Company 401K

[DaVortex]

I have been working at a long distance telephone company for about 5 months and just found out from a co-worker that we actually have some kind of 401K plan. I was also told that the company doesnt match anything.

Is it worth it to sign up for the 401K if they dont match 1 cent. Or should I just take my money and put it into my Roth IRA like I have been doing.

 

[snoopdoug1]

I'd say both if you can afford it. Putting pre-tax money into your 401k is a good way to save for retirement.

 

[PricklyPete]

If they don't match...just go Roth IRA. If you max out your Roth IRA, the 401K won't be a horrible idea if they let you choose where your 401k contributions are invested (index fund would be preferrable).

 

[Modeps]

Only do it if the company matches... It's free money, with no taxes. You should be doing it as soon as you can

 

[Betawi]

What he said. :thumbsup:

Originally posted by: PricklyPete
If they don't match...just go Roth IRA. If you max out your Roth IRA, the 401K won't be a horrible idea if they let you choose where your 401k contributions are invested (index fund would be preferrable).

 

[IHateMyJob2004]

Originally posted by: DaVortex
I have been working at a long distance telephone company for about 5 months and just found out from a co-worker that we actually have some kind of 401K plan. I was also told that the company doesnt match anything.

Is it worth it to sign up for the 401K if they dont match 1 cent. Or should I just take my money and put it into my Roth IRA like I have been doing.

Ignoring all other things...

If you are good at picking high quality, high yielding issues, I'd go with the Roth-IRA. If you are not, do the 401K. If you really want to work the rest of your life and retire happy, do both.

Remember, any money you put into a Roth_IRA, can be taken out. So if you put $3,000/year into a Roth-IRA for 10 years, you've contributed $30,000. If the Roth-IRA is later worth $100,000, you can pull out up to $30,000 to put towards a home or something you need or if times of hardship are upon you. You'd still have ot leave ht $70,000 in there.

With the 401K, you can borrow money at any time as "hardship loans". I think. my company does it. Not sure if it's company specifiic or if it's part of all 401Ks.

Could go on.... but won't

 

[phreakah]

my company raised my salary just so they can put the difference in my 401k without me feeling any difference in pay

 

[SuRgEoN]

Any time you can start an investment, you should. I've been investing since I was 13yrs old. Im 24yrs old now and very well off. I did however just start my 401k this past year. It's defintely worth it when you work for a company that can match it.

 

[shenaniganz]

Originally posted by: PricklyPete
If they don't match...just go Roth IRA. If you max out your Roth IRA, the 401K won't be a horrible idea if they let you choose where your 401k contributions are invested (index fund would be preferrable).

Agreed. Why do companies even offer 401k's and not match? Do they think employees are gullible enough to believe this is a benefit?

 

[DaVortex]

Originally posted by: SuRgEoN
Any time you can start an investment, you should. I've been investing since I was 13yrs old. Im 24yrs old now and very well off. I did however just start my 401k this past year. It's defintely worth it when you work for a company that can match it.

SuRgEoN,

I was just curious as to what kind of investing you did at the age of 13?

 

[GasX]

If 10% of your salary is greater than 2000, open a 401k either as well as or instead of an IRA

 

[Jzero]

Originally posted by: shenaniganz

Originally posted by: PricklyPete
If they don't match...just go Roth IRA. If you max out your Roth IRA, the 401K won't be a horrible idea if they let you choose where your 401k contributions are invested (index fund would be preferrable).

Agreed. Why do companies even offer 401k's and not match? Do they think employees are gullible enough to believe this is a benefit?

Regardless of corporate match, it's still a tax-shelter, so there is some benefit to it.

 

[pyonir]

If i want to contribute to my IRA, can i do it pre-tax? Or can i only put post-tax money in it?

 

[GasX]

Originally posted by: pyonir
If i want to contribute to my IRA, can i do it pre-tax? Or can i only put post-tax money in it?

A Roth IRA takes post-tax money and let's it grow tax free. When you retire, no taxes are due on that money.

A Regular IRA takes pre-tax oney and lets it grow tax free. You pax tax on the withdrawals when you retire.

 

[SagaLore]

Yes. I believe you can move 401Ks around when you switch companies.

 

[pyonir]

Originally posted by: Mwilding

Originally posted by: pyonir
If i want to contribute to my IRA, can i do it pre-tax? Or can i only put post-tax money in it?

A Roth IRA takes post-tax money and let's it grow tax free. When you retire, no taxes are due on that money.

A Regular IRA takes pre-tax oney and lets it grow tax free. You pax tax on the withdrawals when you retire.

Thanks man. I think i have a Roth...gotta double check since i just transferred my last company's 401k into it.

 

[Apathetic]

Originally posted by: PricklyPete
If they don't match...just go Roth IRA. If you max out your Roth IRA, the 401K won't be a horrible idea if they let you choose where your 401k contributions are invested (index fund would be preferrable).

Good advice.

Dave

 

[dsfunk]

I only max my roth out right now, but if I wanted to could I max my roth and then have a regular ira as well?

 

[axnff]

You can only put up to $4k into any number of IRAs per yer if you are under 59 1/2. You can split it up between traditional and Roth, but each person can only go up to $4k/annum. You also have to receive at least as much as your contribution in taxable compensation (includes income and alimony and a few other things, but not pensions, SS, or retirement distributions).

It's very hard to imagine a scenario in which a zero-match 401k would be better than a Roth IRA. Maybe if the 401(k) is really well managed, but you can probably find IRAs with the same management. Plus, since 401k is post-tax, and grows tax-free, it is effectively bigger than the 401(k). Depending on your income level, you might be able to use the 401(k) to remain in a lower tax bracket....

Personally, I would max out the Roth first. If I went over $4k/year, I would put the remainder in the 401(k) - in which you can put up to $14k/year.

A good discussion of Roth IRAs can be found here.

 

[SearchMaster]

Originally posted by: pyonir

Originally posted by: Mwilding

Originally posted by: pyonir
If i want to contribute to my IRA, can i do it pre-tax? Or can i only put post-tax money in it?

A Roth IRA takes post-tax money and let's it grow tax free. When you retire, no taxes are due on that money.

A Regular IRA takes pre-tax oney and lets it grow tax free. You pax tax on the withdrawals when you retire.

Thanks man. I think i have a Roth...gotta double check since i just transferred my last company's 401k into it.

I hope not. You can't mix Roth monies with 401K rollover monies or you'd have a huge tax mess. You probably just have a rollover IRA account, which is just a regular IRA and subject to taxation upon withdrawal.

 

[pyonir]

Originally posted by: SearchMaster

Originally posted by: pyonir

Originally posted by: Mwilding

Originally posted by: pyonir
If i want to contribute to my IRA, can i do it pre-tax? Or can i only put post-tax money in it?

A Roth IRA takes post-tax money and let's it grow tax free. When you retire, no taxes are due on that money.

A Regular IRA takes pre-tax oney and lets it grow tax free. You pax tax on the withdrawals when you retire.

Thanks man. I think i have a Roth...gotta double check since i just transferred my last company's 401k into it.

I hope not. You can't mix Roth monies with 401K rollover monies or you'd have a huge tax mess. You probably just have a rollover IRA account, which is just a regular IRA and subject to taxation upon withdrawal.

Was not aware of that. Thanks once again.

 

[rh71]

I would do it anyway... I mean... we're screwed with social security when our time comes ... (40 years from now)... I've been doing the max % since I was 21.

 

[RossMAN]

Ask your company benefits/HR department:

1) Are you vested 100%?
2) Do they match? How much?

 

[Hector13]

Originally posted by: shenaniganz

Originally posted by: PricklyPete
If they don't match...just go Roth IRA. If you max out your Roth IRA, the 401K won't be a horrible idea if they let you choose where your 401k contributions are invested (index fund would be preferrable).

Agreed. Why do companies even offer 401k's and not match? Do they think employees are gullible enough to believe this is a benefit?

you have to remember that not everyone qualifies for a roth ira as well. There are income limits which might make your 401k (matching or not) your only choice.

 

[SuRgEoN]

Originally posted by: SagaLore
Yes. I believe you can move 401Ks around when you switch companies.

Yes, it's called a rollover