Posted on 04/01/2009 3:36:54 PM PDT by randomhero97
Yo FReeps, I need a little advice. I've been a DoD contractor pretty much since I got out of the AF. I have never started a 401K with any company. I'm working for a fourth different company now and am deciding on opting out of the companies 401K plan due to the current political environment. I have a large savings and other investments so I think I am in good shape.
Down the road if we find out the socialites decide not to attack our retirement accounts I may opt back into it. Is anyone else in this position or have these concerns?
30
Borrowing from Dave Ramsey’s plan, put as much in as to get the company match (free money). Then put 15% or the maximum allowed into a Roth IRA. If the government took one kind of account, they might not take the other. This way, you’re hedging bets.
IMO, now is the time to get into a 401K. Make sure you have a good mix of funds (depending on your age), but if you are still young, stock funds are a great deal now.
Why are you pinging him to his own thread? He just started it a couple of minutes ago.
I almost said screw you but I won’t.
My employer just stopped matching. I have mine parked in a fund that is safe but pays 1.5% approx., lately. I got out late. I expected a big O-bozo bounce the first couple of months after inauguration. Don’t trust my judgement!
I guess it all depends on how comfortable you are with investing right now.
I still contribute 12% of my pay, my company matches 50% up to 6% or 3%. Most of my funds have been shuffled around in the past year so that the bulk of it is in the Income Fund, no losses and very small gains.
If and when I feel that it is safe to reinvest I will.
Other may disagree with me and that is their right, but I find it very hard to refuse the matching funds.
At the risk of provoking another swallowed epithet, perhaps you mean to bump the thread? It’s not a “terrible thing,” it’s either a mistake or sort of dumb.
If you’re 30, now is definitely the time to get in.
Look at it this way. If the government and the dollar falls apart, nothing you saved in a passbook or mattress will make any difference anyway.
On the other hand, if the market is cyclical, which it always has been, now is the time to get in.
For now, put it in a guaranteed fund or money market or whatever safe haven allowed. Move it into growth funds as the market starts up.
The other thing to consider, if they ‘nationalize’ 401k plans and dump trillions of dollars into the treasury and replace your account with an IOW, I suspect they’re going to get their revolution.
Invest as much as you are allowed. The market is on sale. This is the time to start. don’t go crazy investing in the company stock, though. Learn from the Enron fiasco. I understand the fear of the dems targeting 401k’s for confiscation, but I think the chance of that is minute. We will give them a fight like they’ve never seen if they try.
Easy decision. Do you get any matching funds? If yes then yes invest the minimum to get the maximum of the matching funds. If no then your better off getting an IRA or your own investments.
Yes, we share your concerns. We are now feeling uncomfortable having money in such a non-liquid account, and there is also the possibility of the gov taking that money. We stopped contributing. Maybe if things turn around and we end up not being a socialist country we’ll get back in just enough to get the match. Otherwise, a Roth or an MMA is more liquid. Gold and silver might be a good investment right now.
Matching funds = Free $$$
And you lower your tax base. 401Ks are usually a very good thing. Do you get to chose your investment options?
Remember what you invest [I invest the max between $14,000 and $15,000 per year]. Subtract that from your annual earnings and it may well shoot you into a lower tax bracket. It is usually a good deal.
That you may go to another company is an issue ... but remember that you would just roll over your 401K into your IRA. Penalties apply if you just decide to take the money so thik about it.
There are zillions of places on the web that explain the whole deal, but in general, saving money is good. The 401K is attractive. Your own circumstances will have to decide just how attractive.
A government powerful enough to confiscate your retirement accounts is likely to take non-retirement investment accounts, so paranoia applied only to retirement accounts is irrational. It will be very easy for the government to raise taxes on capital gains and interest income, and considerably harder to outright confiscate existing 401k or IRA accounts.
The best strategy I heard was to invest in your employer's 401k program up to the employer match (before tax income, tax deferred savings), then in a Roth IRA (after tax income, tax-free savings) to the max, then in the unmatched 401k up to the limit (before tax income, tax deferred savings).
An after-tax Roth, with tax free savings, is considered better than the unmatched, before tax 401k, with tax-deferred savings, because taxes are likely to go up in the future.
An after-tax Roth with tax free savings, is considered better than the tax deductible standard IRA, with tax-deferred savings, for the same reason.
If nothing else, put in up to the employer match. That is like a guaranteed rate of return.
Also investing anywhere right now is like buying at fire sale prices.
Investing in tax-deferred retirement accounts (401k, IRAs) is better than investing in ordinary accounts, because you will not get hit on the interest income and capital gains which can be significant with mutual funds.
Never, ever, ever take money out of your 401k because you are afraid of where the market is going. Instead, keep the money in the 401k account, but move the dollars into a money-market fund or a government securities fund if those options exist. You will get hammered on taxes if you withdraw funds early.
Never, ever, ever take money out of your 401k before retirement unless it is a grave, grave emergency. A 401k is not intended as a rainy-day fund (that is what an emergency fund is for), nor is it a savings account to save up for a down payment on a house. You will get hammered on taxes if you withdraw funds early.
Never, ever, ever cash out of a 401k when you change employers. You have options to roll it over into your new employer's 401k, or better, just roll it over into an IRA with a respectable investment company, and invest it appropriately in the new account. If you cash out, you will get hammered on taxes.
Finally, invest $15 and buy Dave Ramsey's Total Money Makeover book.
maybe he uses ping as a bookmark for later reading
I can help you out just send 10% of your gross to me Al Baby thats right Al baby
If there’s an employer match, you’d be out of your mind not to participate to whatever degree is necessary to get the maximum match. And with taxes likely to beincreasing, it’s pretty hard to make a rational rgument for not participating even there is no match, or if you don’t expect to be there long enough to get the match portion vested. In a 30% tax bracket, you lose 30% right off the bat if you take money in a paycheck that you could have diverted to a 401k. With what sort of investments are you imagining you’ll be able to get that sort of guaranteed return in the foreseeable future?
So for each available $100 in gross pay that could go into the matching 401k, you can put away away $70/month (after giving $30 or so to the government in upfront taxes) at 1.5%, or you can put away $200/month (your $100 plus the company’s $100 match) at, for the sake of simplicity, also 1.5%. You’re having trouble deciding whether you prefer having $200 vs. $70 ??? The total investment income will of course be much larger on the $200, even if both options yielded the same rate of return, so assuming you would pay taxes at the same rate when you start withdrawing for retirement, you still come out with more than double the money than if you hadn’t participated. Why are you having trouble with this math?
You say you already have other readily accessible, totally liquid investments. Even if they proved to be insufficient, you can still withdraw the 401k funds with a penalty, and KEEP THE MATCHING PORTION! Also, as long as you remain with this employer, the vast majority of employers have a 401k loan program, under which you can borrow up to $50,000 of your 401k funds any time you want, for any purpose (again, including the vested matching portion), and pay the interest to YOURSELF (into the 401k) as long as it’s outstanding.
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