Just started my 401k, thoughts?

[UpstateNYUPSer(Ret)]

Just out of curiosity, is there a way to put money into a 401k, get whatever company match there might be and then move the money to a better performing Roth IRA without incurring a penalty? You can probably tell I know nearly nothing about 401k's.

There is no company match. You can roll the 401k over to an IRA upon retirement without incurring a penalty.

 

[Catatonic]

That seems like a good mix, mine not much different. Every time you get a raise, up your contribution percentage. You won't even miss the extra money.

That's what I did back in 1990 and every year since.
It is a good way to ensure you live within your means too.
Starting in 1999, I maxxed out and did every year since.
I was able to max out this year even though I retired in Feb by allocating my MIP into 401k.
2014 is going to be "weird" year since it will be the first time in 35 years I will not be contributing to investments.

I like your mix of Index Funds but the International is a bit strong for my tastes.
I have only 10% but I am heavily into global companies that are US based.

 

[bbsam]

We don't have 401(k)s at Ground but our financial advisor has been great.

 

[Johney]

Thanks.

I want to be in a position where I decide if I am ready to retire, not my finances.

My son is going for his MBA and had to borrow $43K to pay for it. There were some on this forum who thought that I should help pay for part of it. My ex initially felt this way as well. While I would have loved to have helped out, I have less than 6 years to go before I am eligible to retire. The last thing I need to do at this point is take on more debt. He is working as a TA and I send a check once a month so he can get some groceries.

He does not know this but I am hoping to pay off his students loans ($70K) for him from the proceeds of the sale of my condo.

Just curious Dave, you are on a fast track to retirement and paying off your condo. I think it's awesome that you plan to sell it and pay off your son's student loans...props to you, but where do plan on living after retirement? The only thing I'm paying for rent/mortgage after I leave UPS is my property taxes.

 

[Johney]

We don't have 401(k)s at Ground but our financial advisor has been great.

Oddly enough I had a retired FedEx account rep on one of my old routes years ago who worked for a investment firm hook me up with some awesome financial advice for my 401K.

 

[UpstateNYUPSer(Ret)]

Just curious Dave, you are on a fast track to retirement and paying off your condo. I think it's awesome that you plan to sell it and pay off your son's student loans...props to you, but where do plan on living after retirement? The only thing I'm paying for rent/mortgage after I leave UPS is my property taxes.

My daughter and son in law live just outside of Albany----I plan on either renting their townhouse when they move in to a nicer house or I will find something nearby.

I very well may keep the condo as I would only be responsible for taxes, insurance and HOA fees.

A lot can change in 5.5 years.

 

[Brownslave688]

From a planning point of view, your best return will be starting big and reducing over time.

You should probably sit down and talk to a financial adviser. Going from PT money to FT money provides a very unique savings opportunity that you will not have again in your lifetime.

is instant a full timer? I have told ever driver that started the last 5 years. Put away 20% from day one. Live cheap until u hit full scale. It's a lot harder to scale back than it is to never have.

 

[superballs63]

If the OP felt it were no one's business, then he/she would not have posted. He/she did.

The OP asked for advice. asking them "what's the point?" isn't advice, well it is, but you might as well have told him to contribute nothing and wait til he can afford it, and then max out the 401.

 

[Kae3106]

There is no company match. You can roll the 401k over to an IRA upon retirement without incurring a penalty.

There is a company match for non-union and management employees. Union gets better insurance, non-union gets a 401k match. We do not have the same benefits and perks throughout the company though we are all supposed to be one big happy family.

 

[UpstateNYUPSer(Ret)]

is instant a full timer? I have told ever driver that started the last 5 years. Put away 20% from day one. Live cheap until u hit full scale. It's a lot harder to scale back than it is to never have.

20% may be tough, especially when you have kids, who like to eat (a lot). 10% over 30 years will still net you a tidy sum.

 

[instantK]

Can I switch to a Roth 401k if need be? I thought having a traditional 401k and a Roth IRA would be good , but I'm just starting to research all this

 

[barnyard]

The OP asked for advice. asking them "what's the point?" isn't advice, well it is, but you might as well have told him to contribute nothing and wait til he can afford it, and then max out the 401.

Evidently you completely missed my other posts.

A shame.

 

[Johney]

I did 5% from the beginning as my wife stayed home with the kids and I was the only bread winner, now I do 20% and it's going to work fine for us.

 

[barnyard]

Can I switch to a Roth 401k if need be? I thought having a traditional 401k and a Roth IRA would be good , but I'm just starting to research all this

You can, but you pay the taxes when you switch.

I rolled all my previous 401k accounts into a Roth account and now contribute to that every week. That account is managed by an Edward Jones guy. He looked over the Teamster 401k plans and suggested my mix based on what I was putting in the Roth, how much stock and am buying and all that. Our mortgage is shrinking rapidly and we are thinking when the house is paid off, buying a rental, while we are still used to making house payments will be our next move.

I am investing as if I get a very minimum, if anything from the Teamsters.

 

[UpstateNYUPSer(Ret)]

Can I switch to a Roth 401k if need be? I thought having a traditional 401k and a Roth IRA would be good , but I'm just starting to research all this

You can switch your 3% over to the Roth 401k but you cannot comingle the funds between the traditional and Roth as the former is pre-tax while the latter is post-tax. You would basically have 2 401k's going at the same time. One of the big selling points of a 401k is the compounding----the higher your balance, the more you make----and having 2 401ks reduces the benefits of compounding.

 

[Notretiredyet]

He's just starting to invest, I'd go with the Roth 401 after tax. That way you can access the money you've invested without penalty if you need to. When you start earning enough to max your Roth out each year start up your before tax 401K.

 

[Brownslave688]

20% may be tough, especially when you have kids, who like to eat (a lot). 10% over 30 years will still net you a tidy sum.

yeah i am pretty much talking about young single drivers. I know that's not always the case. With many guys in their 30's before starting driving.

Making a a budget can almost always free u up a few hundred a month. However I had this discussion with some friends last night. I'm of the thought money is meant to be spent and as long as I am putting away an amount I'm comfortable with and paying all my monthly bills. I really don't see a need to budget. Does it really matter where it goes?

 

[UpstateNYUPSer(Ret)]

He's just starting to invest, I'd go with the Roth 401 after tax. That way you can access the money you've invested without penalty if you need to. When you start earning enough to max your Roth out each year start up your before tax 401K.

The IRS sets an annual limit for contributions----this year it is $17,500 with a "catch-up" contribution limit of $5,500 for employees 50 or older. The most that can be set aside is 40% (35% pre- and post-tax and an additional 5% post-tax) up to the limits. If you reach the limits prior to the end of the year the contributions will stop. IMO if you are going to focus on the Roth it would make no sense to contribute to the traditional. I have had the traditional for so long that it would make no sense for me to start on the Roth.

If I were the OP I would focus on the Roth with a minimum of a 5% contribution rate.

 

[Brownslave688]

The IRS sets an annual limit for contributions----this year it is $17,500 with a "catch-up" contribution limit of $5,500 for employees 50 or older. The most that can be set aside is 40% (35% pre- and post-tax and an additional 5% post-tax) up to the limits. If you reach the limits prior to the end of the year the contributions will stop. IMO if you are going to focus on the Roth it would make no sense to contribute to the traditional. I have had the traditional for so long that it would make no sense for me to start on the Roth.

If I were the OP I would focus on the Roth with a minimum of a 5% contribution rate.

The employee contributions limit is $17,500. Where we all screwed up was not finding a job that the employer maxes out their side of contributions. We would all be set then.

 

[UpstateNYUPSer(Ret)]

The employee contributions limit is $17,500. Where we all screwed up was not finding a job that the employer maxes out their side of contributions. We would all be set then.

The highest match that I have ever seen is 6%.