I have been with company more than a year now and can now contribute to 401k they will match up to 4%?

Question

my question is how much should i be contributing ? just the 4% ?

I plan to contribute at least the 4%, but have read thats all i should put in company, and the remaining 6% into a Roth, someplace else, does it really matter?

Answer 1

As much as you can afford to, at a minimum 4%. As someone on here said, (another question), time is your best friend. It's also a tax break for you. Try to do 10%. But at a minimum 4% so you can get the "free" money.

Answer 2

First, the minimum you should contribute is the 4%.

Depending on your age and investment goals, I would usually recommend maxing out a ROTH IRA next. If you still have more money to save afterwards, then increase your 401(k) contribution.

Additional details response: I usually recommend a ROTH because it is more flexible and offers you the ability to have tax free IRA withdrawls mixed with your taxable withdrawls from your 401(k) when you retire. You can build a better retirement tax structure. I say it is more flexible, because you can withdrawl contributions (not earnings) at any time without tax penalty. You can't do that with an 401(k).

However, if you are paying a lot of taxes right now, then increasing the 401(k) contibutions will relieve a little bit of the bite.

Answer 3

multiple the time you won't be able to connect a 401K plan until you have labored there a minimum of one thousand hours. connect as quickly as a threat with the aid of fact the longer you have the 401K with them the extra you get to maintain of the organisation tournament once you depart. in case you artwork there for 4 years and then connect the 401K and contribute for a million 3 hundred and sixty 5 days you're purely vested for 25%. You get the finished one hundred% when you had the 401K for 4 years. It concerns how long you had the 401K no longer how some years entire you labored for the organisation. in case you depart the organisation you will continuously get to maintain your very own contributions and the vested area of the organisation contributions. you could the two roll it over in to an IRA or depart it until you could roll it into the subsequent jobs 401K software. Or... take the money and pay the penalty to the IRS 10% and get totally taxed on the finished volume lower back the subsequent 3 hundred and sixty 5 days once you report taxes. approximately 35 to forty% of your money will flow to the IRS and around 3% to the State.

Answer 4

Fund your 401K enough to get the max employer contribution, which is 4 percent in your case. If you can put aside more, put it in a Roth IRA at a discount brokerage, because:
1-you will get a much better choice of investment options than in a 401K
2-you will still be liquid, meaning if you need money later for car repairs, new house, etc., you can withdraw from your Roth as much as you put in

Answer 5

It does matter...put into a ROTH if you are young and in a low income bracket. Don't put into a ROTH if are already in a high income bracket or likely aren't going to be in a high income bracket when you retire. Also, avoid the ROTH if the funds in your 401k are excellent and have extremely low expense ratios. As an example...my expense ratios in my 401k are about 1% lower than I can get in an IRA. Over the course of 30 years of employment that can mean the equivalent of over 200k. That, plus the up front tax savings that allow me to put in more than I would be able to otherwise, makes the 401k more attractive for me.

You can't make a blanket statement as to whether it's good to do or not...it's entirely up to your own specific personal situation....we can only deal in generalities. And, in general, people are better off with the 401k. Mostly because people overestimate their tax brackets at retirement. Remember, you don't take your distributions lump sum....you only take them 4% at a time.

I say use the ROTH only to diversify your holdings, and only if you are going to retire before you are eligible for social security. That way you have the option to take the distributions tax free and use them as a bridge until you begin drawing on your social security and then both as a bridge until age 67 when you should delay your 401k distributions until....leave the pre-tax in as long as you possibly can.

but that's just my own personal opinion.

Answer 6

4% is the minimum.

If you need a tax deduction and can afford it, contribute as much as you can afford.

If you can afford 15%, that is 15% off of your Adusted Gross Income for taxes and will put you in a lower tax bracket.

If you can only afford the 4%, that is fine, but the next time you get a raise, increase it to the amount of the raise. That is like a tax defferred raise that goes right into savings.

Never take it out it until retirement. The penalty is too great. That is safe money, it is protected from lawsuits and bankruptcy (in most cases).

Answer 7

You should contribute the maximum allowed by law because the contributions are made with before tax dollars. You will easily learn to live within the amount left after your contribution, and this approach will ensure a good retirement.

Answer 8

you need to contribute AT LEAST the 4% - this is the only place you can effectively get 100% return on your investment, for every dollar you put in of YOUR money, you are getting another dollar for free.

However, you should contribute much more, even if they don't match. 15-20% is ideal. Then divide it evenly among the different accounts/funds they have available, they should have someone who can help you figure out how much to put in each account, based on your age, level of risk, etc.

The more you put in, and the sooner you put it in, the better.

Answer 9

putting money into a Roth when you're young doesn't make sense - get all the pre-tax benefits you can while they exist. Put the 4% in, put money into savings (cd's when you have enough) for 3-6 month emergency savings and any other savings you need - vacation, presents, next car down payment, car repairs, then if have any money left over - add more to your 401k

Answer 10

Contribute at least enough to get the maximum company match. That is "free money" if you stay long enough to get vested.