401k, Am I doing this right?

[Jones]

Yeah, what advantages could I actually expect from being in a more managed allocation?

The only advantages you can expect from the BH funds are higher fees and lower returns vs the index funds. Compounded over 24-29 years it's a lot of money.

 

[The Driver]

The only advantages you can expect from the BH funds are higher fees and lower returns vs the index funds. Compounded over 24-29 years it's a lot of money.

I'll switch to 100% in S&P500 Large Cap, then. What about the mid and small cap allocations within the S&P? Opinion?

 

[Jones]

I'll switch to 100% in S&P500 Large Cap, then. What about the mid and small cap allocations within the S&P? Opinion?

You could go all in the S&P500, it's got the lowest fees of any of the funds and you're essentially investing in the success of the 500 largest companies in the US which is a pretty good bet imho. If you want to spread out a bit more then go with 33% each in the large cap , mid cap and small cap which would give you full stock market exposure. The fees on the mid cap and small cap are slightly higher than the S&P500 but still way below the BH funds.
Remember this just the opinion of someone on the internet

 

[The Driver]

Seems good. I'll consider it, thank you.

 

[Ms.PacMan]

Different from 401k----------->After tax contributions (up to 5% at UPS) in a 401k plan were devised as/ is a scheme to allow highly compensated employees access to a Roth IRA who are otherwise over the income guidelines. After tax contributions in a 401k can be rolled over into a Roth IRA (minus taxes paid on any gains and if the plan allows in-service rollovers), irregardless of a person's income.

This is not specific to UPS and you may remember that people were very curious during the last election as to how Mitt Romney had amassed so much money inside his Roth IRA's when he clearly made too much money to contribute anything. That's how and it's a perfectly legal loophole in the tax law!

After tax contributions are probably allowed in our plan because they are offered in the plan for mgmt. Unless you are maxed out on both the Roth 401k and a personal Roth IRA, after tax contributions aren't necessary.

 

[Brownslave688]

Different from 401k----------->After tax contributions (up to 5% at UPS) in a 401k plan were devised as/ is a scheme to allow highly compensated employees access to a Roth IRA who are otherwise over the income guidelines. After tax contributions in a 401k can be rolled over into a Roth IRA (minus taxes paid on any gains and if the plan allows in-service rollovers), irregardless of a person's income.

This is not specific to UPS and you may remember that people were very curious during the last election as to how Mitt Romney had amassed so much money inside his Roth IRA's when he clearly made too much money to contribute anything. That's how and it's a perfectly legal loophole in the tax law!

After tax contributions are probably allowed in our plan because they are offered in the plan for mgmt. Unless you are maxed out on both the Roth 401k and a personal Roth IRA, after tax contributions aren't necessary.

Ahhhhh yes the Roth back door.



It's a loophole that's likely to be closed soon.

 

[Ms.PacMan]

Ahhhhh yes the Roth back door.
It's a loophole that's likely to be closed soon.

Actually it's not a backdoor Roth. A backdoor Roth is when someone over the income guidelines contributes to a traditional IRA, with the same individual limit of $5,500, and then converts it to a Roth IRA. It's tricky and causes an accounting nightmare because of the pro rata rule.

I don't think the 401k after tax conversion to a Roth has a name and the sky's the limit on the amount you can tuck away depending on your salary and the percentage your 401k allows you to put in after tax funds.

The IRS ruled last September that this 401k conversion to a Roth was perfectly legal.

I'm not sure which one Obama wants to do away with because everyone accidentally confuses the two.