YA Roth 401k T

[Albis]

If a company matches 6% of your income in a Roth 401k, is that match based on your pre-tax income or after-tax income?

For example, if you make 100k/yr is the match $6000 or is it based on your after-tax income of 60k which would mean the match is $3600?

 

[Gunslinger08]

Pre.

 

[DaveSimmons]

Pre-tax. Remember that you must put in at least 6% yourself to get the full match.

Also their share usually "vests" over 5-6 years (you only own 20% of the match after 2 years, 40% after 3, 60% after 4 . . . )

 

[Albis]

Ah, pre-tax match sounds much nicer than an after-tax match.

This is the first year we have a Roth 401k at work so I look forward to taking advantage of that while I'm still young.

I'm assuming it doesn't matter if I contribute 6% of my total salary now or spread it out over the year? The match should still be the same correct?

 

[DaveSimmons]

401K is usually set up that you must pick a % and have it deducted from every paycheck, you don't get to pick a time to write one check like with an IRA.

 

[Albis]

We have our 401k through Fidelity and I think I can change my contribution % whenever I want. I think it's 0-60% of my salary so that was what I was thinking about doing.

I was thinking of funding my 6% of my yearly salary early on.

 

[bennylong]

Originally posted by: Albis
Ah, pre-tax match sounds much nicer than an after-tax match.

This is the first year we have a Roth 401k at work so I look forward to taking advantage of that while I'm still young.

I'm assuming it doesn't matter if I contribute 6% of my total salary now or spread it out over the year? The match should still be the same correct?

You would have to contribute 6% each paycheck to get your match. The match is per paycheck, not per year.

 

[Engineer]

Originally posted by: Albis
We have our 401k through Fidelity and I think I can change my contribution % whenever I want. I think it's 0-60% of my salary so that was what I was thinking about doing.

I was thinking of funding my 6% of my yearly salary early on.

If you stop contributing or max out early, you lose the match during those "no contribution" periods.
(generally with a few exceptions)

 

[DaveSimmons]

Originally posted by: Engineer

Originally posted by: Albis
We have our 401k through Fidelity and I think I can change my contribution % whenever I want. I think it's 0-60% of my salary so that was what I was thinking about doing.

I was thinking of funding my 6% of my yearly salary early on.

If you stop contributing or max out early, you lose the match during those "no contribution" periods.
(generally with a few exceptions)

Right, the 6% is usually a maximum, and is usually tied to each paycheck.

If you put in 12% for half the year, they match 6% during those 6 months. If you then switch to 0% for the second half, they match 0% during the second half.

 

[Albis]

Ah you guys are right, it's 6% match per paycheck with a true up at the end of the year to make sure you get your full 6% match.

 

[zinfamous]

Since you get the match with work, go ahead and keep the 401k. But you should invest minimally in those things. open up an IRA ASAP. Well, you probably have...

Pre-tax funds will hurt you in the end.

 

[bennylong]

Originally posted by: Albis
Ah you guys are right, it's 6% match per paycheck with a true up at the end of the year to make sure you get your full 6% match.

You might want to check with HR to see what % you should contribute each paycheck if you're making 100k a year since the max. you can contribute is $15,500 a year.

HR should provide you a chart showing which % maximize match.

 

[erub]

Not quite what you are looking for, but I just found this 401k calculator:

Link

If I put in 10% of my expected salary after my MS, earn 8% return, with 3% annual salary increase and 100% employer match on 5% (what my previous company was offering), with the 2K currently in there, I'll have almost 5 million at 65! Although pretax money plus another 4 mil from the Roth IRA..damn..

 

[bennylong]

http://partners.leadfusion.com/tools/choosetosave/savings02/tool.fcs

This is a good calculator. I will have $16 millions when I'm 65! Hello, 18 years old , I'll be your sugar daddy.