My division was just sold from a Fortune 50 company - we are now a private company owned by a Private Equity group.
As a result, all of our benefits have changed. I'm wondering a few things:
1. What are the contribution limits on YOUR specific 401k plan? My old plan (with the Fortune 50 company) we could contribute Pre-tax or Roth 401k up to $18,500 (plus the $6K catch-up provision for those over 50 years old). Additionally, we could contribute additional post-tax dollars up to the Federal maximum of $55K (which includes the company match). However, in my new company, we can only contribute up to $18,500 (plus the $6K catch-up)....no post-tax contributions allowed beyond those limits.
1.a....wondering what other people's 401K Contribution limits look like (are you in a big or small company?)?
1.b....why would a company limit the contributions to only $18,500 vs. expanding the limit to $55K
2. Does your company offer a pension? I heard pensions are a dying breed, so just wondering?
2.a....my new company offers a lump sum contribution into your 401k on Dec 31 of each year, a percent of your pay
2.b...my old company offered a tradition pension with annuity payments based on a complicated formula
Hoping to just get some feedback...maybe to make myself feel better?!
The company I work for used to limit 401K contributions to the $18,500 (or what ever the IRS pre-tax limit was in the particular year), plus the old-age catch up limit. Account was at Fidelity, and they offered either a small number of fund options (maybe 15-20?) or we could opt for a BrokerageLink option that let us select any fund that Fidelity offered. The company matched .50 on the dollar for up to 6 percent each paycheck.
A few year ago we were acquired by a larger company. The following January we switched to the 401K plan offered by our new parent company. No longer have the BrokerageLink option so we are limited to a different set up limited fund choices. Now get dollar for dollar matching for up to 6 percent contribution. Once we hit the IRS $18,500 limit, we have the option to continue contributing as after tax dollars, but still get the company match. As an added benefit, I am able to to in-service withdrawals, so each year I do a rollover of the after-tax contributions into a personal Roth IRA, and the remaining balance into a Rollover IRA. This gives me additional flexibility on investment options
The Company where I work has a 401k but no pension.
Employees can contribute up to 15% of pay to the max dollar amount, including the old-age catch-up amounts.
The company match is 35% of employee contributions on the first 5% of employee contributions.
If you put in 5% the company match is 1.75%, at 4% it is 1.4%, etc.
The 401k is at Fidelity and at age 59.5 you can take in-service distributions.
I have moved quite a large sum of my 401k to a Fidelity Rollover IRA already.
Retired now, but my former employer - also a Foirtune 50 - had a plan very similar to your old one (could conrtribute up to the Federal limits); included a pension. They also had a 7% match.
After I retired, I was able to roll-over after tax contribution amounts into a Roth. I also utilized Net Unrealized Appreciation (NUA) and used some of the after tax amounts to avoid paying immediate taxes on the stock basis.
i used to work for a company that offered post tax contributions beyond the IRS limits. forget what the match was - think it was 1:1 up to 6%. Switched to a new company where they capped contributions at the IRS max. I asked a HR friend of mine and they thought that might have been in place to avoid something called Top Heavy plans.
For a company like Apple where their compensation is high across the board have a lot of employees can contribute over 18K. For something like Amazon - they probably have to limit contributions due the volume of worker making just above minimum wages who can barely afford 401k contributions.
I don't think Pensions have much to do with the 401K or limits. Both companies offered pensions. If anything a pension might impact the match.
Not really sure it makes a lot of sense putting post tax dollars in a traditional 401K due to taxes. I would rather the company offer Roth 401Ks. Or take the post tax dollars and put them into a Roth. Tax rates on dividends/Cap Gains is much lower than Ordinary income. You usually have limited options in a 401K but can invest in anything outside.
(11-28-2018, 03:15 AM)yandz Wrote: i used to work for a company that offered post tax contributions beyond the IRS limits. forget what the match was - think it was 1:1 up to 6%. Switched to a new company where they capped contributions at the IRS max. I asked a HR friend of mine and they thought that might have been in place to avoid something called Top Heavy plans.
For a company like Apple where their compensation is high across the board have a lot of employees can contribute over 18K. For something like Amazon - they probably have to limit contributions due the volume of worker making just above minimum wages who can barely afford 401k contributions.
I don't think Pensions have much to do with the 401K or limits. Both companies offered pensions. If anything a pension might impact the match.
Not really sure it makes a lot of sense putting post tax dollars in a traditional 401K due to taxes. I would rather the company offer Roth 401Ks. Or take the post tax dollars and put them into a Roth. Tax rates on dividends/Cap Gains is much lower than Ordinary income. You usually have limited options in a 401K but can invest in anything outside.
I like your idea, but Roth IRAs have income restrictions, so I cannot invest...although I could contribute to a Traditional IRA, then convert to a Roth every year. But that sounds like a lot of work :-)
(12-04-2018, 04:30 AM)Fishindude Wrote: (11-28-2018, 03:15 AM)yandz Wrote: i used to work for a company that offered post tax contributions beyond the IRS limits. forget what the match was - think it was 1:1 up to 6%. Switched to a new company where they capped contributions at the IRS max. I asked a HR friend of mine and they thought that might have been in place to avoid something called Top Heavy plans.
For a company like Apple where their compensation is high across the board have a lot of employees can contribute over 18K. For something like Amazon - they probably have to limit contributions due the volume of worker making just above minimum wages who can barely afford 401k contributions.
I don't think Pensions have much to do with the 401K or limits. Both companies offered pensions. If anything a pension might impact the match.
Not really sure it makes a lot of sense putting post tax dollars in a traditional 401K due to taxes. I would rather the company offer Roth 401Ks. Or take the post tax dollars and put them into a Roth. Tax rates on dividends/Cap Gains is much lower than Ordinary income. You usually have limited options in a 401K but can invest in anything outside.
I like your idea, but Roth IRAs have income restrictions, so I cannot invest...although I could contribute to a Traditional IRA, then convert to a Roth every year. But that sounds like a lot of work :-)
It's simple if you don't have existing traditional IRAs. Just fund the IRA, wait a few days for the funds to clear, and then convert the IRA to a Roth IRA. There should be no tax implications - just extra lines on your IRS basis forms to fill out.
I am in the same situation as you. I never contributed to an IRA because of income limits (I would rather fully fund a 401K) and put the remainder into a taxable account. Once the IRS announced the change allowing backdoor Roth IRA funding I started funding an IRA in anticipation and converted the entire balance the first year it was possible (with a small tax hit).
Its messier if you have existing IRAs since you can't target the post tax dollars when converting, You have to move both pre/post tax dollars.
FYI, the annual IRS limits are summarized here, including some for 2019 (estimated):
https://benefitsattorney.com/charts/maximums/
[b](Note that the meaning of some of the limits is not always clear.)[/b]
[font=Helvetica,Arial,"Lucida Grande",sans-serif]In 401k can contribute, including company match, after-tax up to IRS max (and then move after tax into Roth). Company matches 1:1 up to 7%. As mentioned above, the limit is potentially in place to address compliance issues. Cash balance pension plan (i.e. which is different than a traditional final average salary formula).[/font]
From my limited experience (retired now), I believe what you describe as your "new" plans is pretty normal. Your "new" plan matches what I had available. I believe lots of companies just don't want to go through the hassle of updating their plans and docs to match everything that can be done now.
I am guessing that while you were working for a Fortune 50 company, their 401(k) probably had a lot more participants and aggrate holdings in the 401(k) than your new employer. IMHO, economies of scale, clout and efficiency (along with interest from execs) can make a big difference in what is offered or how frequently the offerings are evaluated or extended. I would be sure that your F50 company had their 401(k)s with a custodian that wanted to keep the AUM and look the best he could. He was probably dealing with execs that did not mind the expense and headaches of changing the plan docs and kept up on what was allowed. Smaller plans with less AUM, maybe not so much.
Probably not what you were looking for but that would be my most likely conclusion.
Some employees have even sued their companies for how BAD their 401(k) plans are. I am not saying that you are in a bad one but just google "401(k)+lawsuits".
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