schildi
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Post by schildi on Oct 30, 2014 21:19:33 GMT -5
Never thought about this, but among all retirement accounts (401k / Roth / HSA we will end up stashing away almost $50,000 this year. That does not include my company's contribution. Wow. Yes, that is quite a bit.
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schildi
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Post by schildi on Oct 30, 2014 21:20:34 GMT -5
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. Our company does that, but the money does not go directly into the 401(k), it's a separate account.
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schildi
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Post by schildi on Oct 30, 2014 21:22:08 GMT -5
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 I agree. It does not make sense that how much you can contribute depends on you employer.
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ArchietheDragon
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Post by ArchietheDragon on Oct 30, 2014 21:44:00 GMT -5
I mean contribute to everyone's 401k, regardless of whether they do or not. Our company does that, but the money does not go directly into the 401(k), it's a separate account. what kind of account does it go into?
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Deleted
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Post by Deleted on Oct 30, 2014 21:54:15 GMT -5
For those that didn't see the other thread I am the evil doer suggesting the limits when you are able to max a 401k/IRA/HSA are too high.
I'm becoming more convinced it is a "total" cap that's needed versus a yearly one. The main point of my argument is I believe the gov is trying to encourage retirement savings to the point that someone has enough not to have to rely on any financial assistance at the end of their lives and after someone has that there isn't any benefit to society to give them tax breaks to save even more. I do struggle with what that number would be given all of the variables. I just know after maxing everything for 5 years and with the intent of continuing to do so it appears I will have way more than I need in retirement and at this point I'm getting subsidized by the gov to become rich.
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schildi
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Post by schildi on Oct 30, 2014 22:25:18 GMT -5
Our company does that, but the money does not go directly into the 401(k), it's a separate account. what kind of account does it go into? It's an account similar to the 401k (tax free contributions, taxed when it comes out only), just separate and I have no control over how it's invested. It is in a moderate allocation mix. It does not matter whether I max the 401(k) or put in $0, the company will fund that account the same. Once I retire or leave, the amount in the account can be rolled over into the 401(k) or an IRA. It will be used also to be translated into an annuity, and if a certain minimum pension is not met, then the company will make up the difference. Quite involved.
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cronewitch
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Post by cronewitch on Oct 31, 2014 0:35:32 GMT -5
For those that didn't see the other thread I am the evil doer suggesting the limits when you are able to max a 401k/IRA/HSA are too high. I'm becoming more convinced it is a "total" cap that's needed versus a yearly one. The main point of my argument is I believe the gov is trying to encourage retirement savings to the point that someone has enough not to have to rely on any financial assistance at the end of their lives and after someone has that there isn't any benefit to society to give them tax breaks to save even more. I do struggle with what that number would be given all of the variables. I just know after maxing everything for 5 years and with the intent of continuing to do so it appears I will have way more than I need in retirement and at this point I'm getting subsidized by the gov to become rich. A total cap would need to be high since it takes a lot to retire. We all think of 4% return so saving a million gives you 40K on top of SS. Many people don't trust the stock market so will be putting the money in the bank making maybe 1% so saving a million isn't nearly enough for a single but 2 million might be enough for a couple. I ended up retiring with about 700K in retirement accounts but had a couple more hundred thousand in taxable accounts. Would you say then I couldn't have as much in retirement since my net worth was more? To not need financial assistance if you retire without a house or any other income you might need 60K just for an apartment, food, medical insurance and transportation so after deducting SS of say 15K you would need income of 45K. If you had a paid off house and taxable investments of a few hundred thousand you might not need retirement accounts at all, if you have a pension or inherit money you might not need retirement accounts.
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Deleted
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Post by Deleted on Oct 31, 2014 6:55:25 GMT -5
For those that didn't see the other thread I am the evil doer suggesting the limits when you are able to max a 401k/IRA/HSA are too high. I'm becoming more convinced it is a "total" cap that's needed versus a yearly one. The main point of my argument is I believe the gov is trying to encourage retirement savings to the point that someone has enough not to have to rely on any financial assistance at the end of their lives and after someone has that there isn't any benefit to society to give them tax breaks to save even more. I do struggle with what that number would be given all of the variables. I just know after maxing everything for 5 years and with the intent of continuing to do so it appears I will have way more than I need in retirement and at this point I'm getting subsidized by the gov to become rich. So I don't know what other thread you are referring to. What makes you think you are "getting subsidized by the gov to become rich"? You'll likely pay plenty of taxes when you withdraw the money and/or when you/your heirs eventually spend it. Are you young? I don't mean any offense to you, but you seem a bit naive. You are not really getting something for nothing. It will be taxed one way or another. Maybe not via an income tax, but might be by a reduction in benefits or means testing for Social Security or an inheritance tax at some point. You don't have to agree with me but your argument loses a lot of credibility when you break out the name calling (I don't mean any offense before it doesn't make it any less so). We contribute fully to the Roth 401k/IRA. All of the gains from those accounts will never have income tax paid on them and what could be for many decades. That is what makes me think we are getting subsidized to become rich, we won't end up with a couple million, but 7-8 million in today's dollars if my current projections play out.
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ArchietheDragon
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Post by ArchietheDragon on Oct 31, 2014 7:08:00 GMT -5
what kind of account does it go into? It's an account similar to the 401k (tax free contributions, taxed when it comes out only), just separate and I have no control over how it's invested. It is in a moderate allocation mix. It does not matter whether I max the 401(k) or put in $0, the company will fund that account the same. Once I retire or leave, the amount in the account can be rolled over into the 401(k) or an IRA. It will be used also to be translated into an annuity, and if a certain minimum pension is not met, then the company will make up the difference. Quite involved. Do you know what it is called? I am interested.
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Deleted
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Post by Deleted on Oct 31, 2014 7:10:21 GMT -5
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Miss Tequila
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Post by Miss Tequila on Oct 31, 2014 7:27:51 GMT -5
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. What sucks is that you can't force all employees to participate. To encourage participation, we have an automatic 2% deferral that employees have to elect out of (people are lazy so those that wouldn't normally contribute don't get around to actually electing out). But then the majority of the loans are to lower level people that really should be worried about retirement.
Because of the generous contribution that my employer makes, we are all safe harbored except the two officers of the company. And we had a plan design meeting yesterday (we are being sold and need our own plan) and are devising the new plan so that even the officers are safe harbored....but that will do nothing to get people to take responsibility for their retirement.
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Miss Tequila
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Post by Miss Tequila on Oct 31, 2014 7:29:28 GMT -5
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. That is what my company does. Everyone gets 4.5% contribution and then an additional match. So most of us HCE are safe harbored but not the two officers. We didn't know that until yesterday's meeting so our new plan will meet all of the safe harbor rules (the only thing we are missing is mandatory communication).
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Miss Tequila
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Post by Miss Tequila on Oct 31, 2014 7:31:46 GMT -5
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. This is a money board...I would assume that we have higher than average incomes and higher than average investments. I'm guessing most of us on here actually ARE maxing out...
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ArchietheDragon
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Post by ArchietheDragon on Oct 31, 2014 7:32:54 GMT -5
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. This is a money board...I would assume that we have higher than average incomes and higher than average investments. I'm guessing most of us on here actually ARE maxing out... I would not guess that. It takes a lot of money to max out. A lot.
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Post by Deleted on Oct 31, 2014 7:51:13 GMT -5
This is a money board...I would assume that we have higher than average incomes and higher than average investments. I'm guessing most of us on here actually ARE maxing out... I would not guess that. It takes a lot of money to max out. A lot. $17,500 per person.....and at the tax bracket that the majority of people on this board are in, that's a nice tax savings.
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ArchietheDragon
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Post by ArchietheDragon on Oct 31, 2014 7:55:35 GMT -5
I would not guess that. It takes a lot of money to max out. A lot. $17,500 per person.....and at the tax bracket that the majority of people on this board are in, that's a nice tax savings. Maybe I just underestimate the amount of money people make on this board. I think that DW and I make a pretty good combined salary, but it would take us saving 31% of our income to max out retirement savings. we just can't swing that.
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Deleted
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Post by Deleted on Oct 31, 2014 7:59:57 GMT -5
$17,500 per person.....and at the tax bracket that the majority of people on this board are in, that's a nice tax savings. Maybe I just underestimate the amount of money people make on this board. I think that DW and I make a pretty good combined salary, but it would take us saving 31% of our income to max out retirement savings. we just can't swing that. 31% of your combined gross income?
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ArchietheDragon
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Post by ArchietheDragon on Oct 31, 2014 8:02:56 GMT -5
Maybe I just underestimate the amount of money people make on this board. I think that DW and I make a pretty good combined salary, but it would take us saving 31% of our income to max out retirement savings. we just can't swing that. 31% of your combined gross income? yes
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Deleted
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Post by Deleted on Oct 31, 2014 8:03:11 GMT -5
I would not guess that. It takes a lot of money to max out. A lot. $17,500 per person.....and at the tax bracket that the majority of people on this board are in, that's a nice tax savings. You're not including IRA. A couple would have to put away 46K/year. I'll bet most here aren't doing that.
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ArchietheDragon
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Post by ArchietheDragon on Oct 31, 2014 8:04:22 GMT -5
$17,500 per person.....and at the tax bracket that the majority of people on this board are in, that's a nice tax savings. You're not including IRA. A couple would have to put away 46K/year. I'll bet most here aren't doing that. Right, until you make too much to contribute to an IRA (ignore backdoor), then it becomes easier to max! ; )
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Deleted
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Post by Deleted on Oct 31, 2014 8:06:11 GMT -5
$17,500 per person.....and at the tax bracket that the majority of people on this board are in, that's a nice tax savings. You're not including IRA. A couple would have to put away 46K/year. I'll bet most here aren't doing that. IRA holds no tax advantage for me.
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TheHaitian
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Post by TheHaitian on Oct 31, 2014 8:14:14 GMT -5
31% of your combined gross income? yes What are we talking about here? 401k 401k + ROTH 401k + ROTH + HSA I think on this board different people have different views on what maxing truly is.
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thyme4change
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Post by thyme4change on Oct 31, 2014 8:14:42 GMT -5
Are the limits too high?
Depends on what you are trying to accomplish.
- Encouraging everyone to save a little, so the number of people who are dead broke is smaller
- Encouraging anyone to save as much possible, so the public resources can go to the broke people and those that planned well can take of themselves
- Making sure the government doesn't defer so much tax revenue that the country can't function today
- Setting a limit that gives most people a chance to have a lot of money, but the wealthy can't put millions out of reach
- Having a limit that makes people "feel good" about their contributions
I think it is a balance. However, I do think there should be one max number, and that is the amount you can defer no matter what kind of account it is. Enough of this $5k here, $6k there, $2k there, etc.
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ArchietheDragon
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Post by ArchietheDragon on Oct 31, 2014 8:15:07 GMT -5
What are we talking about here? 401k 401k + ROTH 401k + ROTH + HSA I think on this board different people have different views on what maxing truly is. IMHO an HSA is not a retirement account. It is a medical savings accounts.
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TheHaitian
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Post by TheHaitian on Oct 31, 2014 8:16:59 GMT -5
You're not including IRA. A couple would have to put away 46K/year. I'll bet most here aren't doing that. IRA holds no tax advantage for me. Even ROTH IRA's? My company offers ROTH 401k and if it wasn't for the tax advantage of a 401k that we need right now I would definitely consider the ROTH 401k. Maybe down the road: 18k/year to grow tax free .... Oh Lordy! A good way to diversify your holdings...
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Deleted
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Post by Deleted on Oct 31, 2014 8:17:36 GMT -5
What are we talking about here? 401k 401k + ROTH 401k + ROTH + HSA I think on this board different people have different views on what maxing truly is. good point.....I max my 401k ($17500, catch up contributions start in 2015) and my HSA.
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Deleted
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Post by Deleted on Oct 31, 2014 8:18:51 GMT -5
IRA holds no tax advantage for me. Even ROTH IRA's? My company offers ROTH 401k and if it wasn't for the tax advantage of a 401k that we need right now I would definitely consider the ROTH 401k. Maybe down the road: 18k/year to grow tax free .... Oh Lordy! A good way to diversify your holdings... I just started contributing to roth 401k but it's not pre-tax so it doesn't lower my taxable income
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Deleted
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Post by Deleted on Oct 31, 2014 8:19:47 GMT -5
You're not including IRA. A couple would have to put away 46K/year. I'll bet most here aren't doing that. IRA holds no tax advantage for me. A Roth wouldn't now but you'd love it in retirement. It's still part of maxing retirement savings options.
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TheHaitian
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Post by TheHaitian on Oct 31, 2014 8:21:59 GMT -5
I think that where AJ is coming from: both his wife and him are doing the ROTH 401k + ROTH.
So all that money when thy withdraw it is tax free and they don't have to worry about it.
Off course he is paying the tax now to be able to invest that money so it is definitely not tax free. But I can see where some would feel the government is substituting them to be able to be rich when the retire.
7-8 Million in today dollars that the government cannot touch is A LOT!
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TheHaitian
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Post by TheHaitian on Oct 31, 2014 8:23:27 GMT -5
We contribute fully to the Roth 401k/IRA. All of the gains from those accounts will never have income tax paid on them and what could be for many decades. That is what makes me think we are getting subsidized to become rich, we won't end up with a couple million, but 7-8 million in today's dollars if my current projections play out. Oops, forgot to quote him!
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