401K and other retirement accounts

Joey_V

New max individual contribution for 2016 is $18,000. Max between employer and employee is $53,000.

My employer decided to cut their 401k contribution from 37,500 per year to 15,900 per year but decided to give me a raise.

Problem is that I don't know how to invest pretax money back into the 401k account since the max I can put in is 18,000$/yr.

53,000 minus 15,900 = $37,100.

Even with a max 18,000 contribution, I am at 37,100-18,000= 19,100.

How do I get 19,100 back into a pretax 401k account? An IRA?

I have an email out to my accountant but no response yet.

Stupid work and their corporate bean counters.

I think they are just trying to screw me over.

MrBuhl

You could do Roth IRA - but maybe not at your income level? Post-tax but contributions are also not taxable when withdrawn at retirement age. (gains are I think)

Joey_V

What's the limit or red tape on Roth IRA? Gains are taxed but I assume not post tax contributions because that would be double. I mean, what's the benefit of a Roth IRA if you can just deposit post tax into an investment account?

I was hoping to continue at 51K 401K contributions indefinitely.... but now apparently I will be down to $34K and no where to find the remaining 19K.

I'm going to have my wife max out her 401K now to offset. And I am going to look into a SEP IRA through my business/independent contractor earnings.

Ugh.... I just took a nap after coming home from work and I wake up to my coworkers blowing up my phone about the 401K plan change... people are not happy over here.

Lousy bean counters...

MrBuhl

I'm not sure honestly, I think there's an income limit on Roths, your accountant is the right person to ask - good call on making that your first call. You've got kids, you could definitely do pre-tax college contributions as well?

motorhead43026

Roths are non taxable upon withdrawal, but the limit you can put in is only 5000.00 per year @ your age. Still would be a good chunk of non-taxable income in 30 years, especially if both you and wife had one. Also it is not considered income when you withdraw.

Joey_V

MrBuhl wrote: »

I'm not sure honestly, I think there's an income limit on Roths, your accountant is the right person to ask - good call on making that your first call. You've got kids, you could definitely do pre-tax college contributions as well?

529 yep.. can't do too much with that one. After it hits a certain number, anything beyond that is moot if not used for college.

Had a preliminary email back from the advisor. Not many pretax vehicles.

Joey_V

motorhead43026 wrote: »

Roths are non taxable upon withdrawal, but the limit you can put in is only 5000.00 per year @ your age. Still would be a good chunk of non-taxable income in 30 years, especially if both you and wife had one. Also it is not considered income when you withdraw.

So I can do 1 for me and 1 for the wife?

No income cap?

motorhead43026

So I can do 1 for me and 1 for the wife?

No income cap?[/quote]


For married filing jointly - your ability to contribute to a Roth IRA is phased out as your MAGI reaches the range of $183,000 - $193,000.

Joey_V

So no Roth either. Phased out.

What a crock.

Joey_V

I am steaming mad with my company... the more I sit here, the angrier I am.

BlueFox

Yes, these first world problems are incorrigible. Use the money for some new speakers.

Joey_V

BlueFox wrote: »

Yes, these first world problems are incorrigible. Use the money for some new speakers.

tonyb

Joey_V wrote: »

I am steaming mad with my company... the more I sit here, the angrier I am.

Welcome to the party.

tonyb

BTW Joey,
When in doubt, send your coin to the Tonyb investment group. We only invest in good stuff, like fine wines, Branzino, imported cheeses, grass fed beef, naked women, good music......and Reese's Peanut butter cups.

We also invest in Animal control companies, Locksmiths, healthcare supplies, ladders, pet supplies, and underwear manufacturers. Diversify now !!!

scubalab

Joey_V wrote: »

What's the limit or red tape on Roth IRA? Gains are taxed but I assume not post tax contributions because that would be double. I mean, what's the benefit of a Roth IRA if you can just deposit post tax into an investment account?

Gains are not taxed in a Roth. I know this doesn't help your situation Joey, but wanted to clarify. If they were taxed, you are correct, there's no benefit, only restrictions that make you wait to withdraw. Investments are post tax (so you pay taxes on those), but the beauty is any interest/gains are tax free as long as you meet the requirements upon withdrawal (I believe it's age and length of time invested). If you don't meet the requirements upon withdrawal, yes, the deferred taxes may be collected.

"Earnings on investments within a Roth IRA are neither subject to income tax nor are they included in the IRA owner's income. Instead, they accumulate on a tax-deferred basis and are tax free when withdrawn from the Roth if the distribution is qualified."

Some good info here:

http://www.rothira.com/traditional-ira-vs-roth-ira

scubalab

tonyb wrote: »

......and Reese's Peanut butter cups.

'Nuff said Tony!!

steveinaz

MrBuhl wrote: »

You could do Roth IRA - but maybe not at your income level? Post-tax but contributions are also not taxable when withdrawn at retirement age. (gains are I think)

+1.

Joey_V

Heard back.

No Roth. We don't qualify.

She plainly said, "Not much pretax vehicles left."

Great I'm getting angry again...

I will have to pursue increasing the 529, the sep Ira maxes at 8/yr, and I need to look at maybe a whole life plan?

I'm going to have my wife max her 401k at 17...

So that's 17 from her with her 3k company match = 20.

I'll go 17 with my 16 company match = 34.

Then with sep Ira at 8.

Maybe another 10 into 529.

And maybe 10 into a whole life?

Save the rest...

Oh wait... Bud says buy more audio gear.

Joey_V

Any other ideas other than investing TonyB's investacenter?

motorhead43026

I am investing $10,000.00 a year in silver for the next 5 years. This is physical silver, bars and coins. That is as long as prices hover around the current levels. If I see prices start to escalate much, I will adjust my timeframe accordingly.

tonyb

Joey_V wrote: »

Any other ideas other than investing TonyB's investacenter?

Talk to a CPA Joey, specifically one that deals in those types of investments. The laws change every year, and not in your favor either....as your finding out.

Other than that, you may want to look at some offshore opportunities, move some money elsewhere. Open a small business, take advantage of the boat loads of write offs available to you. Or invest in real estate, apartment buildings. God isn't making anymore land.

motorhead43026

I like tangible assets, TonyB is right on. Something that is less likely to go poof at any time.

tonyb

Or a cash business, vending machines, Laundromats, etc. The business always loses money, which you write off, and a portion of the cash goes into your kids account which if kept under a certain amount, won't ever have to file taxes on. Plus you give your kid a job, on the books anyway. Pay them a salary that also goes into their account which you are in charge off. Deduct your car, expenses off the business, home office, clothes, and much more.

Many ways to skin that cat as I like to say.

Your young Joey, I might look at the real estate option. Having a few apartment buildings paid off by the time you retire could net you 10k a month easily. Plus your other IRA's or other investments.....you could live a sweet life and retire early.

rooftop59

Just to keep this in perspective Joey, based on 2010 census data (admittedly a little dated) 51% of American households (NOT individuals) make less than 50K per year. Not that that's your fault, just realize that most Americans wouldn't consider your problem, well, a problem.

I do hope you find a solution, and I think Tony has some good ideas. I mean the worst case scenario is that you invest post tax dollars. I am sorry but at your income level I don't think that is a tragedy...

Joey_V

You guys are right. Count the blessings.

We are having a partnership meeting this Tuesday and I along with others will be voicing our displeasure. We used to have a great 401k plan. The company gave 15% of our income to a max of 265,000 so that would mean $38,000 into a 401k account per year and I would put in the remaining 13,000$ to hit the max of 51.

It was good.

There was a vesting period where you go from 33% ownership of your 401k to 66% to 100%. I am fully vested and it was cool.

Then I get this email that now it goes down to 6% company match up to the first 265,000 earned. I was like WTF. Who gets to keep the remaining 9%?? Corporate??

Board members voted on it without consulting the partnership or associates.

Must be nice to up top. Private jets and all.

But yes, you guys are right. Perspective, I'm still good. But I just don't like being sorta swindled.

Atleast they are transitioning some of that 401k money into a "raise". My thinking is that they want to advertise a higher salary or per your rate to attract younger help. Everyone wants everything NOW now now... No one wants to wait 3 years to get vested in the 401k plan...

Easy Runnin

Remember, there are 2 types of people in 401k plan, highly comped and non highly comped. The HCEs cannot benefit way more than the NHCEs. I suspect issues with compliance testing are causing the changes. If you raise was less than 30k I believe you have a reason to complain.

cnh

If you can afford to put away that much a year, well, you should be able to retire "earlier" than most of us? More power to you!

I can't disagree with rooftop or BlueFox either. lol

I think what's more worrying for a lot of us a little lower on the food chain is how much they can now tax when we start withdrawing those monies once retired? Death and Taxes! No?

Joey_V

Easy Runnin wrote: »

Remember, there are 2 types of people in 401k plan, highly comped and non highly comped. The HCEs cannot benefit way more than the NHCEs. I suspect issues with compliance testing are causing the changes. If you raise was less than 30k I believe you have a reason to complain.

The raise is approx 26K.

They said that was fair.

I told them it wasn't because my "investable" portion is only $16K since that's post tax.

Ah well.... I've been talking with the CEO and other board members all day and hopefully they'll hear my thoughts and take it into account.

I can't push too hard... I'll probably just get fired.

Joey_V

cnh wrote: »

If you can afford to put away that much a year, well, you should be able to retire "earlier" than most of us? More power to you!

I can't disagree with rooftop or BlueFox either. lol

I think what's more worrying for a lot of us a little lower on the food chain is how much they can now tax when we start withdrawing those monies once retired? Death and Taxes! No?

Yeah, that'd be nice to retire early. Wife thinks we are still deficient in our retirement savings. I told her we aren't going to be at the monthly expenses we are at now since all debts (house, etc) would be paid off.... except for rolling expenses and autos and property taxes.

It might seem like a lot. But when you actually calculate it out.... money dwindles quick. Even I'm fearful of retirement.

Joey_V

Death and taxes... you're right. From dust we came, to dust we go. But we pay taxes to go from one to the other.

gdb

Maybe a pretentious picture of an oversized wristwatch on a frail wrist posed in front of the steering wheel of a luxury automobile will be of comfort. Sheesh.