I got a raise, dropped it all in my 401K

[Da_Sperm]

So are you guys putting more in your 401k than your companies are matching? Is that a good idea? Wouldn't being diverse with other funds make more sense?

I think that putting the max, even above your employer matching funds, into your 401K should be the FIRST priority. Putting money into post-tax funds means your are behind at least your current tax rate compared to the pre-tax funds. If you are in the 28% tax bracket, then you will have to find a post tax fund that returns at least 33% (add 5% because most safe funds return 5% per year) just to break even with a pre-tax safe investment fund.

I for one seek out risky funds in my 401K. I'm in a fund that is up 20% this year, so in order to get the same return post-tax, I will have to find a fund that yields 48% or higher. Not to mention, outside an IRA, you will pay taxes on gains from a mutual fund regardless if you sell them or not each year. So you may need to find a fund that yields 50%+ profit if you don't invest in an IRA.

Thats my 2 cents. I'm open for opposing views because I may have it wrong.

 

[CEE DOG]

Sounds good. Thanks!!!!

I think that putting the max, even above your employer matching funds, into your 401K should be the FIRST priority. Putting money into post-tax funds means your are behind at least your current tax rate compared to the pre-tax funds. If you are in the 28% tax bracket, then you will have to find a post tax fund that returns at least 33% (add 5% because most safe funds return 5% per year) just to break even with a pre-tax safe investment fund.

I for one seek out risky funds in my 401K. I'm in a fund that is up 20% this year, so in order to get the same return post-tax, I will have to find a fund that yields 48% or higher. Not to mention, outside an IRA, you will pay taxes on gains from a mutual fund regardless if you sell them or not each year. So you may need to find a fund that yields 50%+ profit if you don't invest in an IRA.

Thats my 2 cents. I'm open for opposing views because I may have it wrong.

 

[jag4life]

Then it depends on what you are investing for. If it is for retirement...401K... if you are investing for a purchase or to have vacation money... it might be cheaper to invest separately.

 

[Justin]

Maxing out is the plan. But don't do what some people do and OVERfund it. That's money that could be put to use in other investment vehicles.

 

[Da_Sperm]

Then it depends on what you are investing for. If it is for retirement...401K... if you are investing for a purchase or to have vacation money... it might be cheaper to invest separately.

Investing for a purchase is more of a short term investment and should not be put into any retirement vehicle (401K, IRA, etc.). But I think for long term investments such as retirement, one should max out the 401K before spilling over into other investments.

The one exception I can think off is investing in real estate. I'm sure that real estate investing will outdo a 401K investment, even with the pre-tax advantages of the 401K. Mainly because real estate investing has 3 things going for it. 1) profit from rent. 2) appreciation of the property and 3) tax deductions.

 

[Fiyah]

Well a few months ago my part time gig started a 401k program and they will match up to 3%. I jumped on that quick and did 5%, along with their 3% I think I'm doing fine. I don't miss any of that 5%, I will sometimes work a extra few hours a week to just pay for it so when I get that check it's still the same or close to what I was getting anyway.

 

[Da_Sperm]

Well a few months ago my part time gig started a 401k program and they will match up to 3%. I jumped on that quick and did 5%, along with their 3% I think I'm doing fine. I don't miss any of that 5%, I will sometimes work a extra few hours a week to just pay for it so when I get that check it's still the same or close to what I was getting anyway.

Hey, that is COOL.

Question?

If you have a primary gig and a part time gig and contribute to the 401K in both gigs, how do the LIMITS work? Meaning, if you max out your 401K at JOBA, can you participate in the 401K at JOBB?

 

[jag4life]

Hey, that is COOL.

Question?

If you have a primary gig and a part time gig and contribute to the 401K in both gigs, how do the LIMITS work? Meaning, if you max out your 401K at JOBA, can you participate in the 401K at JOBB?

Good question. I've never heard anything regarding something like this.

My first thought would be that the IRS would look at your total income from both jobs and base your annual monetary limit on that number, meaning you could max out both as long as your totals (income and contribution) fall within the IRS limits....but that is just a GUESS.

 

[Da_Sperm]

I ask because up until our twins were 7 or 8, we were paying about $10K per year in childcare. We (Nita and I) were only allowed to put $5K into a dependent reimbursed account (pre-tax). I wish we both could have put $5K each ($5K from my job and $5K from hers) to cover that cost.

I think you are right, you probably can 10 jobs and participate in all 10 401K programs, but your limit will be combined to fit the IRS guidelines.

 

[Fiyah]

Hey, that is COOL.

Question?

If you have a primary gig and a part time gig and contribute to the 401K in both gigs, how do the LIMITS work? Meaning, if you max out your 401K at JOBA, can you participate in the 401K at JOBB?

With my primary employer we don't have a 401K program (school district) but I do have a 403B that I contribute to from that job.

 

[Fiyah]

That thing they called a raise for us the last few years really ended up being a paycut for some of those years becuase the cost of our insurance went up so much.

I haven't received this years "so called" raise information yet but it's probably the same BS they've given us the last few years. That 3% from midpoint sucks, since I'm above the midpoint range I don't get a true 3%.

That's how they did the teachers in CH the last year I was there. That's just WRONG, IMO.

Yep....

I think they do them like that everywhere in this state. It is a shame that a teacher would have to pay $550+/month for insurance if the kids are covered.

It's much higher per month

Why is insurance so expensive for teachers.

Just looked at the new rates and they are gonna either force those of us on the High HMO to change plans or pay about a 30% increase in fees. :upset::upset:

 

[ABE]

I think they do them like that everywhere in this state. It is a shame that a teacher would have to pay $550+/month for insurance if the kids are covered.

Here it only costs an arm and a leg if you want to include your spouse. The multiple children rate is reasonable. (to me)

 

[Suge]

Hey, that is COOL.

Question?

If you have a primary gig and a part time gig and contribute to the 401K in both gigs, how do the LIMITS work? Meaning, if you max out your 401K at JOBA, can you participate in the 401K at JOBB?

I think max outs are max outs period. My wife and I are getting 2 seperate roths because we could make them both out yearly, instead of 1. I think your 401K is like a roth and govt regulated, is not regulated by your job. But would you want to max out 2 401K's. You would probably max out the 401K at one job and then get a roth, mutual fund, or annuity at the other.

 

[Da_Sperm]

Suge, my question was not really maxing out the 401K at both jobs, but more of monitoring the amount contributed to the 401K between both jobs. So, for 2008, you can max out your 401K at $16K. If you participate in a 401K at JobA and contribute $15K, then you have to take the responsibility and make sure YOURSELF that you only contribute $1K to your 401K at JobB. That way, when you do your taxes, you are not over the limit.

You are correct, after you max out your 401K, it is a good idea to invest in a Roth, if you still want to put money into a retirement account.

 

[CEE DOG]

Still good advice too.