all of these people are dual high income households, or even dual income at all. Why is it that any time someone quotes a compound interest figure someone jumps in to say "oh but inflation" no matter how clear they were about using real return? 
|
|
#
?
Oct 19, 2017 04:52
|
|
