I had percentages and need this broken down for my damn MM brain to handle. It's regarding my 401K with my company. I have the option to contribute to Pre-tax and Roth.
The book I just finished reading (Suze Orman) has me leaning towards contributing more towards the Roth portion. But I wanted MM's opinion and to have this translated...
• Your employer will match up to 3% of your compensation that you elect as pre-tax contributions. When you contribute to your plan, your employer matches 50% of the first 3% of your pay.
So...what should I contribute more too? Pre-tax or roth? Oh I'm contributing 13% total.
ETA - I know I asked this already but it's still something I struggle grasping. I just can't fathom 20 years from now. Just seems surreal. LOL.
• Your employer will match up to 3% of your compensation that you elect as pre-tax contributions. When you contribute to your plan, your employer matches 50% of the first 3% of your pay.
If you contribute 3% of your salary, you employer will kick in 1.5% of your salary. If you contribute 2% of your salary, you employer will kick in 1% of your salary. If you contribute 1% of your salary, you employer will kick in .5% of your salary. I don't know why they word those in such a confusing way... a table would be much better.
I agree that a Roth probably makes sense for you at this point. I'm assuming your salary is pretty low, you have a long way until retirement and you are just starting to save. A few years down the road you can start diversifying between pretax and tax deferred.
I agree, a table would make more sense. I'm making a decent salary for a recent grad, $40K. It can be higher with my bonus but I'm being conservative and sticking with $40K.
I would contribute 6% to your 401k to get the full match and then fund your Roth.
Why not 3%? This is where I get confused. If they match at 3% shouldn't I contribute at least 3%? Or do I take that number and double it to get 6% and they contribute 3% of that?
From reading that, I would say that you need to make sure you are contributing at least 3% to the PRE-TAX option.
If you are planning to do 13% total- maybe do 3% pre-tax and 10% Roth? Would that still work with your take-home/budget? I know many people choose to split, so you could do 6%/7% or something. The important thing is to make sure you put at least 3% into the pre-tax option to max out the employer match (FREE MONEY!)
I would contribute 6% to your 401k to get the full match and then fund your Roth.
Why not 3%? This is where I get confused. If they match at 3% shouldn't I contribute at least 3%? Or do I take that number and double it to get 6% and they contribute 3% of that?
I hate this. LOL.
they match 50% of your contribution up to 3%. So you get the most out of them if you contribute 6%. You/Them 1/.5 2/1 3/1.5 4/2 5/2.5 6/3 7/3 8/3....
I don't think that is right ijack. It says they will match 50% of the first 3% of your pay, not 6%. I read that to mean that you need to put in at least 3% (pre-tax) to get full employer match.
It doesn't matter since bliss is planning to contribute 13% so will get the full match anyway.
I don't think that is right ijack. It says they will match 50% of the first 3% of your pay, not 6%. I read that to mean that you need to put in at least 3% (pre-tax) to get full employer match.
It doesn't matter since bliss is planning to contribute 13% so will get the full match anyway.
you're right. I read it wrong. So that changes my answer. Contribute 3% to the 401k and then the rest to your Roth.
I don't think that is right ijack. It says they will match 50% of the first 3% of your pay, not 6%. I read that to mean that you need to put in at least 3% (pre-tax) to get full employer match.
It doesn't matter since bliss is planning to contribute 13% so will get the full match anyway.
That's what I thought. So it'd make sense to do 3% to PRE-TAX and the remaining 10% for the ROTH. I'm still get the free money, but also benefiting from the ROTH.
Personally, I'd rather pay the taxes on a majority of it now than later when I'm a higher tax bracket.
Bliss- I have noticed in a bunch of your posts that you misuse to/too. I know you work in PR so I would be careful about that. I hope I don't sound like the grammar police
I don't think that is right ijack. It says they will match 50% of the first 3% of your pay, not 6%. I read that to mean that you need to put in at least 3% (pre-tax) to get full employer match.
It doesn't matter since bliss is planning to contribute 13% so will get the full match anyway.
That's what I thought. So it'd make sense to do 3% to PRE-TAX and the remaining 10% for the ROTH. I'm still get the free money, but also benefiting from the ROTH.
Personally, I'd rather pay the taxes on a majority of it now than later when I'm a higher tax bracket.
Yes, that would be my recommendation. 3% to pre-tax, 10% to Roth. I know lots of people are advising you to do a Roth IRA, but the last time we talked about this (too lazy to find the post) I maintained that it will be easier for you to have it automatically done through your employer. I still think that, especially as you get used to a new job/budget/salary.
That's why I say 3% pre-tax 401K (to get full match) and 10% to Roth 401K even though others are going to come in here and talk about a Roth IRA.
Bliss- I have noticed in a bunch of your posts that you misuse to/too. I know you work in PR so I would be careful about that. I hope I don't sound like the grammar police
For heaven's sake it's a message board. I toggle between screens, ya know, work and shit. So I don't really care to proofread my "to/too".
However, when I write copy for work I make sure to proofread and correct any errors. On a message board, I don't really care.
ETA - Sorry if this sounds snappy. It's more annoyance at the consistent call-out on my grammar. I figure as long as I'm not typing like Springs1, it's pretty clear what I'm trying to say.
Bliss- I have noticed in a bunch of your posts that you misuse to/too. I know you work in PR so I would be careful about that. I hope I don't sound like the grammar police
For heaven's sake it's a message board. I toggle between screens, ya know, work and shit. So I don't really care to proofread my "to/too".
However, when I write copy for work I make sure to proofread and correct any errors. On a message board, I don't really care.
I notice it all the time in your posts- I was just trying to be helpful.
That's what I thought. So it'd make sense to do 3% to PRE-TAX and the remaining 10% for the ROTH. I'm still get the free money, but also benefiting from the ROTH.
Personally, I'd rather pay the taxes on a majority of it now than later when I'm a higher tax bracket.
Yes, that would be my recommendation. 3% to pre-tax, 10% to Roth. I know lots of people are advising you to do a Roth IRA, but the last time we talked about this (too lazy to find the post) I maintained that it will be easier for you to have it automatically done through your employer. I still think that, especially as you get used to a new job/budget/salary.
That's why I say 3% pre-tax 401K (to get full match) and 10% to Roth 401K even though others are going to come in here and talk about a Roth IRA.
That was my thinking as well based on my previous post and what I read. I do have a ROTH IRA set up with Fidelity that I could eventually start using as well. But I wanted to see how my employer options worked out first. I figure I've got some time to play with the numbers and see what works best for me.
For heaven's sake it's a message board. I toggle between screens, ya know, work and shit. So I don't really care to proofread my "to/too".
However, when I write copy for work I make sure to proofread and correct any errors. On a message board, I don't really care.
I notice it all the time in your posts- I was just trying to be helpful.
I appreciate that. But like I said, it's an informal message board. I don't really care if bits of my grammar is incorrect. I'm too busy/lazy to fix it. So I don't. It's not extremely important.