401k like I"m five please

[jlt19]

I've worked in a setting for my entire adult life that has been a 100% employer paid pension program (as well as 100% employer paid health insurance premiums for my family). However, I no longer do and I'm trying to figure out how much money I need to make when taking into account the contributions I'll now have to make to those things. I know every company is different and I've got the insurance stuff semi-figured out (though I don't get the HSA stuff but that's not a concern right now).

Ok, ramblings aside, I've interviewed at a few places, but have my sights set on one particular company that if I contribute 6%, they match at 10% (so 1.5x). When I'm looking at annual max $ amounts, does that include their portion? 

And then when figuring taxes, anything that comes out like 401k and health insurance/HSA premiums, I'll be using that number to base my taxes on, right (AGI)? So, for instance if salary was $100, then $25 was taken out for 401k & health, then my AGI is $75? 

[wildrice]

That's an incredible match! I am 99% sure that your employer's contribution does NOT count toward the annual max.

And yes that's how AGI works. It's adjusted to whatever you have left after your pre-tax payments are taken out.

I have my fingers crossed for you that this company hires you! You deserve to find something awesome.

[jlt19]

Feb 27, 2020 9:39:19 GMT -5 wildrice said:

That's an incredible match! I am 99% sure that your employer's contribution does NOT count toward the annual max.

And yes that's how AGI works. It's adjusted to whatever you have left after your pre-tax payments are taken out.

I have my fingers crossed for you that this company hires you! You deserve to find something awesome.

Aw, thanks, I really appreciate it!

[brooke77]

I’m also pretty sure that your employer’s contribution does not count towards your limit. You can contribute $19,500. There IS an annual limit to how much you AND your employer can contribute. It’s something like $50K though, so your 10% match wouldn’t put you above it.

[dcn]

The employer contribution doesn’t count toward the $19,500 max.

And yes to your agi example.

[Wallflower]

Employer contributions do not count (https://smartasset.com/retirement/does-employer-match-count-toward-the-401k-limit).

And yes, that is how the AGI works.

However, if your employer offers a Roth 401k, you might consider that. With this option, you pay the taxes on the contribution now (so your AGI would still be $100), but what grows in the 401k Roth is not taxed when you take it out. It's a guessing game what taxes will look like when you retire, but if tax rates go up, then you're better off paying tax now.

[madringal]

Psh, feel free to check out my "HSA: WWYD" post for some very important information about HSAs, lol. I learned a lot!

ETA: my post is over on ML

[dragon's breath]

Your employer contribution will not count against your contribution limits ($19,500). However, I would verify that you will not be restricted by any "highly compensated employee" limits. This tends to happen with smaller employers, or places where not enough people contribute to the retirement system.

That's a great match! If they offer a roth, I'd look into that as well, depending on your personal tax situation. The match would go to the traditional 401k still, so you'd get some diversity there.

[mich1]

I've worked in a setting for my entire adult life that has been a 100% employer paid pension program

Have you figured out what happens with this?

[jlt19]

Feb 27, 2020 15:43:45 GMT -5 mich1 said:

I've worked in a setting for my entire adult life that has been a 100% employer paid pension program

Have you figured out what happens with this?

Yes, it's a defined pension plan so once I turn 65 I'll get a monthly benefit for life.

madringal it's definitely something I'll be studying. The amount of options and tiers and stuff is super overwhelming. The company has tens of thousands of employees around the world and a cute little interactive guy that helps you make decisions. So they must be aware that's it's super confusing!

[mich1]

Feb 27, 2020 19:31:53 GMT -5 jlt19 said:

Feb 27, 2020 15:43:45 GMT -5 mich1 said:

I've worked in a setting for my entire adult life that has been a 100% employer paid pension program

Have you figured out what happens with this?

Yes, it's a defined pension plan so once I turn 65 I'll get a monthly benefit for life.

madringal it's definitely something I'll be studying. The amount of options and tiers and stuff is super overwhelming. The company has tens of thousands of employees around the world and a cute little interactive guy that helps you make decisions. So they must be aware that's it's super confusing!

Have you calculated how much?  The reason why I ask this is because I spent 14 years within a pension system.  I was vested, but my pension would have only been a couple hundred $/mo had I left it there.  I pulled the money out of the pension and invested it on my own in an IRA.  The $400 I would have received is going to be about $1200 of my income today, 20 years later.  You just need to do the math to find out which will suit you better.  Had I managed to last another 6 years, my response would have been different but lasting there wasn't going to happen (my job was leaving and there was a hiring freeze going on when I left).  

[jlt19]

Feb 28, 2020 13:18:48 GMT -5 mich1 said:

Feb 27, 2020 19:31:53 GMT -5 jlt19 said:

Yes, it's a defined pension plan so once I turn 65 I'll get a monthly benefit for life.

madringal it's definitely something I'll be studying. The amount of options and tiers and stuff is super overwhelming. The company has tens of thousands of employees around the world and a cute little interactive guy that helps you make decisions. So they must be aware that's it's super confusing!

Have you calculated how much?  The reason why I ask this is because I spent 14 years within a pension system.  I was vested, but my pension would have only been a couple hundred $/mo had I left it there.  I pulled the money out of the pension and invested it on my own in an IRA.  The $400 I would have received is going to be about $1200 of my income today, 20 years later.  You just need to do the math to find out which will suit you better.  Had I managed to last another 6 years, my response would have been different but lasting there wasn't going to happen (my job was leaving and there was a hiring freeze going on when I left).  

Yes, we get a statement each October. I will get about $1900/month when I turn 65. I don't even have the option of pulling it out to re-invest. It's not set up that way. Now, we did just start an annuity last May and everyone there was immediately vested, but I think I have to wait until it hits the three year mark and can then pull that out to re-invest somewhere. But it'll be pennies compared to my pension, obviously. 

[dr.girlfriend]

You got good answers already, but good luck with the job!

[dr.girlfriend]

Feb 28, 2020 16:19:42 GMT -5 jlt19 said:

Feb 28, 2020 13:18:48 GMT -5 mich1 said:

Have you calculated how much?  The reason why I ask this is because I spent 14 years within a pension system.  I was vested, but my pension would have only been a couple hundred $/mo had I left it there.  I pulled the money out of the pension and invested it on my own in an IRA.  The $400 I would have received is going to be about $1200 of my income today, 20 years later.  You just need to do the math to find out which will suit you better.  Had I managed to last another 6 years, my response would have been different but lasting there wasn't going to happen (my job was leaving and there was a hiring freeze going on when I left).  

Yes, we get a statement each October. I will get about $1900/month when I turn 65. I don't even have the option of pulling it out to re-invest. It's not set up that way. Now, we did just start an annuity last May and everyone there was immediately vested, but I think I have to wait until it hits the three year mark and can then pull that out to re-invest somewhere. But it'll be pennies compared to my pension, obviously. 

Make sure you keep your info updated with them...my employer recently "cashed out" their pension plan.  It was a huge switch but I think that's the way things are going.  I was able to roll the whole amount into my 403b (a 401k for nonprofits).