WWYD- Husbands craptastic 401k plan - Early-Retirement.org

WWYD- Husbands craptastic 401k plan

Yesterday, 04:19 PM	? #1
Recycles dryer sheets ? Join Date: Apr 2012 Location: San Diego Posts: 307	WWYD- Husbands craptastic 401k plan My husband works for a firm that is based in another state. He's the only employee in this state. They offer a 401k to employees who have been there a year. They offer a match of $1 for every $1 up to $1000/year. That all sounds good. Up till now, since he's worked for small firms, he's just been doing IRAs w/catchup... And I've born the brunt of the tax advantaged savings by maxing my 401k and catchup. The problem with the 401k he's being offered - it's 100% full of load funds. The loads vary from 5.75% (stock funds) to 3.75% (bond and/or money market funds.) I think the $1k/year match is still worth it... And if he participates in the 401k, he can't do the IRA. So I told him to do $6k /year into the 401k, and any money left over can go into taxable savings (same as before.) I suggested he put it in the bond fund - and I'll adjust my asset allocation to account for this 100% bond allocation on his side. I just can't see giving up 5.75 cents for every dollar to loads. It's bad enough giving up almost 3.75 cents/dollar. Should we have just stayed with IRA? FWIW - he's retiring in Jan 2014... so we only have to deal with this craptastic plan for 1 year. ' + '?' + google_ads[i].line2 + '?' + google_ads[i].line3 + '?' + '' + google_ads[i].visible_url + ' '; } } '' } if (google_ads[0].bidtype == "CPC") { /* insert this snippet for each ad call */ google_adnum = google_adnum + google_ads.length; } document.write(s); return; } google_ad_client = 'ca-pub-7757781251671730'; google_ad_channel = '3711355403'; google_ad_output = 'js'; google_max_num_ads = '6'; google_ad_type = 'text'; google_feedback = 'on'; // --> __________________
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Yesterday, 04:25 PM	? #2
Moderator ? Join Date: Jan 2008 Location: Chicagoland! Posts: 8,246	My husband works for a firm that is based in another state. He's the only employee in this state. They offer a 401k to employees who have been there a year. They offer a match of $1 for every $1 up to $1000/year. That all sounds good. Up till now, since he's worked for small firms, he's just been doing IRAs w/catchup... And I've born the brunt of the tax advantaged savings by maxing my 401k and catchup. The problem with the 401k he's being offered - it's 100% full of load funds. The loads vary from 5.75% (stock funds) to 3.75% (bond and/or money market funds.) I think the $1k/year match is still worth it... And if he participates in the 401k, he can't do the IRA. So I told him to do $6k /year into the 401k, and any money left over can go into taxable savings (same as before.) I suggested he put it in the bond fund - and I'll adjust my asset allocation to account for this 100% bond allocation on his side. I just can't see giving up 5.75 cents for every dollar to loads. It's bad enough giving up almost 3.75 cents/dollar. Should we have just stayed with IRA? FWIW - he's retiring in Jan 2014... so we only have to deal with this craptastic plan for 1 year. Crapastic! What a great word. Very descriptive. Even though you are paying excessive fees, for the $1000 you put in you get an immediate additional $885 - the employer match minus all the fees. Grit your teeth and do it. When he leaves, roll it over into an IRA. ' + '?' + google_ads[i].line2 + '?' + google_ads[i].line3 + '?' + '' + google_ads[i].visible_url + ' '; } } '' } if (google_ads[0].bidtype == "CPC") { /* insert this snippet for each ad call */ google_adnum = google_adnum + google_ads.length; } document.write(s); return; } google_ad_client = 'ca-pub-7757781251671730'; google_ad_channel = '3568142076'; google_ad_output = 'js'; google_max_num_ads = '6'; google_ad_type = 'text'; google_feedback = 'on'; // --> __________________ It's not the cards you're dealt in life but what you do with them that matters
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Yesterday, 04:36 PM	? #3
Recycles dryer sheets ? Join Date: Apr 2012 Location: San Diego Posts: 307	Actually our plan is to have him put $6000 in. That's what would go into an IRA. He isn't allowed to do both a traditional IRA and a 401k. His employer is relatively small - around 50 people. But they're all highly educated... you'd think they'd want to avoid the fees. Not sure if it's possible to get a no-load 401k plan set up for 50 employees or less. __________________
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Yesterday, 05:42 PM	? #8
Recycles dryer sheets ? Join Date: Apr 2012 Location: San Diego Posts: 307	Hmm. I thought we were above the income caps for Roth. That turbo tax calculator suggests other wise. Off to go read some more. __________________
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Today, 01:45 AM	? #19
Dryer sheet aficionado ? Join Date: May 2012 Posts: 46	If your husband is 59 1/2 of age, can't he transfer his money out to an IRA ? I would leave a small amount and capture the company's match of $ 1K. I know this is an early retirement forum, so you and he maybe alot younger than the 59.5.... __________________
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Today, 05:27 AM	? #20
Recycles dryer sheets ? Join Date: Jun 2012 Location: Austin Posts: 77	You may not be able to deduct it, but as I understand it, you can still contribute, and the earnings from that point on are still tax-deferred. I've always wondered about this myself, since we both contribute the max to our 401(k)s and our household income exceeds the amount that would allow us to contribute to individual retirement accounts outside of those company 401(k)s. But if that limitation is only for "tax deductable" contributions and still allows after-tax dollars to be contributed, is there a maximum of after-tax dollars that can be contributed each year and does it make financial sense to do that instead of putting the money into regular after-tax investment accounts? ' + '?' + google_ads[i].line2 + '?' + google_ads[i].line3 + '?' + '' + google_ads[i].visible_url + ' '; } } '' } if (google_ads[0].bidtype == "CPC") { /* insert this snippet for each ad call */ google_adnum = google_adnum + google_ads.length; } document.write(s); return; } google_ad_client = 'ca-pub-7757781251671730'; google_ad_channel = '2895579729'; google_ad_output = 'js'; google_max_num_ads = '6'; google_ad_type = 'text'; google_feedback = 'on'; // --> __________________
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