My Company Increased 401K Match! ETA: And Leave!

[SVT]

Some might know I just started my first job out of college today. The match, at the time I signed the offer letter, was 100% up to 4%, which I thought was really good (it seems like the average match is like half up to 5% or half up to 6%. Well, in some time during the 6 months between me signing the offer letter and me starting, they increased the match to 100% up to 6%!

A good friend of mine who also works for a Government Contractor, and works for the same agency, gets an automatic 10% match though, whether the employee contributes anything or not!

Just wanted to share!

[Deleted]

A good friend of mine who also works for a Government Contractor, and works for the same agency, gets an automatic 10% match though, whether the employee contributes anything or not!

Read more: notmsnmoney.proboards.com/index.cgi?action=display&board=finance&thread=3609&page=1#139093#ixzz1EMn2x7jG



Unfortunately, that is why Wisconsin, amongst other states, are going through what they are gong through right now.

[SVT]

Feb 18, 2011 21:02:59 GMT -5 @toughtimes said:

Now, I want you to do one more thing. Read your employee manual so that you know when you "Vest" in the funds. Until that date, you have 100% of nothing. Never leave any job just before you vest.

Immediately vested 100%.

[SVT]

Feb 18, 2011 21:08:24 GMT -5 ArchietheDragon said:

A good friend of mine who also works for a Government Contractor, and works for the same agency, gets an automatic 10% match though, whether the employee contributes anything or not!

Read more: notmsnmoney.proboards.com/index.cgi?action=display&board=finance&thread=3609&page=1#139093#ixzz1EMn2x7jG



Unfortunately, that is why Wisconsin, amongst other states, are going through what they are gong through right now.

It's Federal.

[Deleted]

Feb 18, 2011 21:16:25 GMT -5 SVT said:

Feb 18, 2011 21:08:24 GMT -5 ArchietheDragon said:

A good friend of mine who also works for a Government Contractor, and works for the same agency, gets an automatic 10% match though, whether the employee contributes anything or not!

Read more: notmsnmoney.proboards.com/index.cgi?action=display&board=finance&thread=3609&page=1#139093#ixzz1EMn2x7jG



Unfortunately, that is why Wisconsin, amongst other states, are going through what they are gong through right now.

It's Federal.

Same difference.

[SVT]

Feb 18, 2011 21:17:30 GMT -5 ArchietheDragon said:

Feb 18, 2011 21:16:25 GMT -5 SVT said:

It's Federal.

Same difference.

See avatar.

I kid! I kid!

But its not my fault. My particular skills are in demand, not to mention the security clearance that you have to get, which not just anyone can obtain. Because of that, the pay and benefits are pretty good. And based on the norm, my salary will increase $20k after the first year, easily.

[SVT]

Feb 18, 2011 21:27:46 GMT -5 @toughtimes said:

Typically, you are 100% vested in your own contributions, but vesting in your employer's contributions takes several years. Please re-read your manual to make sure you are correct. This would be very atypical.

"_____ will match dollar for dollar on employee contributions up to 6%, with immediate vesting."

Yes, immediate vesting is bolded and underlined in the manual.

[SVT]

There's also a profit sharing contribution at the end of each year.

The funds sort of stink though.

[WannabeWealthy]

SVT,

You are definitely very lucky when it comes to retirement. Our company is very stingy and only give like 50% up to the first 3%.

[SVT]

Feb 19, 2011 11:17:25 GMT -5 WannabeWealthy said:

SVT,

You are definitely very lucky when it comes to retirement. Our company is very stingy and only give like 50% up to the first 3%.

Yeah, all the Contractors around here are similar actually. It's pretty competitive.

I also have an HSA with my HDHP, which is perfect for me. And I start with 4 weeks leave and 10 holidays.

[patchwork150]

wish that was true for me! but I can't complain, my company gives us so many benefits... and pays like 80% on our medical insurance... we're overall very lucky. The company has been doing extremely well in the last few years, we've probably grown 10x our size in the last 5 years. However, my company does not do anything for our 401k. We DO get biannual profit sharing, and we can put it in our 401k if we so choose....

[Plain Old Petunia]

That's great! Congratulations on your new job and on your sweet match.

[phil5185]

SVT - let me tell you what someone your age can expect. (I retired in 1998 - that is 15 yrs after companies started offering 401k's - mine was about $1M at retirement).

If you contribute the $16,500/yr and another $4000/yr is added by your employer, $20.5/yr goes in. Your out-of-pocket cost is about $11,000/yr (depending on your state tax).

For this $11k/yr, you get $1M on account at age 42, $2M at about 48, $4M at age 54, $8M at about 61, and so on. And after retirement it keeps growing. (Your actual values will be higher because the contribution limit will be adjusted for inflation.)

[Deleted]

That's good... considering ...

online.wsj.com/article/SB10001424052748703959604576152792748707356.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop

[SVT]

Yeah, do you remember my other thread though? I really want to max it right now but it's probably not best for me right now? Plus, do you know anything about the HSA? I can contribute $3050/year into that! That's also pretax and can be used for medical expenses tax free. It can be invested into stocks as well. According to the bogleheads forum, the priority should be 401k up to match, then max HSA.

But thanks for the numbers. Either way, my goal is $100k net worth by 30, $1M by 40.

[SVT]

Wait, where did you get the $4000 from? My salary is $57750.

ETA: Nevermind, I guess you were doing the average over the years, as my salary would go up!

[blackcard]

$100k net worth by 30? I am 30 myself, we now have $450k NW, and only $72k in mortage debt from a $250K loan. our mortgage should be gone in about 3 yrs or so. 1 Mil by 35 is our goal.

Sounds like a great match. You, like my DH, must have some special in demand expertise.

[phil5185]

That's good... considering ...

I'm about 5 yrs older than the first boomers - but I saw those things (in the article) first hand. And the problems were not with the 401k system, workers were their own worst enemy. Our HR guys said that only about 35% signed up - and many of them contributed only a token amount. And money that used to be withheld to fund pensions was spent elsewhere.

In the boomer's defense - few people in their generation knew anything about investing. When I was investing in the 1960's peers seemed astonished that a worker could go to a brokerage and buy stocks. The modern investment concepts that we take for granted were unheard of - ie, buy incrementally and accumulate, build wealth & then transition to wealth preservation, index funds, ETFs - all 'new' within the last two decades.

So the first wave of 401k owners had way less guidance than modern investors. OTOH, the stories of losing half of a 401 (now a 201k?) are mostly sensationalism - many of them never had a meaningful investment to start with. Much of the money that could have gone to wealth building went to McMansions & Toys.

Hopefully, the second wave will have learned from their older coworkers, will have a full 30-yr investment term, and will do way better.

[phil5185]

where did you get the $4000 from? My salary is $57750.

LOL - just a guess, I went with college grad & MD - $70k. But that's only 2 raises away?

[SVT]

Feb 19, 2011 18:36:55 GMT -5 phil5185 said:

where did you get the $4000 from? My salary is $57750.

LOL - just a guess, I went with college grad & MD - $70k. But that's only 2 raises away?

While not guaranteed, it seems likely and the 'norm' that I will get a $20k raise after 1 year

[ameiko]

If you contribute the $16,500/yr and another $4000/yr is added by your employer, $20.5/yr goes in. Your out-of-pocket cost is about $11,000/yr (depending on your state tax).

Phil, I believe this is not correct. The most that one can put into an account is 16.5K, period (or 21.5K if 50 or over). In his case, he could put in 12.5K personally and 4K from the boss to max out the account).

What to do with that extra 4K? Toss is into a Roth!

[SVT]

Feb 19, 2011 22:16:56 GMT -5 ameiko said:

If you contribute the $16,500/yr and another $4000/yr is added by your employer, $20.5/yr goes in. Your out-of-pocket cost is about $11,000/yr (depending on your state tax).

Phil, I believe this is not correct. The most that one can put into an account is 16.5K, period (or 21.5K if 50 or over). In his case, he could put in 12.5K personally and 4K from the boss to max out the account).

What to do with that extra 4K? Toss is into a Roth!

The $16,500 max is only the employee contribution. So Phil is correct. Everyone can contribute the $16,500, not including company contributions.

[ameiko]

Feb 19, 2011 22:19:08 GMT -5 SVT said:

Feb 19, 2011 22:16:56 GMT -5 ameiko said:

If you contribute the $16,500/yr and another $4000/yr is added by your employer, $20.5/yr goes in. Your out-of-pocket cost is about $11,000/yr (depending on your state tax).

Phil, I believe this is not correct. The most that one can put into an account is 16.5K, period (or 21.5K if 50 or over). In his case, he could put in 12.5K personally and 4K from the boss to max out the account).

What to do with that extra 4K? Toss is into a Roth!

The $16,500 max is only the employee contribution. So Phil is correct. Everyone can contribute the $16,500, not including company contributions.

I would strongly advise you to research that. I have always read the opposite.

[formerexpat]

That's good... considering ...

The absence of any math or financial skills doesn't make a 401k bad.

In general, people facing problems today got too little advice, or bad advice. They didn't realize that a 6% annual contribution, with a 3% company match, might not be enough.

Some started saving too late or suspended contributions when they or their spouses lost jobs. Others borrowed against 401(k) accounts for medical emergencies or ran up debts too close to their planned retirement dates.

In the stock-market collapses of 2000-2002 and 2007-2009, many people were over-invested in stocks. Some bailed out after the market collapse, suffering on the way down and then missing the rebound.

Some people like to remain ignorant about their finances. Others take an active & responsible role. [/size]

[ameiko]

www.pensionrights.org/publications/general-retirement-plan-information/retirement-plan-contribution-and-benefit-limits?gclid=CLvWn4HnlacCFYpN2god4R03eQ

Annual employee contribution limit for 401(k), 403(b), or 457 savings plans: $16,500

Annual limit for combined employer - employee contributions to a defined contribution plan $49,000

Wow, it appears that I may have not been correct. I will look around a bit more but, wow. I may have to up my contributions! Then again, my employer only kicks in 1% (but I get a pension).

[SVT]

I don't need to research it. I already know it's correct

[formerexpat]

I would strongly advise you to research that. I have always read the opposite.

www.money-zine.com/Financial-Planning/Retirement/401k-Limits/

Finally, in 2011 the total of both employee and employer contributions is limited to the lesser of 100% of your compensation or $49,000. That's the same limit that applied in 2010. Once again, in 2012 these limits will be adjusted for inflation, and can be increased in $1,000 increments. This total contribution limit includes pre-tax and after-tax contributions.

Don't know where you're researching because this was a pretty simple search.[/size]

[Deleted]

Feb 19, 2011 22:29:55 GMT -5 ameiko said:

Feb 19, 2011 22:19:08 GMT -5 SVT said:

The $16,500 max is only the employee contribution. So Phil is correct. Everyone can contribute the $16,500, not including company contributions.

I would strongly advise you to research that. I have always read the opposite.

The $16,500 is personal contribution only, not including company contribution.

You can search it on www.irs.gov

[SVT]

Feb 19, 2011 22:38:29 GMT -5 ameiko said:

www.pensionrights.org/publications/general-retirement-plan-information/retirement-plan-contribution-and-benefit-limits?gclid=CLvWn4HnlacCFYpN2god4R03eQ

Annual employee contribution limit for 401(k), 403(b), or 457 savings plans: $16,500

Annual limit for combined employer - employee contributions to a defined contribution plan $49,000

Wow, it appears that I may have not been correct. I will look around a bit more but, wow. I may have to up my contributions! Then again, my employer only kicks in 1% (but I get a pension).

$16,500 for individuals under 50. $49,000 for combo of employee and employer contribution or up to 100% of your annual salary...the lesser of the two.

[Deleted]

And to the OP, nice 401K match... just sweet!