Double post today, but something's come up that requires my attention and perhaps your assistance.
Long story short, our contract got bought out by another contractor. Although nothing is for certain, the new contractor said that it's only a management change, and they plan to keep all of us regular employees.
In any case, I've checked the 401(k) plan for the new contractor, and they have a performance-based match (which appears to be around $0.50 to $.65 per dollar dollar), but with a match limit of "only" up to 6% of gross.
Now, I realize this is fairly typical, but my current employer has NO LIMIT on their employer match (at $0.28 per dollar).
So, here's what I am thinking of doing (and perhaps this is the part where I once again live up to my name). I'm thinking of giving 100% of my paycheck for the next two months to my current 401(k). Two months because that's how long the current contractor has before their contract expires. That way, I can take advantage of as much of their employer match as I can, while I still can. After that, I'll ease up considerably to both replenish the EF, as well as adjust to the new contractor's terms.
My EF is more than enough to cover expenses for the next two months, so I don't think this is completely insane. Just the same, I would have to be super-careful because I would be living on emergency savings alone. Then again, if it turns out to be undoable, then I'll just dial the contributions back down.
Soooo, what do you guys think about this idea? Too crazy, or just crazy enough that it might work? (Actually, I've already switched it over to 100%, BUT if someone thinks this is a really bad idea, I can always switch it back.)
401(k)
January 5th, 2009 at 06:11 pm
January 5th, 2009 at 06:19 pm 1231179598
January 5th, 2009 at 06:27 pm 1231180036
January 5th, 2009 at 06:27 pm 1231180052
However, the new contractor has a much more conventional setup, and that's why I was thinking about contributing my entire paycheck. That way, I take as much as I can from my current employer's matching before having to adjust to the new employer's matching scheme.
Chances are really good that I will not be maxing my 401(k) this year, due to the new employer's matching limits. Given my current predicament hehe I mean tax bracket, I'm better off maxing the Roth after that. And if I like my new 401(k) brokerage (I don't know who it is yet), then maybe I'll come back and max it. If not, I'd like to double check my other options, such as HSA first. Not entirely sure yet. We'll have to see when I get to that point.
January 5th, 2009 at 06:38 pm 1231180711
January 5th, 2009 at 06:40 pm 1231180800
January 5th, 2009 at 06:44 pm 1231181079
Plus this will motivate you to really deside if a purchase is worth it before you buy it since you will be using your savings to buy it.
January 5th, 2009 at 06:50 pm 1231181408
January 5th, 2009 at 06:51 pm 1231181508
January 5th, 2009 at 07:00 pm 1231182009
Plus, I don't actually like my current 401(k) company. At all. I'll wait until the 2010, but yes, I plan to roll that money over to my own IRA. In fact, I plan to save up a separate fund this year to do a conversion (within my tax bracket) when the time comes to do the rollover.
January 5th, 2009 at 07:15 pm 1231182941
You can do it if anybody can!
January 5th, 2009 at 07:23 pm 1231183419
(Speaking of which, I need to clean my closet. It's been really cluttered lately.)
January 5th, 2009 at 08:55 pm 1231188935
January 6th, 2009 at 12:46 am 1231202786
January 6th, 2009 at 01:42 am 1231206135
Just one suggestion: Make sure you like the funds in the new employer's (contractor's?) plan. Would be a shame for you to sock away 100% of your income for the next 2 months only to be forced to put it in the "Squeaky Wheel USAutomakers Fund" when you have to transfer your funds to the new company's plan.
January 6th, 2009 at 10:15 pm 1231280140
January 7th, 2009 at 01:19 am 1231291183
In fact, I plan to do exactly that, because I don't like my current 401(k) company. Next year to be exact, after the employer match is deposited and I've saved up a little bit more to maybe do some Roth conversion.
January 7th, 2009 at 05:19 pm 1231348749
If you make 50k*.06*.5=$1500 This could go up another $500 (with $.66 match).
If you make 100k the old 401k is just a hair better. If you make 150k the new 401k kicks the other ones butt.
January 7th, 2009 at 06:49 pm 1231354174
Next year, I will only have the new employer's match to work with.
January 8th, 2009 at 07:04 pm 1231441497
When I worked full time, I contributed 40 percent of my check until I maxed out at 15k a year. Now, as a freelancer, I put 100 percent in my IRA til I max it out.
January 10th, 2009 at 06:07 am 1231567626
January 10th, 2009 at 06:57 am 1231570629
I'm hoping not though. In fact, if I really had any doubts, I would not do this.
But I'm willing to take the risk. Heh.