Comments on: “Why I Love my 401(k)”

By: J. Money

J. Money — Thu, 14 May 2020 11:07:16 +0000

In reply to GJ.

That’s a helluva match!!

And nope, I probably should have a strategy, but usually after I max out all the retirement accounts I don’t have much left over to spread around :) But when I do it tends to go right into our regular brokerage account which diversifies it a little. So I guess my strategy is “max out retirement accounts and then if anything is left over throw into brokerage” haha…

By: GJ

GJ — Wed, 13 May 2020 23:08:43 +0000

In reply to J. Money. My understanding is that it is an IRS requirement that employer contributions be traditional. We were contributing 10% there to get a 12% match (!) so it was a decent chunk of his 401k that we thought had already been taxed. I know you max out your IRAs every year, do you have a strategy for having funds be pre and/or post tax?

By: J. Money

J. Money — Wed, 13 May 2020 21:38:27 +0000

In reply to J.

I’m so glad there was a happy ending there! Haha…

But of course she’s totally right. Even if you picked THE WORST funds for those years you still would have come out with more money in the end just cuz your rate of return is so dang high when you get those matches! Especially at 3x like that??! But you live and you learn and we all have war stories like that :)

In fact, It took me a full year to get invested in my 401k plan too back in the day! And the worst pat was that I *thought* I had been invested the whole year until I actually double checked my paystub at the end (wanted to see how much I had accrued! lol…) and realized I never actually pulled the trigger, womp womp….. But just like you it was a hard lesson learned and I never looked back :)

By: J. Money

J. Money — Wed, 13 May 2020 21:32:13 +0000

In reply to GJ.

Fascinating!!

I’m not too versed in it personally since I’ve been out of the 9-5 world for a while now (I don’t even think they had that option 10 years ago?!), but def. didn’t know they account for it like that? I wonder if that’s employer specific or the general rule?

Either way – ALL 401(k)s are good (especially the ones which give you FREE MONEY FOR CONTRIBUTING!) – so A+ all around :) And for starting so young too!!

By: J

Wed, 13 May 2020 18:11:00 +0000

This story has my mind wondering and doing a lot of reflecting today. I was so nervous about picking bad investments that I just put it of for my first couple of working years. I was a business major, so it was a source of shame for me. Then our company’s district trainer happened to be in the store office one day and literally said I was an idiot if I didn’t invest in our 401k for at least the match. (They were matching $3 for every $1 we put in at the time up to 2% of pay). She a gruff, older country girl who spent most of her working years working with good old boys, so she was tough as nails in her speech and mannerisms. But that was exactly the kick in the @ I needed. I made the time to get it done and in the next 48hrs I was invested. Hands down one of the best financial decisions I made in my 20’s.

By: GJ

GJ — Wed, 13 May 2020 18:08:30 +0000

I relate very much to Laura on this, I’m SO glad my husband and I started when we were married at 22! What I’m curious about is how many people have Roth vs Traditional 401ks.

About a year ago, we started working with our financial advisor to slowly begin converting funds from Traditional to Roth in our IRAs because we are likely at the lowest income bracket we will be in between now and retirement and because we don’t have confidence that tax increases aren’t looming.

My husband switched employers this year and when we went to roll over his “Roth” 401k, I discovered that only his contributions were Roth but the employer’s were Traditional! I had no idea that is how they are required to do it. So we have further to go on this goal than I thought. Boo!

Anyway, I just ran the numbers and currently a third of our retirement is Roth and two thirds are Traditional. Anyone else thinking about or working on this, too?