joebenz
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| 401k...what should i do? |
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i now qualify for my company's 401k. now i'm trying to figure out what to do. This is how their's works. If i invest up to 4%, they will match $.50 to the dollar. If I invest 5% or more, they will only match 2% instead of 50%. The max I am allowed to invest is 25% of my paycheck. In your opinions, what do you feel i should do?
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Mon Jun 27, 2005 10:04 pm |
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Andrew
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I would try to maximize the employer matching by contributing 4.5% and having the company match the first 4% of that at 50%.
That'll be 6.5% going in... not bad.
Of course, you could put in 10%, for example and save more, but the matching will be almost worthless at that point.
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Mon Jun 27, 2005 10:11 pm |
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xboxundone
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quote:
Originally posted by Andrew
I would try to maximize the employer matching by contributing 4.5% and having the company match the first 4% of that at 50%.
That'll be 6.5% going in... not bad.
Of course, you could put in 10%, for example and save more, but the matching will be almost worthless at that point.
I agree go with 4% and if you are wanting to save more for retirement open a roth IRA as you can access it without penalty plus it is TAX free.... But do get your company match first!
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Tue Jun 28, 2005 12:17 am |
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efflandt
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Location: Elgin, IL USA
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I would reread that to see how it is worded. Is that 2% of the contribution (which would NOT make sense) or 2% of your salary (which is same as 50% of the first 4%)?
I would think that they would not discourage you from investing more, since the % limit depends upon overall participation. For example in our 401K we are currently limited to 20% max contribution. So they just upped matching funds to encourage participation, to hopefully increase the limit from 20% to the max allowed 25%.
A common recommendation for first priority is to contribute enough to 401K to get maximum matching funds, then if you can budget enough during the year to max out a Roth IRA, bump up the 401K contributions.
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Tue Jun 28, 2005 12:47 am |
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David Briggs
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Ask me what to invest it in. That's where I have fun.
~~David
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Tue Jun 28, 2005 3:28 am |
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jlee1224
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Location: Baltimore
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I believe you are misreading. I believe they will match 50% for the first 4% you invest. So if you invest 4%, they'll put in 2% (50% of 4%), for a total of 6%.
If you go over 4%, then they'll just add 2% to your number. So if you invest 7%, then they'll add 2% (or in other words 50% match on your first 4%), for a total of 9%.
They would not lower 50% to 2% for investing more.
So I would invest at least 4% to get the max free money.
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Tue Jun 28, 2005 1:44 pm |
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MattL
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I would max out to any match they will offer. Anything they won't match put in a Roth IRA (assuming you qualify).
Debt Elimination
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Tue Jun 28, 2005 3:28 pm |
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