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10/20/2017 1:01:18 AM
9/22/2017 12:11:25 AM
Posted: 8/2/2005 12:37:50 PM EDT
[Last Edit: 8/2/2005 1:10:30 PM EDT by scuba_ed]
I've read most of the postings on this thread relating to 401-k's; particularly with respect to some perceptions and some adivce. My employer may be entirely different than your own, yet the math as stated by many leads me to believe a lack of understanding.

The following are examples:

Employee earns $50,000 per year, defers 6 %.
Deferrals = $3,000 per year
Match = 50% of $3,000 = $1,500

Employee earns $50,000 per year, defers 8 %.
Deferrals = $4,000 per year
Match = 50% of $4,000 = $2,000

The match is certainly based upon the first 50%, but what many have seemingly missed is the question of 50% of what?

Do the math, consult your HR if you need clarification. The only exception I've encountered in discussion with friends in other companies is that many companies don't understand that employees are entitled by law to contribute the max. of $14-k per year to a companies 401-k plan.





Link Posted: 8/2/2005 2:44:15 PM EDT
[Last Edit: 8/2/2005 7:38:28 PM EDT by Q3131A]
Every employer I have worked for had the same program:

50% match for the first 6%.
Link Posted: 8/2/2005 2:48:45 PM EDT
mine matches 100% for 5 %
Link Posted: 8/2/2005 2:51:17 PM EDT
Every employer I have work for had the same program:

50% match for the first 6%.


__________________________________________________________

Yeah....let me ask a question.

Yourself, and a dozen other co-workers have salary ranges from $50-k to $100-k. Each of you contributes a 50% match for the first 6%. By your explanation, each of you contributes...the same? Do the math.

The 1st 6% of what? Have you ever balanced an equation?

Example:

2 fellows get paid by the amount of paper they throw away. Each gets a 50% match based upon salary earned.

Joe is able to throw 50-lbs. away.
Jill is able to throw 10-lbs. away.

Who gets paid more?


Link Posted: 8/2/2005 3:38:12 PM EDT
A person can only contribute the maximum of $14,000 (plus $4,000 catch-up) if the plan document allows it.

The match % is the % of salary a participant contributes, up to the maximum the match is figured upon. For instance if the match is 50% up to 6%, a participant would get the following:

1% contribution 50% of 1%

4% contribution 50% of 4 %

6% contribution 50% of 6%

10% contribution 50% of 6%
Link Posted: 8/2/2005 5:02:21 PM EDT
My employer matches 100% up to the limit. Last year they also dumped some money in a couple of times when we did really well. I was quite happy about that.
Link Posted: 8/2/2005 7:37:53 PM EDT

Originally Posted By scuba_ed:
Every employer I have work for had the same program:

50% match for the first 6%.


__________________________________________________________

Yeah....let me ask a question.

Yourself, and a dozen other co-workers have salary ranges from $50-k to $100-k. Each of you contributes a 50% match for the first 6%. By your explanation, each of you contributes...the same? Do the math.

The 1st 6% of what? Have you ever balanced an equation?

Example:

2 fellows get paid by the amount of paper they throw away. Each gets a 50% match based upon salary earned.

Joe is able to throw 50-lbs. away.
Jill is able to throw 10-lbs. away.

Who gets paid more?





First 6% of salary put in the 401k is matched by the company at 50%. So, if Joe makes $100k per year and puts 6% in to his 401k ($6,000), the company will chip in another $3k.

Which is heavier a pound of gold or a pound of feathers?
Link Posted: 8/2/2005 7:39:47 PM EDT
[Last Edit: 8/3/2005 11:29:08 AM EDT by Q3131A]

Originally Posted By scuba_ed:

The 1st 6% of what? Have you ever balanced an equation?




I balance every one of my equations. I have a math degree.
Link Posted: 8/3/2005 11:32:19 AM EDT
I balance every one of my equations. I have a math degree.

__________________________________________________

I see these mistakes all the time...I have an Chem. E. degree.

When you get a six-figure + income, then maybe I'll listen to you.

Link Posted: 8/3/2005 11:40:55 AM EDT
You can lead a horse to water, but...

You can contribute a certain percentage of every paycheck into this account without paying taxes on it. Most employers match your contributions up to a certain amount. For example, your company might contribute 50 cents for every $1 you contribute.

That means for every extra dollar, you get the better match....jeepers, see this site...one of many:

http://www.thebeehive.org/Templates/Money/Level3Image.aspx?PageId=1.194.308.672
Link Posted: 8/3/2005 11:42:19 AM EDT
Where are the myths?

I believe you've stated the obvious.
Link Posted: 8/3/2005 12:00:39 PM EDT
SHIVAN

Yeah, well...I see youngsters making these same mistakes over and again--just guessing they're seeking advice from "professional" services who would like a chance to get a portrayed view of extra money they deem as better spent with the investment "professional"

On another note...Hi SHIVAN !



Link Posted: 8/3/2005 12:12:08 PM EDT
[Last Edit: 8/3/2005 12:28:29 PM EDT by SHIVAN]

Originally Posted By scuba_ed:
Do the math, consult your HR if you need clarification. The only exception I've encountered in discussion with friends in other companies is that many companies don't understand that employees are entitled by law to contribute the max. of $14-k per year to a companies 401-k plan.



BTW, you have an error in this statement you've made. Your statement applies to people under the age of 50. People over the age of 50, assuming their company allows it, can contribute up to an additional $4,000 to their 401(k) plan.

For a potential PRE-TAX maximum of $18,000. That same 50+ year old employee could then elect to defer even more of his net pay after taxes and withholdings for a maximum theoretical threshold of $42,000 or 25% of gross income; whichever is less.

The after tax, net income, deferrals apply to all employees, so long as your company allows that sort of contribution.

Link Posted: 8/3/2005 12:13:39 PM EDT

Originally Posted By scuba_ed:
You can contribute a certain percentage of every paycheck into this account without paying taxes on it. Most employers match your contributions up to a certain amount. For example, your company might contribute 50 cents for every $1 you contribute.



You can contribute a certain percentage of every paycheck into a tax deferred account.
Link Posted: 8/3/2005 12:22:44 PM EDT
SHIVAN

Yeah, you're correct; I was thinking of my own situation. Only 42 (Only? Ohhhhhhhh!)
Link Posted: 8/3/2005 12:24:56 PM EDT
SHIVAN:

Re:

BTW, you have an error in this statement you've made. Your statement applies to people under the age of 50. People over the age of 50, assuming their company allows it, can contribute up to an additional $4,000 to their 401(k) plan.

For a potential maximum of $18,000.


____________________________________________________________________

Over the age of 50, catch-up contributions are available too!
Link Posted: 8/3/2005 12:27:15 PM EDT
I added one more modification that wasn't clear in your original post....
Link Posted: 8/3/2005 12:29:41 PM EDT
[Last Edit: 8/3/2005 12:31:41 PM EDT by Q3131A]

Originally Posted By scuba_ed:
I balance every one of my equations. I have a math degree.

__________________________________________________

I see these mistakes all the time...I have an Chem. E. degree.

When you get a six-figure + income, then maybe I'll listen to you.




About what?

Would you care to spell out exactly what these mis-conceptions/mistakes are?

Use your words.
Link Posted: 8/3/2005 1:01:54 PM EDT
[Last Edit: 8/3/2005 1:24:45 PM EDT by scuba_ed]
Posted by Q3131A:


--------------------------------------------------------------------------------
Originally Posted By scuba_ed:
I balance every one of my equations. I have a math degree.

__________________________________________________

I see these mistakes all the time...I have an Chem. E. degree.

When you get a six-figure + income, then maybe I'll listen to you.


--------------------------------------------------------------------------------




About what?

Would you care to spell out exactly what these mis-conceptions/mistakes are?

Use your words.


_______________________________________________________

You're just too funny! Okay, I'll play.

This is the game.

You're so-called math-Fu is weak, my friend. Apparently, having been caught in a misperception, you then decided upon a challenge, which, though note-worthy and entertaining to say the least, you aggrevated your previous error through a triviality.

The best I may hope for you is maturity, though not so mature as your money management scheme would progress as to leave you with a defict in your old age. Your current defict is an inability to learn.

Link Posted: 8/3/2005 3:38:35 PM EDT

Originally Posted By scuba_ed:
Posted by Q3131A:


--------------------------------------------------------------------------------
Originally Posted By scuba_ed:
I balance every one of my equations. I have a math degree.

__________________________________________________

I see these mistakes all the time...I have an Chem. E. degree.

When you get a six-figure + income, then maybe I'll listen to you.


--------------------------------------------------------------------------------




About what?

Would you care to spell out exactly what these mis-conceptions/mistakes are?

Use your words.


_______________________________________________________

You're just too funny! Okay, I'll play.

This is the game.

You're so-called math-Fu is weak, my friend. Apparently, having been caught in a misperception, you then decided upon a challenge, which, though note-worthy and entertaining to say the least, you aggrevated your previous error through a triviality.

The best I may hope for you is maturity, though not so mature as your money management scheme would progress as to leave you with a defict in your old age. Your current defict is an inability to learn.




Obi-Wan: "Use the Quote Luke"

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