Company 401k Plans
- TZ57
- mdorsey
- SteveT
- GES27
- SteveT
- CaptRon
- Chgo
- SteveT
- Jen_
- mnovak13
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» TZ57 - Re: Limit my contribution
Two main reasons.Prior to 2002 employer's could only deduct 15% of net compensation on their corporate tax return. The 15% deduction was further reduced by 401(k)deferrals. Starting in 2002 the limit goes up to 25%, employer's use gross compensation instead of net compensation, and 401(k) deferrals no longer count against the corporate deduction.
The 25% of pay or $35,0000 you reference is called the "415 Limit". All contributions made during the year count against the limit. For example, say you contribute 15% from your check, your plan matches 50% up to 6% of compensation and you receive an annual profit sharing contribution of 8%. You would be at 26% (15+3+8). If your over the limit you will likely receive a refund of your deferals. In 2002 the limit goes to the lesser of 100% of pay or $40,000.
Bottom line is that starting in 2002 employer's will have less incentive to restrict 401(k) contributions.
-- posted by TZ57
» mdorsey - Not sure where this belongs. A good read.
Thank you for recommending this post to our Best of feature.I have been a little frustrated with the content of this board lately (when did this become the libertarian board instead of the REHP board??). I was about ready to delete this board from my favorites, but I decided to go back and read some old posts to get myself geared up for the big push for investing and saving for retirement this year, as I have come to the conclusion that I must retire early as I hate work. Hate it, hate it.
Anyway, decided not to delete this board after going back and reading these oldies but goodies. They gave me some great inspiration this afternoon, and I think they will continue to inspire me in the coming year.
Hocus's "10 mental exercises leading to freedom"
http://boards.fool.com/Message.asp?mid=1...
Hocus's "The High Cost of Flattery"
http://boards.fool.com/Message.asp?mid=1...
Hocus's "Unwritten Rules of Wage Slavery"
http://boards.fool.com/Message.asp?mid=1...
Hocus, where have you been lately??
Ziggy29's "Letting the Joneses Win"
http://boards.fool.com/Message.asp?mid=1...
Hanson001's "Anatomy of an Early Retirement"
http://boards.fool.com/Message.asp?mid=1...
SunQuing's "Retire Early Story"
http://boards.fool.com/Message.asp?mid=1...
Some food for thought from past years to consider as we enter the New Year.
Janet
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-- posted by mdorsey
» SteveT - Re: Re: Limit my contribution
In response to message posted by TZ57:Thanks for the good news! Do you have a source for the info? My plan only allows the employee to contribute 16% with a 4% match. I would like to raise it to 21% with the same 4% match. If I had the info in hand to show the boss it would make my task easier. Thanks again.
-- posted by SteveT
» GES27 - Re: Contribution Limits
Unfortunately I've joined the ranks of the HCE and my contributions have been capped at 6%. This is very disappointing. I no longer get to take advantage of the full $11K contribution. What can my company do get more of the lower paid group to contribute to the plan? What can I do express my displeasure with the plan?-- posted by GES27
» SteveT - Re: Re: Limit my contribution
In response to message posted by TZ57:I final got around to check on this and found some information. I am all for anything to raise contributions. For those not making in excess of $44,000 and have had limits under 25% this may help you persuade the boss to allow higher contributions. Scroll down near the bottom of the page to Employer Deductible Contribution Limit
http://401k.mpower.com/commentary/featur...
May not apply to all but every little bit helps.
-- posted by SteveT
» Chgo - Re: Individual 401 k
In response to message posted by CaptRon:Ron, thanks a million for the link. I've been searching for weeks
for this. Nobody seems to know about it. (even Bob got a call about it,
late Sat). Here's another link, but not as "useful".
http://www.pioneerfunds.com/uni_k/home.j...
I can't find any of the "majors" offering this, i.e. Vanguard, T.Roe, Fidelity, etc.
-- posted by Chgo
» SteveT - How to Fix Your 401
http://story.news.yahoo.com/news?tmpl=st...How to Fix Your 401
Sun Jul 21, 9:47 AM ET
By Linda Stern
WASHINGTON (Reuters) - Market gyrations have some people worried that we are back to working until we are 90 years old and eating cat food thereafter. It's not quite that grim, but those 401(k) statements are certainly a lot more depressing than they used to be.
Three years of sliding stock prices and corporate blowouts have hurt soon-to-be retirees, and those still decades away from retirement are plenty worried, too.
But most 401(k) savers still have more control -- and more money -- than their parents had at comparable ages. And the current market mess offers savers and investors an opportunity to tune up their retirement plans so that they will be better situated when its time to grab the gold watch and run.
Here's how to fix your 401(k) now:
-- First, get some perspective. If you've lost a lot of money this year, it's probably only because you made a lot in 1998 and 1999.
Self-fed and directed retirement accounts, such as 401(k) plans, still offer more autonomy for workers than did many traditional pension plans, which had their own scandals and the like. There may be less of it, but it's still your money.
-- Stay in stocks. The nearer you are to needing your 401(k) money, the less of it should be tied up in stocks. But remember that even if you are retiring next week, you have a decades-long need for money. The stock market will come back eventually, and when it does, you'll want to be there. Investors hurt themselves more by being out of the market during rebounds than they do by being in the market during sell-offs. And, if you haven't sold yet, you're too late.
-- Temper those stock market risks with bonds and real estate, dividend-paying stocks, foreign stocks and different kinds of stocks.
This is basic portfolio theory: If your portfolio is truly diversified among all types of investments, you'll never lose too much in any one year. Rebalance your 401(k) at least once a year to make sure various types of investments are all represented. This year, that might mean that you sell some bond and real estate funds and add more stock funds.
Over time, this technique will have you buying low and selling high, despite your more typical inclinations.
-- Raise your contribution. If you can do this, it accomplishes two things. It makes up for some of the money you've lost. And it positions you for the recovery. You can never time the bottom or top of the market. But it certainly stands to reason that shares are much cheaper today than they were two years ago, when you didn't have any trouble continuing to invest.
Buy at today's prices, try to ignore tomorrow's and sell in 10, 20 or 30 years. You'll do very well.
-- Clean out that company stock, if you haven't already. Even Enron hasn't taught everyone about the hazards of too much company stock. Yours should not make up more than 10 percent (at the most) of your retirement plan. If you've got too much of it and you can sell it, do so.
-- Cut your fees. Mutual fund fees were important back when you were earning 20 percent a year on your money, but they are even more important now that you're losing money. The bulk of your 401(k) stock market money should be in a fund that charges less than 1 percent a year. Unfortunately, some employers have traded off low costs for themselves against high fees for their employees. If your 401(k) account doesn't offer a low-cost stock index fund that can be the core of your account, ask your boss why not. Fees matter even more in bond funds.
Average annual expense charges for a no-load intermediate bond fund run at 0.67 percent, according to Morningstar.
-- Balance your view of retirement. Remember that your 401(k) is only a piece of your retirement, and not the biggest piece. While you're rebuilding your company retirement fund, try to build equity in your house, cut down on your debt and think of ways to earn a little money after you retire from your big full-time job.
(Linda Stern is a freelance writer who covers personal finance issues for Reuters. Any opinions in the column are solely those of Ms. Stern.)
-- posted by SteveT
» Jen_ - The Aunt & the Grasshopper
<img src="/files/mysites/jen14/ant-grasshopper.gif" width=472 height=364>http://seattlepi.nwsource.com/horsey/
....Jen
-- posted by Jen_
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