Too much or not enough...

[TheHaitian]

In the other thread about 401k's I started a poster stated how they felt the total limit for 401k's / IRA's and HSA's was just too high.

Between them, their spouse and employer contributions they are stashing 60k/year in those accounts. He felt if is broken once a person can have "millions" in those accounts.

And I believe a few posters around on YM have admitted to about the same: maxing 401k's, ROTH IRA's if they qualify and HSA's. And for a couple
Over 50, they can add an extra 12k in there I believe in catch up (5k 401k, 1k IRA and 1k HSA). I believe 2girlsdad have the most generous plans with his employer and him putting up to 45k in his 401k/year (call me if they are hiring).

Yet we get bombarded with stories about how America is not saving enough and how we are all doomed to eat cat food in our old ages etcetera.

So which is it do you feel? Being able to save too much or not saving enough? A bit of both?

Those that are disciplined are taking advantage of every single vehicle offered to them and those that are not
are just not saving?

Do you think the limits are too high and should be lowered? Let's say a typical couple, they both work and they can afford it (that is the big part, being able to afford it) is putting away
18k X 2 = 36 k - 401k
5.5k X 2 = 11k - IRA
6.5k X 1 = 6.5 - HSA
-------------------------------
53.5k Total and that is without employer match.

But how many couples are really taking full advantage of it? I know I am not. But just because I am not doesn't mean I want them to lower it, more power to those that can.

Damn... That is 1 person salary you are saving a year! Lordy!

[yogiii]

Next year is the first time I'll be doing an HSA and hope to take full advantage as you put it.  But really, this is YM, not average America.

[Deleted]

I don't know why it matters if the limit is higher than you think you need. 

But, I don't think it's fair that people can put so much into a 401K, but not an IRA.  There are a lot of people with no access to a 401K plan with their employer.  I think they should up the amount allowed in IRAs and set a maximum limit for all tax-preferred accounts combined instead. 

If I didn't have a 401K I'd be pissed.  Why should where you work determine how much of a break you can get on your taxes for saving for retirement? 

[Plain Old Petunia]

I don't think the limits are too high. I would like to see IRA limits raised to the same as 401k, and then reduced by any amounts you actually contribute to a 401k or other employer plan. This would let people without an employer plan stash more in tax-advantaged plans.  People with 401ks would have a lower max, but it would be more fair than what we have now. 

[tskeeter]

Oct 30, 2014 11:58:43 GMT -5 TheHaitian said:

In the other thread about 401k's I started a poster stated how they felt the total limit for 401k's / IRA's and HSA's was just too high.

Between them, their spouse and employer contributions they are stashing 60k/year in those accounts. He felt if is broken once a person can have "millions" in those accounts.

And I believe a few posters around on YM have admitted to about the same: maxing 401k's, ROTH IRA's if they qualify and HSA's. And for a couple
Over 50, they can add an extra 12k in there I believe in catch up (5k 401k, 1k IRA and 1k HSA). I believe 2girlsdad have the most generous plans with his employer and him putting up to 45k in his 401k/year (call me if they are hiring).

Yet we get bombarded with stories about how America is not saving enough and how we are all doomed to eat cat food in our old ages etcetera.

So which is it do you feel? Being able to save too much or not saving enough? A bit of both?

Those that are disciplined are taking advantage of every single vehicle offered to them and those that are not
are just not saving?

Do you think the limits are too high and should be lowered? Let's say a typical couple, they both work and they can afford it (that is the big part, being able to afford it) is putting away
18k X 2 = 36 k - 401k
5.5k X 2 = 11k - IRA
6.5k X 1 = 6.5 - HSA
-------------------------------
53.5k Total and that is without employer match.

But how many couples are really taking full advantage of it? I know I am not. But just because I am not doesn't mean I want them to lower it, more power to those that can.

Damn... That is 1 person salary you are saving a year! Lordy!

Limiting tax advantaged contributions to savings plans will do nothing to improve the situation of the have nots.  So what's the point in imposing more stringent limits?  Such limits would help no one and hurt some.

[Ryan]

Most gurus will say to maximize your retirement savings, so if you're doing up to the limits then you feel like you're doing your job.  Even though most people on here say they are maxing their 401k, I kinda doubt that many of them ACTUALLY are.  Or they haven't been doing it for that long or consistently.  I only say this because the retirement savings balances don't seem to jive with someone maxing out a 401k.

My employer is pretty generous and probably kicks in $6K per year and I can put in $17,500.  We have a business in my wife's name so she can put in $17,500 there plus 25% of her salary as profit sharing (max $51K) for an additional $12K.  And since she's a teacher, she has a pension where she contributs 10% of her salary.  So all in all, I can contribute $53K and, if I get my income down enough, more towards a ROTH.

I'm 36 and have about 400K saved plus my wife has 12 years into a state pension.  I'm not worried about retirement in the least since I know it'll only pick up from here on out.

The only thing that holds me back is having to pay penalties in case I need the money out of a retirement account.  I have reserves, but you never know what could happen.  

[cktc]

I feel like the limits are pretty arbitrary and whether it is too much, or not enough depends on which forms are available to the individual. A lot of people don't have access to a 401k or HSA through their employer,and I think you can't have an IRA after a certain income.

I'd prefer the limits as a percent of income, regardless if it is a 401k, traditional IRA, or Roth, maybe with a cap. 

HSA I'm not sure. It's use is different so maybe it should be in another category.

[ArchietheDragon]

Oct 30, 2014 12:14:34 GMT -5 Ryan said:

Most gurus will say to maximize your retirement savings, so if you're doing up to the limits then you feel like you're doing your job.  Even though most people on here say they are maxing their 401k, I kinda doubt that many of them ACTUALLY are.  Or they haven't been doing it for that long or consistently.  I only say this because the retirement savings balances don't seem to jive with someone maxing out a 401k.

My employer is pretty generous and probably kicks in $6K per year and I can put in $17,500.  We have a business in my wife's name so she can put in $17,500 there plus 25% of her salary as profit sharing (max $51K) for an additional $12K.  And since she's a teacher, she has a pension where she contributs 10% of her salary.  So all in all, I can contribute $53K and, if I get my income down enough, more towards a ROTH.

I'm 36 and have about 400K saved plus my wife has 12 years into a state pension.  I'm not worried about retirement in the least since I know it'll only pick up from here on out.

The only thing that holds me back is having to pay penalties in case I need the money out of a retirement account.  I have reserves, but you never know what could happen.  

I give huge kudos to anyone who can max out retirement savings.  They are doing something right.  When my wife goes back to work next year, maxing out retirement accounts would mean contributing $46k a year!!    I am not yet able to do that.  

[gooddecisions]

I don't think this community is a good example of how society contributes to retirement accounts. 2girlsdad has got to be making almost 200K/year between salary and commission for the 12% 45K employer contribution. Most people don't make anywhere near 200K/year.

I didn't see the other poster's comment, but I disagree because it will take "millions" if your goal is to retire around 60 and live another 40+ years. There are plenty of grandfathered government pension plans that shell out 100k/year. That equals $3mm value for 30 years. Now it's personal responsibility to invest enough to replace the pension system.

[gooddecisions]

Also, just because you "can" contribute that much, doesn't mean you have to. Heck, I think it would be cool if you could put your entire salary in retirement accounts and they should remove the limitation all together, but that will never happen because the government needs its taxes and the economy needs us spending. On second thought, I suppose you could- it would just be after tax contributions.

[giramomma]

It would be nice if DH got a full time job once we were down to supporting one kid in HS.
We could live off his salary, and then bank most of my.

I get a 403b at work. I can contribute 17.5K there now, or 23K there after age 50.
In addition to that, I also get a 457 Program. I can contribute 17.5K now and 23K after age 50.

That would likely leave just enough for me to pay for health insurance and my pension, and assorted taxes. (I get $500 raises in a good year. I don't anticipate my salary gaining more than I already am making now.)

If it weren't for my kids, we'd definitely be richer, that's for sure.

[Deleted]

Oct 30, 2014 12:15:55 GMT -5 cktc said:

I feel like the limits are pretty arbitrary and whether it is too much, or not enough depends on which forms are available to the individual. A lot of people don't have access to a 401k or HSA through their employer,and I think you can't have an IRA after a certain income.

I'd prefer the limits as a percent of income, regardless if it is a 401k, traditional IRA, or Roth, maybe with a cap. 

HSA I'm not sure. It's use is different so maybe it should be in another category.

If you don't have a retirement plan at work there is not income limit for a deductible IRA.

[Abby Normal]

I think the 401k is too high only because  I'd really like to say I max out both our roths and our 401k.  Everytime I inch closer, they up the limits.  So it's really just me feeling inadequate or slightly jealous of those who can. 
So.. it's really just all about me. 

[cktc]

Oct 30, 2014 12:33:51 GMT -5 minnesotapaintlady said:

Oct 30, 2014 12:15:55 GMT -5 cktc said:

I feel like the limits are pretty arbitrary and whether it is too much, or not enough depends on which forms are available to the individual. A lot of people don't have access to a 401k or HSA through their employer,and I think you can't have an IRA after a certain income.

I'd prefer the limits as a percent of income, regardless if it is a 401k, traditional IRA, or Roth, maybe with a cap. 

HSA I'm not sure. It's use is different so maybe it should be in another category.

If you don't have a retirement plan at work there is not income limit for a deductible IRA.

Yes, and the IRA limits are definitely not high enough in those cases.

[mrnewengland]

Yeah, why are people saying the limits are to high?  Don't we WANT people to be wealthy and WANT to give them any tool possible?  

[Deleted]

Oct 30, 2014 12:41:42 GMT -5 Abby Normal said:

I think the 401k is too high only because  I'd really like to say I max out both our roths and our 401k.  Everytime I inch closer, they up the limits.  So it's really just me feeling inadequate or slightly jealous of those who can. 
So.. it's really just all about me. 

I told myself, next year I was just going to do it so I could say I did ONE TIME.  I can't afford it at all and was just going to live off other savings to do so, but then I realized I would be so poor to the IRS I'd be hurting myself by doing so.

[ArchietheDragon]

Oct 30, 2014 12:51:11 GMT -5 mrnewengland said:

Yeah, why are people saying the limits are to high?  Don't we WANT people to be wealthy and WANT to give them any tool possible?  

I'm not sure if it is currently too high, but I wouldn't want it to be unlimited, allowing the weathly to just as much as possible in it and pay no taxes, those bastards. 

[justme]

I could see there being a max on any Roth accounts, as well as HSA. Those can cost a lot of money in unpaid income taxes. But I don't really see why there's a limit on traditional ones. The tax will get paid on that money - and any returns. The only reason I can see for limited those retirement accounts is because the government needs it's money now. 

I could also see limits to how much an employer can put in, especially if shifting compensation to 401k would save the employer on taxes. 

[ArchietheDragon]

Oct 30, 2014 13:29:13 GMT -5 CCL said:

Oct 30, 2014 12:55:08 GMT -5 ArchietheDragon said:

I'm not sure if it is currently too high, but I wouldn't want it to be unlimited, allowing the weathly to just as much as possible in it and pay no taxes, those bastards. 

Agree with you on this, but I'd like to see them eliminate that stupid "highly compensated employee" baloney. We tried to contribute the max on his 401k and got screwed out of reaching the limits because of it. Every year in July, they would cut it off, no more contributions for us. Once he was 50 we were allowed the catch-up contributions instead. I never had a 401K, so contributed to IRAs when allowed. Our income was never "wealthy" around 100k at it's highest. Never had any kind of match from employers. I put any money I made into my regular brokerage account. After a while it started to add up. Never had an HSA either.

I think the highly compensated employee rule is a good one.  It encourages companies to make sure all employees are taking advantage of the 401k, not just the upper muckitty-mucks. 

[Tiny]

I think some of the calls to "lower the limits" on retirement savings - is because the current limits just let the 'rich get richer' - I'm thinking about this from the perspective of someone who isn't saving for retirement (they can't eek out anything from their income to put into a personal Roth or Trad IRA. - not even something like $50 a month). The 17K+ limit must seem astronomical to them AND it must seem to them that it's just another way the 'rich' get to keep their money and get richer.

I've had conversations along these lines with some family members in the 30 to 40 year old range. They have access to one of those 401(k) plans that the 'rich people' use to get 'richer'- they COULD contribute to it... but they don't. They aren't 'rich enough' to save money I guess.

FWIW: I did hit the max on both my 401(k) and Roth for two years in a row. I spent a handful of years slowly building to it. I can't do it now though - I'm eligible for the catch up amounts but I just can't eek out another 5K (or whatever) to contribute to the accounts. So, for 2014 I'm getting about 16K into my 401(k) and 6K (with the catch up!) into my Roth. I'm envisioning 2015 contributions going the same way.

[ArchietheDragon]

Oct 30, 2014 13:36:26 GMT -5 CCL said:

Sounds good in theory, I suppose, but in reality it didn't work so well, at least with hubby's employer. People either contributed or they didn't. My husband certainly wasn't a muckitty-muck, lol. Many years we were limited to about $5000 in contributions and for some of those we couldn't put much in IRAs either.

The company is dropping the ball.  The rule is still good.    

[CarolinaKat]

Oct 30, 2014 12:07:51 GMT -5 minnesotapaintlady said:

I don't know why it matters if the limit is higher than you think you need. 

But, I don't think it's fair that people can put so much into a 401K, but not an IRA.  There are a lot of people with no access to a 401K plan with their employer.  I think they should up the amount allowed in IRAs and set a maximum limit for all tax-preferred accounts combined instead. 

If I didn't have a 401K I'd be pissed.  Why should where you work determine how much of a break you can get on your taxes for saving for retirement? 

 Coming from someone who currently has no access to 401k through work, it really blows.

[CCL]

Oct 30, 2014 13:37:20 GMT -5 ArchietheDragon said:

Oct 30, 2014 13:36:26 GMT -5 CCL said:

Sounds good in theory, I suppose, but in reality it didn't work so well, at least with hubby's employer. People either contributed or they didn't. My husband certainly wasn't a muckitty-muck, lol. Many years we were limited to about $5000 in contributions and for some of those we couldn't put much in IRAs either.

The company is dropping the ball.  The rule is still good.    

Can you give an example of it working well? It seems to me if there is a maximum dollar contribution amount that still puts a limit on the "wealthy" without punishing people in the middle like us. There was no convincing the non-contributors anyway.

[ArchietheDragon]

Oct 30, 2014 13:42:23 GMT -5 CCL said:

Oct 30, 2014 13:37:20 GMT -5 ArchietheDragon said:

The company is dropping the ball.  The rule is still good.    

Can you give an example of it working well? It seems to me if there is a maximum dollar contribution amount that still puts a limit on the "wealthy" without punishing people in the middle like us. There was no convincing the non-contributors anyway.

Companies can get into safe harbors by contributing to employee's 401ks even if the employee does not contribute.    If upper management wants to take advantage of 401k deductions they can add these safe harbor contributions into their plan. 

[CarolinaKat]

Oct 30, 2014 13:45:35 GMT -5 ArchietheDragon said:

Oct 30, 2014 13:42:23 GMT -5 CCL said:

Can you give an example of it working well? It seems to me if there is a maximum dollar contribution amount that still puts a limit on the "wealthy" without punishing people in the middle like us. There was no convincing the non-contributors anyway.

Companies can get into safe harbors by contributing to employee's 401ks even if the employee does not contribute.    If upper management wants to take advantage of 401k deductions they can add these safe harbor contributions into their plan. 

The also can have 'opt out' vs 'opt in' because the same people who are too lazy to sign up for 401k are the same ones who are too lazy to redirect 3% of their pay out of the auto-deposit

[ArchietheDragon]

Oct 30, 2014 13:52:14 GMT -5 CCL said:

Oct 30, 2014 13:45:35 GMT -5 ArchietheDragon said:

Companies can get into safe harbors by contributing to employee's 401ks even if the employee does not contribute.    If upper management wants to take advantage of 401k deductions they can add these safe harbor contributions into their plan. 

Do you mean give $$ to lower level employees? Some places might do that if they can save $$ somewhere else. That never happened for us.

I mean contribute to everyone's 401k, regardless of whether they do or not. 

[TheHaitian]

Oct 30, 2014 13:32:17 GMT -5 ArchietheDragon said:

not just the upper muckitty-mucks. 

*runs to mirror to check himself out*

Nope still plain old Carl... Hey Archie you lied... I am not an upper muckitty-muck

*run away to cry*

[ArchietheDragon]

Oct 30, 2014 14:03:33 GMT -5 TheHaitian said:

Oct 30, 2014 13:32:17 GMT -5 ArchietheDragon said:

not just the upper muckitty-mucks. 

*runs to mirror to check himself out*

Nope still plain old Carl... Hey Archie you lied... I am not an upper muckitty-muck

*run away to cry*

You are stuck in the muckitty-muck. 

[NastyWoman]

Oct 30, 2014 12:07:51 GMT -5 minnesotapaintlady said:

I don't know why it matters if the limit is higher than you think you need. 

But, I don't think it's fair that people can put so much into a 401K, but not an IRA.  There are a lot of people with no access to a 401K plan with their employer.  I think they should up the amount allowed in IRAs and set a maximum limit for all tax-preferred accounts combined instead. 

If I didn't have a 401K I'd be pissed.  Why should where you work determine how much of a break you can get on your taxes for saving for retirement? 

 and to add insult to injury: even if you don't have a 401k at work you can still only save $5,500 in either an IRA or a Roth IRA.  While I with my 401k can max that out AND put money in a Roth IRA. Since I'm old that means I can and do save $29.5k before employer match of $4k and a one-time-only  additional match of $5k this year.
The $5k is a result of them freezing our pensions (did I mention we alsoused to have a contributory pension up until last year?) and as a sweetener for taking that away they were going to pay us an additional percentage to our 401k. That lasted all of 4 weeks after the announcement and then it became the one-time-only thing

[Bonny]

Oct 30, 2014 12:14:34 GMT -5 Ryan said:

Most gurus will say to maximize your retirement savings, so if you're doing up to the limits then you feel like you're doing your job.  Even though most people on here say they are maxing their 401k, I kinda doubt that many of them ACTUALLY are.  Or they haven't been doing it for that long or consistently.  I only say this because the retirement savings balances don't seem to jive with someone maxing out a 401k.

My employer is pretty generous and probably kicks in $6K per year and I can put in $17,500.  We have a business in my wife's name so she can put in $17,500 there plus 25% of her salary as profit sharing (max $51K) for an additional $12K.  And since she's a teacher, she has a pension where she contributs 10% of her salary.  So all in all, I can contribute $53K and, if I get my income down enough, more towards a ROTH.

I'm 36 and have about 400K saved plus my wife has 12 years into a state pension.  I'm not worried about retirement in the least since I know it'll only pick up from here on out.

The only thing that holds me back is having to pay penalties in case I need the money out of a retirement account.  I have reserves, but you never know what could happen.  

Does your wife have access to a 457 plan? One she separates from service she can access the money penalty (but not tax) free.