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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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401K and IRA's
Another dumb question!!
My company only matches 2%. Should I be putting in more than that, will the money just grow slower?
Should I max out my dh's IRA because it would be less than maxing out my 401K?
Thanks!
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Posted 10/26/07 3:51 PM  |
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Long Island Weddings
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JP826
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Member since 9/06 10903 total posts
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Me!! All about ME!
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Re: 401K and IRA's
I'm not sure what you mean when you ask "Should I max out my dh's IRA because it would be less than maxing out my 401K?"
However, If your company matches only 2%, then I would definately not put anything less than that. My company matches 5%- I'm putting away 6%. It really doesn't hurt to put more.. after all, it is YOUR money.
How long will it take you you to become fully vested?
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| Posted 10/26/07 3:58 PM |
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QuoteTheRaven424
22 Months?!!!!
Member since 5/05 13659 total posts
Name:
And If That Isn't A True Blue Miracle
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Re: 401K and IRA's
Posted by hazeleyes33
Another dumb question!!
My company only matches 2%. Should I be putting in more than that, will the money just grow slower?
Should I max out my dh's IRA because it would be less than maxing out my 401K?
Thanks!
my rule of thumb has always been to put in the max amount if you can
most companies allow you to put in 15% at the max
i would say to look at your budget and expenses and see what makes the most sense. Basically you want to put a good amount in without strapping yourself too much.
Plus, you have to consider that there may be a bigger risk with a 401K vs. an IRA. Depending on your allocations, if you have a more aggressive portfolio, you can make more money if you put more in, but you can also lose if the market goes down. With an IRA, you're still depending on the stock market, but it may be a bit more conservative.
That doesn't answer your question directly, but it may provide some food for thought
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| Posted 10/26/07 3:59 PM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: 401K and IRA's
In your company's 401k, you should NEVER put less then 2%. However, you should put as much as you can into your 401k up to the max, which is $15,500 unless you're over 50.
This also applies to your DH, you should put money into an employer sponsered plan such as a 401k, before an IRA in most cases. This is because employer sponsered plans are funed with pre-tax money and will grow tax deferred. An IRA is contributed as after tax money and may be deductible on your Federal Tax return ( but it may not, depends on a few varibles).
You can contribute to both an employer sponsered plan and a Traditional IRA or ROTH IRA. If your IRA contribution is not tax deductible, you should be contributing to a ROTH not a traditional.
As far as allocations, most emploer plans have various investment choices to match your risk profile.
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| Posted 10/26/07 4:07 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: 401K and IRA's
agree again. DH and I max our 401k plans with a 15% allocation. Since it reduces your taxable income, you pay tax on a lower income. That's an excellent reason to do it. Your 401(k) money grows tax deferred so when you are at retirement age and start taking distributions you are taxed at a much lower rate than you would at this point. We also contribute to a traditional IRA but do not max it. Just a personal choice of where the money goes to.
This is the time of your lives where you accumulate your retirement income. IMO, you can't depend on SS income to support you down the road.
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| Posted 10/26/07 4:15 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
Posted by SIBride06
I'm not sure what you mean when you ask "Should I max out my dh's IRA because it would be less than maxing out my 401K?"
However, If your company matches only 2%, then I would definately not put anything less than that. My company matches 5%- I'm putting away 6%. It really doesn't hurt to put more.. after all, it is YOUR money.
How long will it take you you to become fully vested?
I currently put in 2%. I have been invested for over 7 years.
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| Posted 10/26/07 4:23 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
Posted by QuoteTheRaven424
Posted by hazeleyes33
Another dumb question!!
My company only matches 2%. Should I be putting in more than that, will the money just grow slower?
Should I max out my dh's IRA because it would be less than maxing out my 401K?
Thanks!
my rule of thumb has always been to put in the max amount if you can
most companies allow you to put in 15% at the max
i would say to look at your budget and expenses and see what makes the most sense. Basically you want to put a good amount in without strapping yourself too much.
Plus, you have to consider that there may be a bigger risk with a 401K vs. an IRA. Depending on your allocations, if you have a more aggressive portfolio, you can make more money if you put more in, but you can also lose if the market goes down. With an IRA, you're still depending on the stock market, but it may be a bit more conservative.
That doesn't answer your question directly, but it may provide some food for thought
Thanks. Totally understood!
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| Posted 10/26/07 4:24 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
Posted by shamrock124
In your company's 401k, you should NEVER put less then 2%. However, you should put as much as you can into your 401k up to the max, which is $15,500 unless you're over 50.
This also applies to your DH, you should put money into an employer sponsered plan such as a 401k, before an IRA in most cases. This is because employer sponsered plans are funed with pre-tax money and will grow tax deferred. An IRA is contributed as after tax money and may be deductible on your Federal Tax return ( but it may not, depends on a few varibles).
You can contribute to both an employer sponsered plan and a Traditional IRA or ROTH IRA. If your IRA contribution is not tax deductible, you should be contributing to a ROTH not a traditional.
As far as allocations, most emploer plans have various investment choices to match your risk profile.
Thanks! My dh does not have a 401K at work so that is why he does IRA.
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| Posted 10/26/07 4:26 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
Posted by Blu-ize
agree again. DH and I max our 401k plans with a 15% allocation. Since it reduces your taxable income, you pay tax on a lower income. That's an excellent reason to do it. Your 401(k) money grows tax deferred so when you are at retirement age and start taking distributions you are taxed at a much lower rate than you would at this point. We also contribute to a traditional IRA but do not max it. Just a personal choice of where the money goes to.
This is the time of your lives where you accumulate your retirement income. IMO, you can't depend on SS income to support you down the road.
Thanks so much!
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| Posted 10/26/07 4:27 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
I just looked it up and we can contribute up to 50% of our income for 401K's!
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| Posted 10/26/07 4:29 PM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: 401K and IRA's
Posted by hazeleyes33
I just looked it up and we can contribute up to 50% of our income for 401K's!
I would double check that, the maximum employee contribution is a 100% of earned income or $15,500 (not including catchup) whichever is less. It's IRS code.
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| Posted 10/26/07 4:35 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
Posted by shamrock124
Posted by hazeleyes33
I just looked it up and we can contribute up to 50% of our income for 401K's!
I would double check that, the maximum employee contribution is a 100% of earned income or $15,500 (not including catchup) whichever is less. It's IRS code.
Sorry, you are right!
"You first become eligible the 1st of the month following the eligibility requirements above. Once eligible you may enroll at any time during the year. You may defer from 1% to 50% of your total annual compensation (in 1% increments) on a pre-tax basis, up to the legal maximum established by the IRS ($15,500 in 2007)."
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| Posted 10/26/07 4:37 PM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: 401K and IRA's
Feel free to FM me if you have any questions. I am happy to help.
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| Posted 10/26/07 4:42 PM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: 401K and IRA's
Posted by shamrock124
Feel free to FM me if you have any questions. I am happy to help.
Thanks so much. I probably will!!
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| Posted 10/26/07 4:53 PM |
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