SavingsTalk.com

Dani_Garcia · 10-31-2007, 03:25 PM

I have been working for four years and have changed jobs a lot of times because I want to move up fast; therefore, I've never put money in 401k. I only have Roth IRA with a brokerage firm and always contribute the max each year. My longest job was only two years. I'm still planning to move around. How should I plan for my retirement?<br />

big$saver · 10-31-2007, 03:25 PM

Just because you are not planning on staying at a job for very long, doesnt mean you should not contribute to the 401k. At my current job and at many others, you are 100% vested from day one and get a company match. You should investigate your employer. When you do leave, you just roll your 401k into an IRA or you next employers plan. Dont miss out on the company match, its free money!!!

Jeff
http://savingmoney.iblogger.org

Quake5 · 10-31-2007, 03:25 PM

If your maxing out your Roth IRA, you're doing about the most you can do as an employee. If you're planning on that much movement - perhaps you could start your own consulting firm and get companies to bring you on as a 1099 employee. Then, you can put up to 40% of your net earnings from your consulting business into an IRA . . . this will help you rack up some serious savings in a tax deferred vehicle!

ermak · 10-31-2007, 03:25 PM

if you are going to bounce around from job to job and you know this, then continue to fund your roth to the max...preferably in a no load mutual fund company like vanguard or fidelity

50cents · 10-31-2007, 03:25 PM

When employees don't except the 401k plans offered by their company they are leaving free money on the table. You should be contributing a minimum of the amount your company is willing to match. If the vesting schedule is strict you will at least be able to collect your own savings when you leave and roll it into an IRA under your own supervision.
Vesting is a schedule when the companies matching funds become 100% your money.
401k's may not seem very important or too useful but they are the only game in town so learn to play early and wisely.
Good luck

chicago_bull · 10-31-2007, 03:25 PM

Congratulations on saving for retirement. 401k, Roth, whatever...the fact that you're saving is huge!

I think Jeff J has got it. If you're moving around a lot the 401k can be a little tricky. Many jobs won't offer any match for at least a year and some will wait for 2 years (this is what happened to me). You might want to research this first and also think about how long you intend to stay at a firm. Seems you're in IT (so was I!) so I can totally appreciate the job hopping.

You're doing it right. Keep going on your Roth but research the 401k in whatever company you are working for. Find out how long before you will get the match. Most companies will allow you to deposit anywhere from 10-17% of your salary and match 50 cents on the dollar up to 6% of your salary.

What this means is that if you're making $50,000 per year and depositing 10% that's $5,000 in your 401k. For every dollar the company will give you 50 cents which would be an extra $2,500! 6% of $50,000 is $3,000 so you'd get the full $2,500. If you want the extra $500 put some more in your 401k and you're there!

Even if you're not there for the match you can save some extra cash over the Roth max. Never hurts to save more money. When you leave, you just roll it over to an IRA and you're good to go. You might be able to roll it over to a Roth but will have to pay the taxes on it when you do since Roth's are after tax while 401k's and regular IRA's are pre-tax.

HTH

invest01 · 10-31-2007, 03:25 PM

You may be moving too fast to take full advantage of the 401k but stop and take another look. The "normal" advice is to put enough into your 401k to get the company match (if you move too fast you may not get to keep all of their match - so check out the plan's vesting policy e.g. when does all or a portion of their match become yours). Even if you get to keep only a fraction of the match it is "free money" and a better return than most investments. You also reduce your federal income taxes for that year and your contributions are always yours to take with you and you can convert them into an IRA and then to a Roth IRA later depending on your income. So by all means fully fund your Roth but don't forget about the 401k.

The above is what to contribute to e.g. Rothe or 401k. The next issue is what are you investing in ? You usually should have a nice mixture of domestic large and small stocks, foreign stocks and bonds. Your broker should be able to guide you based on your age and risk tolerance. If you don't have a broker - I would suggest a visit to a " fee only" certified financial planner. He can review your investments, taxes, etc and give you a plan.

10-31-2007, 03:25 PM	#1
Dani_Garcia Greenhorn Join Date: Jul 2006 Posts: 21 Rep Power: 6	401k and IRA question? I have been working for four years and have changed jobs a lot of times because I want to move up fast; therefore, I've never put money in 401k. I only have Roth IRA with a brokerage firm and always contribute the max each year. My longest job was only two years. I'm still planning to move around. How should I plan for my retirement?<br />

10-31-2007, 03:25 PM	#2
big$saver Piggy Bank Join Date: Jul 2006 Posts: 59 Rep Power: 6	401k and IRA question? Just because you are not planning on staying at a job for very long, doesnt mean you should not contribute to the 401k. At my current job and at many others, you are 100% vested from day one and get a company match. You should investigate your employer. When you do leave, you just roll your 401k into an IRA or you next employers plan. Dont miss out on the company match, its free money!!! Jeff http://savingmoney.iblogger.org

10-31-2007, 03:25 PM	#3
Quake5 Greenhorn Join Date: Jul 2006 Posts: 22 Rep Power: 6	401k and IRA question? If your maxing out your Roth IRA, you're doing about the most you can do as an employee. If you're planning on that much movement - perhaps you could start your own consulting firm and get companies to bring you on as a 1099 employee. Then, you can put up to 40% of your net earnings from your consulting business into an IRA . . . this will help you rack up some serious savings in a tax deferred vehicle!

10-31-2007, 03:25 PM	#4
ermak Greenhorn Join Date: Jul 2006 Posts: 20 Rep Power: 6	401k and IRA question? if you are going to bounce around from job to job and you know this, then continue to fund your roth to the max...preferably in a no load mutual fund company like vanguard or fidelity

10-31-2007, 03:25 PM	#5
50cents Greenhorn Join Date: Jul 2006 Posts: 16 Rep Power: 0	401k and IRA question? When employees don't except the 401k plans offered by their company they are leaving free money on the table. You should be contributing a minimum of the amount your company is willing to match. If the vesting schedule is strict you will at least be able to collect your own savings when you leave and roll it into an IRA under your own supervision. Vesting is a schedule when the companies matching funds become 100% your money. 401k's may not seem very important or too useful but they are the only game in town so learn to play early and wisely. Good luck

10-31-2007, 03:25 PM	#6
chicago_bull Piggy Bank Join Date: Jul 2006 Posts: 60 Rep Power: 6	401k and IRA question? Congratulations on saving for retirement. 401k, Roth, whatever...the fact that you're saving is huge! I think Jeff J has got it. If you're moving around a lot the 401k can be a little tricky. Many jobs won't offer any match for at least a year and some will wait for 2 years (this is what happened to me). You might want to research this first and also think about how long you intend to stay at a firm. Seems you're in IT (so was I!) so I can totally appreciate the job hopping. You're doing it right. Keep going on your Roth but research the 401k in whatever company you are working for. Find out how long before you will get the match. Most companies will allow you to deposit anywhere from 10-17% of your salary and match 50 cents on the dollar up to 6% of your salary. What this means is that if you're making $50,000 per year and depositing 10% that's $5,000 in your 401k. For every dollar the company will give you 50 cents which would be an extra $2,500! 6% of $50,000 is $3,000 so you'd get the full $2,500. If you want the extra $500 put some more in your 401k and you're there! Even if you're not there for the match you can save some extra cash over the Roth max. Never hurts to save more money. When you leave, you just roll it over to an IRA and you're good to go. You might be able to roll it over to a Roth but will have to pay the taxes on it when you do since Roth's are after tax while 401k's and regular IRA's are pre-tax. HTH

10-31-2007, 03:25 PM	#7
invest01 Greenhorn Join Date: Jul 2006 Posts: 35 Rep Power: 6	401k and IRA question? You may be moving too fast to take full advantage of the 401k but stop and take another look. The "normal" advice is to put enough into your 401k to get the company match (if you move too fast you may not get to keep all of their match - so check out the plan's vesting policy e.g. when does all or a portion of their match become yours). Even if you get to keep only a fraction of the match it is "free money" and a better return than most investments. You also reduce your federal income taxes for that year and your contributions are always yours to take with you and you can convert them into an IRA and then to a Roth IRA later depending on your income. So by all means fully fund your Roth but don't forget about the 401k. The above is what to contribute to e.g. Rothe or 401k. The next issue is what are you investing in ? You usually should have a nice mixture of domestic large and small stocks, foreign stocks and bonds. Your broker should be able to guide you based on your age and risk tolerance. If you don't have a broker - I would suggest a visit to a " fee only" certified financial planner. He can review your investments, taxes, etc and give you a plan.

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