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Would you max out your 401K if your employer does not match at all?

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LoveyQ
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Would you max out your 401K if your employer does not match at all?

At my job, they don't match at ALL on the 401K contributions. Should I still try to max out (or contribute as much as I can) to my 401K anyway?

Or would it be smarter to open up an IRA account or other type of retirement account instead/in addition to the 401K?

Posted 1/11/10 2:36 PM
 
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MarathonKnitter
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Re: Would you max out your 401K if your employer does not match at all?

if there is no match, i'd go with the IRA.
reason being that an IRA can give you more investment options than the 401k.

should your employer start to match, in the futer, i'd max the 401k and then go to an IRA

that is my "un-formally educated" opinion

Posted 1/11/10 2:39 PM
 

JandJ1224

Member since 6/06

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Name:
Jannette

Re: Would you max out your 401K if your employer does not match at all?

I would probably go with a Roth IRA

Posted 1/11/10 2:44 PM
 

SusiBee
. . . . .

Member since 3/09

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S

Re: Would you max out your 401K if your employer does not match at all?

Posted by JandJ1224

I would probably go with a Roth IRA



My banker told me I couldn't do a roth because I already have the 401k. I can open a traditional IRA, which I will be doing this year.
The fiscal crisis that ate nearly all of my 401K made me think long and hard about other options. Thankfully my 401K recovered.
And to answer Yesi, I contribute a lot to my 401K, even though my employer matches some of it.

Posted 1/11/10 3:00 PM
 

Kara
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Re: Would you max out your 401K if your employer does not match at all?

Posted by SusiBee

Posted by JandJ1224

I would probably go with a Roth IRA



My banker told me I couldn't do a roth because I already have the 401k. I can open a traditional IRA, which I will be doing this year.
The fiscal crisis that ate nearly all of my 401K made me think long and hard about other options. Thankfully my 401K recovered.
And to answer Yesi, I contribute a lot to my 401K, even though my employer matches some of it.



Have the rules changed in the last few years? My DH had a Roth IRA and a 401(k) for several years, until he passed the income cap for the Roth IRA...

My employer doesn't match either. I absolutely contribute the max and we also put away other money for retirement. Our 401(k)s alone will not be enough.

Posted 1/11/10 3:08 PM
 

SusiBee
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S

Re: Would you max out your 401K if your employer does not match at all?

Kara, you're right. It was the income cap that won't allow for the Roth.

Posted 1/11/10 3:11 PM
 

ave1024
I Took The Wrong Road

Member since 12/07

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That Led To The Wrong Tendencies

Re: Would you max out your 401K if your employer does not match at all?

My company makes a very tiny "match", which I wouldn't even call it a match.

I max mine out at the $15,500 every year. I think my company puts in $1500 a year. Bleh. Chat Icon

Even if they didn't match it at all, I would still max it out. I have been with my company for over 10 years, so it's kind of the "parking spot" for all my retirement $$$$$. I should also contribute to an IRA, but I haven't done anything with that yet.

My plan at least has a decent amount of investment choices.

Message edited 1/11/2010 3:24:43 PM.

Posted 1/11/10 3:24 PM
 

LoveyQ
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Member since 11/07

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Re: Would you max out your 401K if your employer does not match at all?

Ok, so it sounds like maxing it wouldn't be a bad idea. We have a nice mix of investment options...

Posted by ave1024
I max mine out at the $15,500 every year. I think my company puts in $1500 a year. Bleh. Chat Icon



The max this year is 16,000 in case you want to bump it.

Posted 1/11/10 3:28 PM
 

Kara
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They call me "Tater Salad"

Re: Would you max out your 401K if your employer does not match at all?

Posted by LoveyQ

Ok, so it sounds like maxing it wouldn't be a bad idea. We have a nice mix of investment options...

Posted by ave1024
I max mine out at the $15,500 every year. I think my company puts in $1500 a year. Bleh. Chat Icon



The max this year is 16,000 in case you want to bump it.



The max this year (and last year FTR) is $16,500.

Posted 1/11/10 3:41 PM
 

ave1024
I Took The Wrong Road

Member since 12/07

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That Led To The Wrong Tendencies

Re: Would you max out your 401K if your employer does not match at all?

Posted by Kara

Posted by LoveyQ

Ok, so it sounds like maxing it wouldn't be a bad idea. We have a nice mix of investment options...

Posted by ave1024
I max mine out at the $15,500 every year. I think my company puts in $1500 a year. Bleh. Chat Icon



The max this year is 16,000 in case you want to bump it.



The max this year (and last year FTR) is $16,500.




Thanks.

Yeah I never had to worry about adjusting the max as my yearly raises always kept ahead of the 401K max limit.

But of course I am still waiting for my raise from early 2009 (which who knows when they will finally if ever approve that). So I may have to up my contribution percentage.

Posted 1/11/10 3:49 PM
 

Blu-ize
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Susan

Re: Would you max out your 401K if your employer does not match at all?

I max..my company matches a good amount which is in step with it's peers.

I still max it. The investment choices are pretty varied. I also have my IRAs with the firm since I'm required to have my accounts with them.

Posted 1/11/10 5:03 PM
 

LoveyQ
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Member since 11/07

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Re: Would you max out your 401K if your employer does not match at all?

Posted by Kara

Posted by LoveyQ

Ok, so it sounds like maxing it wouldn't be a bad idea. We have a nice mix of investment options...

Posted by ave1024
I max mine out at the $15,500 every year. I think my company puts in $1500 a year. Bleh. Chat Icon



The max this year is 16,000 in case you want to bump it.



The max this year (and last year FTR) is $16,500.



My bad, yes it's $16,500!!

Posted 1/11/10 9:35 PM
 

NYCbride09
LIF Infant

Member since 1/10

69 total posts

Name:
M

Re: Would you max out your 401K if your employer does not match at all?

My company was just bought out. Yukky.

We had like 100% of 4%. I did 8% and comany did 4. I was saving 12% a month.

I think my contro was $5,000-ish last year.

You have to figure out what your plans are for the future, how you need to save.

A roth is AFTER tax dollars, but you can take the money out with NO taxes when its time.

Posted 1/11/10 9:40 PM
 

LSP2005
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L

Re: Would you max out your 401K if your employer does not match at all?

I would talk to your banker because I think, but could be incorrect, that this year (2010) you can do a traditional to roth conversion. You would pay the taxes now but would end up with a roth ira. I would try to do it this way if you income max the roth. I would ask your broker how to do a traditional and then if you can move it into the roth for this year. I don't think investing in an ira or a 401k is mutually exclusive. I would go to a finance person to see what they advise is the best for your personal situation.

Message edited 1/11/2010 11:26:11 PM.

Posted 1/11/10 11:18 PM
 

CookiePuss
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Re: Would you max out your 401K if your employer does not match at all?

Posted by LSP2005

I would talk to your banker because I think, but could be incorrect, that this year (2010) you can do a traditional to roth conversion. You would pay the taxes now but would end up with a roth ira. I would try to do it this way if you income max the roth. I would ask your broker how to do a traditional and then if you can move it into the roth for this year. I don't think investing in an ira or a 401k is mutually exclusive. I would go to a finance person to see what they advise is the best for your personal situation.



You could always do a Roth conversion if you were within certain income parameters.

What is different about a conversion in 2010 is that there is no longer an income ceiling so those with AGI of over $100,000 can now participate.

The taxation of the conversion can be delayed and split so you can delay paying taxes on the conversion amount to 50% in 2011 and then 50% in 2012.

As far as not being able to invest in an IRA if you have a 401k or another employer sponsored qualified plan...that is not true...you can always contribute to an IRA; it is the deductiblity of those contributions that are affected. Roth contributions can and are prevented based on income levels; as the contribution is never deductible.

Message edited 1/12/2010 8:10:50 AM.

Posted 1/12/10 8:10 AM
 

jps
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Member since 11/09

435 total posts

Name:
Jennifer

Re: Would you max out your 401K if your employer does not match at all?

Yes, I would try to.

My employer matches a max of $1k/yr and it doesn't fully vest for 5 years (bit by bit each year) and doesn't kick in until I've been there a full year, so it's basically like they don't match at all. Im not maxing it out at the moment because my DH is still job-hunting but will max it out as soon as he finds something.

Sure, you lose a lot of the add'l benefit if you don't have an employer match, but it's still important to save for retirement and I like that it's automatically deducted each month and taken pre-tax.

Posted 1/12/10 8:15 AM
 

budget09
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Re: Would you max out your 401K if your employer does not match at all?

If your employer does not match and you meet the requirements to contribute to a Roth IRA then you should fully fund a Roth IRA for 2010. Thats $5000 if you are less then 50 years old.

If you have more money to invest after you Roth IRA has $5,000 in there, then you can contribute to your Employers Tax Sheltered Retirement Program.


Chat Icon

Posted 1/16/10 11:29 PM
 

budget09
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Re: Would you max out your 401K if your employer does not match at all?

If your employer does not match and you meet the requirements to contribute to a Roth IRA then you should fully fund a Roth IRA for 2010. Thats $5000 if you are less then 50 years old.

If you have more money to invest after you Roth IRA has $5,000 in there, then you can contribute to your Employers Tax Sheltered Retirement Program.


Chat Icon

Message edited 1/17/2010 10:19:59 AM.

Posted 1/16/10 11:30 PM
 

SecretTTCer
LIF Adult

Member since 6/08

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Re: Would you max out your 401K if your employer does not match at all?


Suze Orman says that you should only contribute up to your max because 401Ks have limited possibilities with regard to investment opportunities.

Posted 1/17/10 3:12 PM
 

Erica
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Member since 5/05

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Re: Would you max out your 401K if your employer does not match at all?

any free money that your company is willing to give you, I would take.


If there wasn't a match, I would look into what teh 401K was being invested into. Is it 100% your company's stock? I wouldn't want all my eggs in that basket KWIM? Individual investing might be a better option.

Posted 1/18/10 9:20 AM
 

MrsO
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Maureen

Re: Would you max out your 401K if your employer does not match at all?

contribute as much as you can. The IRA's have much lower limits and you can't save as much.

Posted 1/18/10 10:45 AM
 

CookiePuss
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Re: Would you max out your 401K if your employer does not match at all?

Posted by SecretTTCer


Suze Orman says that you should only contribute up to your max because 401Ks have limited possibilities with regard to investment opportunities.



That is not necessarily true at all. 401k plans typically have enough options to create a diversified portfolio.

Also, keep in mind that Susie Orman sells books and makes her living off of books sales and those things related to it. Her financial advice is "one size fits all" and that doesn't always work.

Posted 1/18/10 3:26 PM
 

CookiePuss
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Re: Would you max out your 401K if your employer does not match at all?

Posted by budget09

If your employer does not match and you meet the requirements to contribute to a Roth IRA then you should fully fund a Roth IRA for 2010. Thats $5000 if you are less then 50 years old.

If you have more money to invest after you Roth IRA has $5,000 in there, then you can contribute to your Employers Tax Sheltered Retirement Program.


Chat Icon



There is a huge difference in investing in a 401k or other qualified plan that hasn't been mentioned and that is qualified plans are funded with pre tax money and grows tax deferred. That is a big benefit. Investing a max of the $5000 (without catch up) is not going to allow anyone to retire comfortably.

No one knows what their tax bracket is going to be when they retire. Most likely tax rates will go up in the near future but I have no idea what they will be 40 years from now so tax deferral growth with immediate income tax benefits MAY be better.

Posted 1/18/10 3:31 PM
 

munchkinbugs
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Lisa

Re: Would you max out your 401K if your employer does not match at all?

I did.

Posted 1/18/10 7:51 PM
 
 
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