NSXNEXT

iTrader: (2)

Wasn't sure if everyone knew this. My new company matches my 401K contributions up to $3000 a year. I currently max mine out and was worried what was going to happen to the extra $3000.

Turns out the federal maximum is only for your pre-tax dollars and does not include employer match money.

iTimmy

That is interesting, I never had a 401k but would have thought it would have included employer match. Good to know that's not the case

phipark

Isn't the fed max around $15500? So your employer matches your 15.5k w/3k? Good to know on the max thing, even though I'm not even close to it.

DAROCK

I think I read somewhere a while back that they (employers) can give you up to something like 40k a year.

noshow_nogo

now in the calendar year you turn 50, you can make catchup contributions currently $5000. a fun time will be had by all. btw that is a SICK company match.

NSXNEXT

iTrader: (2)

My company matches contributions at 100% on the first 6% of eligible pay up to $750 per quarter.

cbptls

If your company matches, take full advantage of it. It's free money.

hornyleprechaun

Yeah I'm contributing 12%, and they are matching 6%, so I'm getting 18% of my salary

DAROCK

^^GFY. my employer match ends at 5%.

moeronn

My employer match just went up substantially from $1000/yr to $2250/yr. It's a combination of them increasing the match, and changing how they classify me. That's not a huge amount of money, but it's a huge percentage change and best of all it's free.

hornyleprechaun

Yeah that's still $1250 extra

DelawareCLS

My company is currently contributing $5,550 to my 401k in addition to my max contribution

KCPreki11

Take care of your employees and they will take care of you.

WDP-Acura TL

I'm about to invest in my 401k plan with my employer, but first I have a question.
Fidelty 401k dept is closed today so I'll try and ask someone on this forum

I'm 28 yrs old and I don't mind taking more risk over the long haul.
I'm deciding how I should allocate my funds to which investments. Does this look more like a Growth target asset mix? If yes, when I submit it,it takes me to another page where I have to click a link that says Rollover Sources. Does this mean if I have a 401k plan from another source that i'm rolling over to my current 401kplan? This is my first time investing with any 401 k plan, I clicked it and chosed the same allocation. If yes, I don't know why it wouldnt give me the option to skip this.



LIFEPATH 2030 60%
EAFE (INTERNATIONAL) 10%
US DEBT INDEX FUND 25%
STABLE VALUE FUND 5%

How does this look?

WDP-Acura TL

LARGE CAP GROWTH
RUSSELL 1000 GROWTH 60%

INTERNATIONAL
EAFE (INTERNATIONAL) 15%

Bond Investments
INTERMEDIATE-TERM
US DEBT INDEX FUND 20%

Short Term Investments
STABLE VALUE FUND 5%

Total 100%


I decided to choose this allocation, how does this look since I'm 28 yrs old

SixSpeedSaber

thats really dam awesome

Scrib

Any options for mid & small cap funds? I would put more into International based on the above. I'd also move some out of the bond funds??? 20% is a bit too much for my tastes.

Bearcat94

At 28, you've got about 40 years to retirement. Your 401k over the next 20 years or so should be on the "higher" risk side. IOW - dump the bonds and Stable Value; go nearly 100% stocks and weight those toward moderate to moderate-high risk.

Small Cap
Mid-Cap Growth
Mid-Cap Value
Large Cap Growth
Large Cap Value
Large Cap Index (S&P 500)
Balanced Fund (Mix of Stocks, Bonds, Securities and Cash)

Also keep in mind that the stock funds will include a reasonable selection of International Companies. See how much (% wise) in each fund selected is International, then multiply that amount by the % you contribute to that fund. Add up all the results. That's your % International, without being in a specifically International Fund. If the amount in the stock funds is high enough (your call), you may not need to invest in a specifically International Fund.

Once you hit 45 - 50, start shifting money into Balanced funds, Bonds and Stable Value funds. By the time you're around 60, that's where the large majority of your money should be for last several years before retirement.

fish008

First the max you can personally contribute to a 401k is $15,500 - there is a catch-up provision that allows those 50 years and older to contribute another $5000. Total 401k contributions including employer contributions are as follows: The individual limit is the lesser of 100% of compensation or $45,000 for 2007 ($46,000 for 2008), including all employee and employer contributions. Eligible catch-up contributions are in addition to this total. That is the same for both traditional and safe harbor 401ks. There are differences between traditional and safe harbor 401ks with respect to how much an employer can contribute (other things as well but I will not list those). I assume almost everyone on here has a traditional 401k.

I think that your portfolio is quite conservative for someone who is 28 years old. With that said your bond position will certainly help to stabilize your portfolio in this volatile market. The other thing I noticed, was mentioned earlier, is that your are not covering all of your bases. You're missing mid cap, small cap, real estate, emerging markets (I assume your international investments are just in established economies). And that is only true if you are a growth investor. If you are indeed conservative with respect to investing you should still have some long-term, intermediate, short-term and speculative bond exposure. Your use of indexes will make your portfolio particularly volatile in these times.

JediMindTricks

i know i'm a bit late on this, but i'd cut back on the bonds and add to internationa.

and as mentioned before, i'd also check and see if there's an option for midcap and smallcap. if there are, i'd take some of the 60% in large cap growth.

it's all about asset allocation.

my company only matches dollar for dollar up to 3% and then fitty cent to a dollar for the next 2%. could be worse, i guess.

but anyone that has a 401k option at work should really take advantage of it. it's one of the smartest things you can do as not only an investor but an employee. free money ftw!

fish008

You're right, it is all about asset allocation but I think that you're a bit late to the international party. If you saw the market today and realize how volatile this market is/ can be/ will be, you will appreciate the stabilizing value of the bonds. In the end if you miss out on the little corrections up but can minimize the downside loses you will be happy. By the way, large cap growth seems like it could actually be back for the first time in 7 years. But don't let that growth potential keep you from a proper asset allocation, that is unless you're looking to make the same mistakes nearly everyone made in the late 90s.

JediMindTricks

it's not just large cap growth. mid cap and small cap growth look to win out against value.

ultimately, it depends on how much risk the OP is willing to take on.

fish008

You are correct. The growth areas of the market are out performing the value areas once again. This has been said several time but make sure to keep an asset allocation. It is ok to over weight an area or sector, but don't forget about diversification.

KaMLuNg

iTrader: (5)

i am only a few years younger than you... but i have 10% of my salary contributing to my 401k with a 6% match from my company... and i have it allocated 100% in stocks... u still have a long time to retire, it isn't sensible to be so conservative just yet...

JediMindTricks

true, but once again, it all depends on the OP and just how much risk he wants to take.

maybe he has investments somewhere else and wants to use his 401k as a means to decrease volatility. who knows.

yunginTL

before or after tax contributions for someone my age? whats the advantages/disadvantages?

NSXNEXT

iTrader: (2)

Without a doubt before. Think about it, don't you think you'll be making a lot more money when you reach retirement age? More money = higher tax bracket.

yunginTL

just makin sure i been doin the right thing

NSXNEXT

iTrader: (2)

Put as much as you can into a Roth at an early age. Wish it was around when I was younger.

fish008

Pretty sure he means after tax. At least that is his logic. The best thing you can do is a 401k with a match because the match is free money (that is before tax contributions). Then, or if you don't have a 401k, contribute as much as you can ($4000 max for 2007 and $5000 max for 2008 - with a catchup provision of an additional $1000 for those over 50 years old) to a Roth IRA (after tax contributions). The name of the game deferred taxes in any way possible. The 401k defers them until retirement age (59 1/2) and the Roth is exempt withdraws from taxes if taken after 59 1/2 years old.

JediMindTricks

and you have to have had the roth open for 5 years too. but i guess that doesn't really apply here...

yunginTL

yea right now, they match 3% and then 2% they meet you halfway on your contribution. So i'm only contributing 5%...
so with after tax contributions, i wouldn't be taxed when i withdraw at retirement?
but with before tax contributions, they take the money out before my income is taxed and then depending on what tax bracket i fall into when i retire, that will be what i get taxed on for withdrawals?
fuckin confusing

fish008

That is correct, after tax contributions to a Roth IRA are not taxed when you make withdraws provided, like Jedi said, that you have had the Roth for greater than 5 years (you should be fine). The money that goes into your 401k goes in pre-tax so you have not paid taxes on it. Therefore your withdraws once over 59 1/2 years old will be taxed at your current tax bracket. Make sense?

castillo183

i CURRENTLY HAVE 20 PERCENT AND MY COMPANY IS MATCHING 5 PERCENT OUT OF THE 20 PERCENT. I am broke now but in 15 year I have enought money to chill out hopefully if i make to 35 years old.

castillo183

WIth the current rate that i am doing right now. I am going to be worth more then 18 million by the age of 45. That is so freaking cool. I started with my 401 k when i was 19 years old. Right now I am doing stock, forex thinking about day trading.

fish008

Sorry to burst your bubble that isn't going to happen. I ran some numbers with some pretty wild assumptions and it wasn't even close. Assuming that you could somehow put $45,000 a way a year into your 401k you would have to average 19% over the next 24 years to get to 18 million. If those numbers were not shocking enough here is why it can't happen. You're putting 20% into your 401k, lets pretend for a minute that is the max you can do at your age which is $15,500 a year, if the employer matches 5% that is still only about $20,000 a year into your 401k which is no where near the $45,000 maximum total contribution to a 401k. I know those max contribution numbers step up every couple years but this is just running simple numbers. In the scenario putting $20,000 a year away you now have to average better than 24% to get to 18 million at age 45. Twenty four percent is attainable in good years but good luck averaging that over 24 years. Oh and a year with a 0% return or a year with a negitive return will throw that average percent return rate way off and force an even crazier average return for those remaining years. It's great that you are saving so hard at such a young age but it is also important to be realistic. Here is a tip. Make sure you take full advantage of your 401K's match but you should fully fund a Roth IRA while you still can (I know you can because your 401k contribution percentage shows it). You be happy when you retire that you don't have to pay all those taxes. That will also help you reduce/avoid some huge required minimum distributions (RMD)s from your 401k when you are retired if you keep saving the way you do.