Questions tagged [401k]

A 401(k) account is a tax-deferred retirement savings account setup by many employers for their employees in the United States. Employees can elect to contribute part of their earnings - either pre-tax or after-tax - to their 401k account and the employer will often make a matching contribution for a portion of it. The before-tax and/or after-tax contributions are subject to yearly limits set by the IRS. Related to the 403b and Thrift Savings Plan (TSP)

Filter by
Sorted by
Tagged with
57
votes
11answers
7k views

Should you always max out contributions to your 401k?

I am a year out of college, and therefore, i don't have any real retirement/investment plans kicked off. I was having a discussion with my boss, and he was making a few claims I would like to get ...
51
votes
2answers
8k views

When is employer 401(k) match not worth it?

I have always read to take full advantage of your employer 401(k) match. But what if the match is lower than most? My employer will match 10% of my contributions, up to the legal contribution limit. ...
49
votes
4answers
6k views

Recent graduate with new job: Choose Roth 401(k), or traditional 401(k)?

I just graduated, and I'm starting a new job soon. My employer has pretty good policy for matching 401(k) contributions, so I want to invest as much as possible, especially during this first year. My ...
41
votes
4answers
6k views

Justification for aggressive investment strategy when young?

I've frequently heard that the conventional wisdom is to be invested in an 'aggressive' investment strategy when young, and as you approach retirement age, migrate to a more conservative strategy. ...
38
votes
4answers
8k views

What is the logic behind a 50% of X% 401(k) contribution match?

In the situation where an employer is contributing a match to a 401(k), apparently a common formula is to match 50% of employee contributions up to a percentage of their salary. I have also seen this ...
38
votes
4answers
10k views

Why is there a cap on 401k contributions?

In theory, the government wants everyone to save up as much as possible for retirement so that citizens don't end up starving when they're no longer able to work. But in practice there is a limit of ...
32
votes
4answers
3k views

Started new job. Rollover previous employer 401k to new 401k, IRA or Roth IRA?

I recently started a new job and have a 401k from my previous employer that I don't know what to do with. Should I roll it into my new employer's 401k, a traditional IRA or a Roth IRA?
31
votes
4answers
13k views

Why should I invest so much in 401(k)?

I am 24 yrs old and am making $60,000/yr while saving ~41% of that. 28% of which is going to my Roth 401(k) and the rest is going into a TD Ameritrade and a small amount into a Robinhood account (both ...
31
votes
6answers
4k views

Is it ever logical to not deposit to a matched 401(k) account?

In a recent question Should I dump my savings into my student debt?, there was push back from a member regarding the strong advice to save to the match. Is there ever a time to not deposit to the ...
30
votes
6answers
13k views

Is putting money in a 401(k) plan risky?

I've been working for a company that offers me a MassMutual 401(k) plan as a benefit. The employer's match is 50% of my contribution. I've contributed 3% of my gross salary to the plan, and planning ...
28
votes
3answers
1k views

Do traditional and Roth 401k have the same annual contribution limit?

According to everything I can find, the annual contribution limit for both traditional and Roth 401k is the same ($16500 in 2010). Since the Roth is post-tax, doesn't that mean I can save more for ...
27
votes
6answers
6k views

Ideal net worth by age X? Need comparison references

Is there a website resource that gives suggestions for how much savings or net worth I should have at any given age, based on my education level and salary? I'm in my 30s, have no debt, and have been ...
26
votes
6answers
7k views

Does borrowing from my 401(k) make sense in my specific circumstance?

I know the standard answer and understand that I will be losing out on that compound interest, but I am young and only need to borrow a few thousand. here are some more details: Need to borrow $6500 ...
25
votes
10answers
15k views

How can I protect my 401(k) when the stock market is performing badly?

I just opened my 401(k) at the beginning of 2017. In 2017 it did great because of the bull market, but since 2018 I've lost about $1,000. All of my contributions this year have been a complete waste. ...
25
votes
4answers
20k views

Have I saved too much for retirement so far?

I currently have a roth ira as well as a 401k from fidelity. I have around 350k in my 401k and another 10k in my Roth IRA. I just turned 40 recently. Am I saving too much for retirement and should I ...
25
votes
11answers
9k views

Is 401k as good as it sounds given the way it is taxed?

I contribute full 18 to my 401k thinking I am letting my money grow untaxed for such a long time. However, looking at how 401k is taxed when I pull the money out, it does not sound like a great deal ...
25
votes
3answers
6k views

If I switch jobs to a lower tax bracket right before I retire, do I save on 401k taxes?

I'm curious about how your withdrawal tax bracket is determined for your 401k Here are the scenarios: A) Let's say I am making $100,000-$200,000 per year for my whole career with a Traditional 401k. ...
25
votes
7answers
40k views

Can my employer limit my maximum 401k contribution amount (below the IRS limit)?

I contribute about 13% of my income to my company's 401k, which, at my salary, is well below the IRS limit of $17K/year (in 2012). However, with my raise this year, my benefits department told me that ...
24
votes
5answers
16k views

401(k) investment after being fired. Do I own it?

A friend was released from their job after 4 years, not vested. I understand 5 years are required to be vested. Are they entitled to the contributions they made to the 401(k)?
24
votes
5answers
8k views

Who gets the interest on a 401(k) loan?

I was looking at some information about my 401(k) and noticed that it's possible to take out a loan from your 401(k) - it was something like 6.5% interest, which probably isn't as good as a ...
24
votes
10answers
3k views

Any experience with maxing out 401(k)?

I'm 23 right now, and I'm currently contributing about 6% of my salary to a 401(k) with an employer that matches 20% of my contribution up to 6%. Based on various calculators, continuing at this rate ...
24
votes
7answers
7k views

Should I stop contributing to retirement accounts, and instead focus on expanding our real estate investments?

My wife and I are in our later 30s and make about $100,000 per year from salary. We also net about $40,000 from rental properties that we have purchased over the past several years. Our essential ...
23
votes
7answers
2k views

401(k) Contribution When Employer Has No Match?

Long time lurker, first time asker here. I've seen some similar questions to mine here, but nothing exactly in the same circumstance. I've seen almost near-consensus that the ordering for investing ...
22
votes
4answers
5k views

Would it be advantageous for me to pay off these two credit cards and cancel them with a 401k loan?

I'm considering taking a loan on my 401k in order to pay off and close 2 credit cards. I have approximately 30 years until I consider retiring. The amount of the loan will be $1700 which is less ...
22
votes
3answers
814 views

Why is there such disparity of max contribution limits between 401K accounts and regular IRA accounts?

In 2011, regular IRA accounts allowed only $5,000 maximum contribution, while 401K accounts allowed up to $16,500. Why is there such a disparity? Why do tax advantages favor employees of large ...
21
votes
3answers
6k views

Laid off at age 54 1/2, am I eligible to withdraw my 401k money without penalty?

I will be turing 55 this year in November. I got laid off 2 weeks ago (April 4, 2016). I worked in New York City and live in NJ. Can I withdraw my 401k without penalty?
21
votes
1answer
3k views

How to invest after 401k and Roth IRA are maxed?

I'm in my 20's. I'm a big saver and I think I've covered the basics, including: Paying off all high interest (>3%) debt. Getting the full company match out of my 401k. Maxing out my Roth IRA for the ...
20
votes
4answers
3k views

Is it better to use a 401k loan to make a down payment or to put less than 20% down?

I'm about to buy a house and am considering two options: Make a 12% down payment and pay for mortgage insurance Take out a 401k loan and make a 20% down payment I'm having a hard time finding ...
19
votes
4answers
8k views

Is it true that you can have too much money in 401k?

I've been hearing stories about people who invested a lot into their 401k and when they retired, they couldn't use the money fast enough. They said that there's a limit in terms of how much they can ...
19
votes
5answers
1k views

How much should I be contributing to my 401k given my employer's contribution?

I realize that this is similar to at least one question here, however, there are some differentiators. I can contribute a max of 5% of my net salary to the 401k fund. The employer matches 50% of ...
19
votes
8answers
8k views

As a 22-year-old, how risky should I be with my 401(k) investments?

As a 22 year old guy, how should I plan my financial life regarding my 401(k) investments? How much risk should I be taking? Also, is it a good idea to invest in a dynamic portfolio with smart beta ...
19
votes
4answers
22k views

Can I roll over a 401(k) with my current employer into an IRA?

My wife has a 401(k) with her employer that she has been contributing to for years. They recently switched administrators for the 401k, and the new outfit is simply terrible - bad fund choices and ...
18
votes
2answers
2k views

Special Needs Trust and Financial Planning

update: I may not have explained it clearly in my post below but I don't believe the intent is to close out the 401k or fund the life ins. policy using it. I will clarify with the consultant what the ...
18
votes
3answers
763 views

Quit my job: What can/should I do with funds in previous employer's 401(k) plan?

I recently changed jobs, and my previous employer offered a 401k. I know I can roll that money into an IRA. Before I do anything, I would like to understand what options I have, and which option is ...
17
votes
8answers
6k views

I have $3500 in Rollover IRA. Should I withdraw it early and pay off my credit card debt?

I have been investing a healthy amount in my current 401k with no plan to withdraw it early. I have $3,500 in a rollover IRA which has been sitting in there for about 4 years and I have done nothing ...
17
votes
11answers
10k views

Is your future tax bracket the ONLY consideration for Roth vs Traditional 401(k) accounts?

I understand that Roth contributions get taxed on the way in. Income tax now at whatever tax brackets currently apply, no tax to pay when I take distributions at retirement. I understand regular pre-...
17
votes
8answers
944 views

Pay off credit card debt or earn employer 401(k) match?

Should a person with high credit card debt pay it off before contributing to a 401(k) with matching?
17
votes
6answers
14k views

Why do some companies offer 401k retirement plans?

Why do companies offer 401k (or other) retirement plans? Let me elaborate this... I understand that it could be part of an employee's benefits and that a retirement plan option might increase the ...
17
votes
4answers
3k views

Confusion about Roth 401K: Better for me to do pre-tax or Roth post-tax contributions?

My company offers a 401K and a Roth 401K. Given the income level of my family (married filing jointly status), IRAs aren't really an option. We're past the Roth IRA limits and get no deduction for a ...
17
votes
3answers
3k views

Why would you not want to rollover a previous employer's 401(k) when changing jobs?

Are there any valid reasons to not rollover a former 401(k) when changing jobs? I have several little ones that I never quite got around to rolling together - with an upcoming job change, should they ...
17
votes
6answers
5k views

New company doesn't allow 401k deposits for 6 months, what to do with money I used to deposit?

I plan on taking a new job that does not allow employee 401k contributions for the first 6 months. I am used to maxing out my 401k, and this seems like a dangerous amount of money that I don't want ...
17
votes
1answer
748 views

Employer time requirements to transfer from paycheck to 401(k)

Are there any rules or requirements as to a time frame of when money is removed from a paycheck and when the money is posted into a retirement account? My current 401(k) receives funds from my ...
16
votes
3answers
8k views

Want to retire at 55, but 401(k) starts paying at 59.5 years old

Right now, I am on my late 20's, and I have this plan on retiring at 55 years old, instead of the usual retirement age of 62. For this, I plan to save money enough to cover my expenses from the day of ...
16
votes
3answers
4k views

401k match for extremely high income earners

What happens if the percentage of you salary your company requires you to contribute to a 401k in order to receive your full match is greater than the 18k 401k limit? For example say you make $1,000,...
16
votes
2answers
7k views

Accidentally cashed out 401k instead of rolling it into an IRA. What do i do?

I've recently changed jobs (past two weeks) from an employer with a 401k to a new employer who does not offer any retirement accounts. I made a huge mistake and accidentally cashed out my 401k ...
16
votes
1answer
3k views

Is an employer within their rights to limit 401k contributions to 25% of compensation?

I would like to ask a specific question regarding employer limitations on 401k contributions. I have read other posts in the forum that explain that limitations often exist on highly compensated ...
16
votes
4answers
3k views

Could excess 401(k) contributions be used to game/maximize matches from different employers?

Suppose I max out my 401(k) really early. This avoids the risk that if I lose the job I would have lost the chance to contribute to it fully. However there is another risk. My company doesn't match. ...
15
votes
11answers
7k views

I am failing to see the purpose of a Traditional IRA for someone who already has access to a 401(k)

If I understand correctly, the Traditional IRA, if you have 401k with an employer already, has the following features per IRS: Your contributions are taxed Your contributions are NOT taxed upon ...
15
votes
7answers
11k views

Are bonds really a recession proof investment?

I believe that another crisis is imminent if Trump goes ahead with deregulation of financial firms. Whether that is true or not is not my actual question. In that context, I want to protect my 401K ...
15
votes
5answers
3k views

Why 401k contribution as % of salary vs. fixed amount per pay check?

I am wondering why some companies do not let their employee choose a fix amount per pay check as a 401K contribution. In my all jobs it has been always a % of my salary, so I will chose a percentage ...