No company match question.

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Darthvader
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Joined: Sun Jun 07, 2015 2:48 pm

No company match question.

Post by Darthvader » Mon Feb 13, 2017 1:15 pm

hello, fairly new to the forum, but trying to learn more. appreciate all the wonderful advice.
Im in 33% tax bracket in NY state, and do not know how long I will be at this new job so Im sure those are important factors . I already have three fund portfolio at fidelity, a solo 401k for my side business and Roth at vanguard. have 6 month Emergency fund. trying to stay at 70/30 AA.
Just Starting a new job which has pretty much only trow price target date funds and no match. I see here many statements about the traditional or correct order of investments such as
1.401k to company match,
2.Max HSA,
3. max Roth IRA,
4. Max 401k
but having trouble figuring out in a job where there are no good vanguard/fidelity low cost index funds and no match do people generally still contribute to or would you just stick with maximizing their own roth and individual 401k first since they have better funds available?
here is a list of the funds took forever to figure out how to copy paste it. I am still researching the ERs though,

Stable Value/ Guaranteed Small Blend
___ %Guaranteed Investment Account ___ %Calvert VP Russell ~ooo Small Cap Index Portfolio
___ %Royce Pennsylvania Mutual Fund
!nvestment Grade Bond
___ %Calvert VP Investment Grade Bond Index Portfolio
___ % PIMCOTotal Return fund
___ %Calvert Income Fund A
Short-Term Bond
___ %Calvert Short Duration Income fund
Small Growth
___ %Baron Small Cap Fund
Large Cap lnt'I
___ %Calvert VP EAFE International Index Portfolio
___ %Thornburg International Value Fund
Treasury Inflation Protected (TIPS) Small Cap International
___ %American Century Short Duration Inflation Protection 80fld Fund ___ % Third Avenue International Value fund
High Yie!d/Multisector Bond
% Calvert High Yield Bond Fund I
% Fidelity Advisor Strategic Income Fund
Real Estate
___ %Morgan Stanley lf US Real Estate Portfolio
Large Value
___ %American Century Equity Income Fund
___ % T. Rowe Price Eguity Income Fu rid
large Blend
___ %American Funds® Fundamental lrivestors Fund
___ %Calvert VP SErP 500 lridex Portfolio
---~~Invesco Charter Fu11d
Large Growth
___ %Alger Capital Appreciation Portfolio
___ %American Century Growth Fund
___ %Calvert Eguity Fund
___ %Neuberger Berman Guardian Fund T
---~n T. Rowe Price Blue Chip Growth Fund
Mid Value
___ "iii American Century Mid Cap Value Fund
___ q~ Perkins Mid Cap Value Fund
Mid Blend
---~li FMI Common Stock fund
Mid Growth
___ %American Century Heritage Fund
Small Value
___ %Fidelity Advisor Small Cap Value Fund
___ %Third Ave11ue Small-Cap Value Fund
Emergi11g Markets
___ %Morgan Stanley IF Emerging Markets Portfolio
Money Market
___ %Fidelity VIP Money Market Portfolio
Balanced
___ % T. Rowe Price Capital Appreciation Fund
World Bond
___ % FTVIPT Templeton Global Bond VIP Fund
World A!locatio11
___ %American Funds® Capital Income Builder® Fund
World Stock
___ %Third Avenue Value Fund
Utilities
___ % MFS® Utilities Fund
Technology
___ %Ivy Science and Technology Fund
Natural Resources
___ %Van Eck Glob<il Hard Assets Fund
Target Date
___ % T. Rowe Price Retirement 20lO Fund
___ % T. Rowe Price Retirement 2020 Fund
___ % T. Rowe Price Retirement 2030 Fund
___ q'o T. Rowe Price Retirement 2040 Fund
___ % T. Rowe Price Retirement 2050 Fund ER 0.75
___ % T. Rowe Price Retirement Income Fund
Lifestyle
___ %Calvert Moderate Allocation Fund
___ %Calvert Conservative Allocation Fund
---~"'Calvert Aggressive Allocation Fund

thanks appreciate it everyone. So you think its important to make out my own tIRA since I picked my own funds first before delving into the companies 401k? I am hoping to be able to max it out this year if everything goes as planned, but its not guaranteed of course.
Last edited by Darthvader on Mon Feb 13, 2017 3:11 pm, edited 1 time in total.

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ruralavalon
Posts: 11848
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Location: Illinois

Re: No company match question.

Post by ruralavalon » Mon Feb 13, 2017 1:31 pm

Darthvader wrote:hello, fairly new to the forum, but trying to learn more. appreciate all the wonderful advice.
Im in 33% tax bracket in NY state, and do not know how long I will be at this new job so Im sure those are important factors . I already have three fund portfolio at fidelity, a solo 401k for my side business and Roth at vanguard. have 6 month Emergency fund. trying to stay at 70/30 AA.
Just Starting a new job which has pretty much only trow price target date funds and no match. I see here many statements about the traditional or correct order of investments such as
1.401k to company match,
2.Max HSA,
3. max Roth IRA,
4. Max 401k
but having trouble figuring out in a job where there are no good vanguard/fidelity low cost index funds and no match do people generally still contribute to or would you just stick with maximizing their own roth and individual 401k first since they have better funds available?
thanks

In general it's usually still good to contribute to a 401k even without an employer match.

The exceptions - 1) if the expenses in the 401k are extremely high, 2) if you expect to be with the employer for a very long time, or 3) a combination of the two. Please see the wiki article "401k", the section on "expensive or mediocre choices".

If the expenses are very high that may outweigh the tax advantage of using the 401k. If you are with the employer for a shorter time, then when you leave you can do a rollover to an IRA at a low cost provider like Vanguard so that you are not stuck with the high 401k expenses very long.

What are the expense ratios on the funds offered in your 401k? Are there any additional expenses charged in your 401k?

About how long do you expect that you might continue with this employer?

You can simply add this to your original post using the edit button, so that all of your information is in one place.
Last edited by ruralavalon on Mon Feb 13, 2017 1:36 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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willthrill81
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Location: USA

Re: No company match question.

Post by willthrill81 » Mon Feb 13, 2017 1:36 pm

If there's no company match, then I would skip the 401k in lieu of a traditional IRA, assuming your income allows you to deduct the contributions. You can open the IRA anywhere; most of us here faun over Vanguard. You'll have your pick of many of the best investment options in the industry there.

If you don't have significant savings already, it's almost certainly best for you to contribute to a traditional IRA first. Your goal is to 'fill up' the low income tax brackets for retirement first with traditional IRA and 401k funds. When that's done, then it can be worthwhile to switch to the Roth accounts.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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willthrill81
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Re: No company match question.

Post by willthrill81 » Mon Feb 13, 2017 1:37 pm

ruralavalon wrote:In general it's usually still good to contribute to a 401k even without an employer match.


If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

young-ish
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Joined: Fri Apr 15, 2016 12:10 am

Re: No company match question.

Post by young-ish » Mon Feb 13, 2017 1:46 pm

willthrill81 wrote:If there's no company match, then I would skip the 401k in lieu of a traditional IRA, assuming your income allows you to deduct the contributions.


Agreed. Save as much as you can in an IRA (Traditional or Roth) before contributing to a 401k with no match.

fantasytensai
Posts: 347
Joined: Fri Sep 30, 2016 3:30 pm

Re: No company match question.

Post by fantasytensai » Mon Feb 13, 2017 2:26 pm

willthrill81 wrote:
ruralavalon wrote:In general it's usually still good to contribute to a 401k even without an employer match.


If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?


Because IRA limit is $5,500 while 401(K) is $18,000? I much rather have 18k off my taxable income then being able to deduct 5.5k.

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willthrill81
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Location: USA

Re: No company match question.

Post by willthrill81 » Mon Feb 13, 2017 2:29 pm

fantasytensai wrote:
willthrill81 wrote:
ruralavalon wrote:In general it's usually still good to contribute to a 401k even without an employer match.


If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?


Because IRA limit is $5,500 while 401(K) is $18,000? I much rather have 18k off my taxable income then being able to deduct 5.5k.


That's not the point. The IRA can be funded first, then the 401k. If it's a choice between the two, IRA all the way. There's no reason at all not to.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

fantasytensai
Posts: 347
Joined: Fri Sep 30, 2016 3:30 pm

Re: No company match question.

Post by fantasytensai » Mon Feb 13, 2017 2:33 pm

willthrill81 wrote:
fantasytensai wrote:
willthrill81 wrote:
ruralavalon wrote:In general it's usually still good to contribute to a 401k even without an employer match.


If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?


Because IRA limit is $5,500 while 401(K) is $18,000? I much rather have 18k off my taxable income then being able to deduct 5.5k.


That's not the point. The IRA can be funded first, then the 401k. If it's a choice between the two, IRA all the way. There's no reason at all not to.


Why IRA all the way?

Assuming 100k gross, funding IRA with no 401(k) gets you 5.5k deduction; taxable income becomes 94.5k.
Funding 401k to the max gets you a taxable income of 82k. What am I missing here?

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willthrill81
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Re: No company match question.

Post by willthrill81 » Mon Feb 13, 2017 2:35 pm

fantasytensai wrote:
willthrill81 wrote:
fantasytensai wrote:
willthrill81 wrote:
ruralavalon wrote:In general it's usually still good to contribute to a 401k even without an employer match.


If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?


Because IRA limit is $5,500 while 401(K) is $18,000? I much rather have 18k off my taxable income then being able to deduct 5.5k.


That's not the point. The IRA can be funded first, then the 401k. If it's a choice between the two, IRA all the way. There's no reason at all not to.


Why IRA all the way?

Assuming 100k gross, funding IRA with no 401(k) gets you 5.5k deduction; taxable income becomes 94.5k.
Funding 401k to the max gets you a taxable income of 82k. What am I missing here?


Before he does anything else, he should fund the TIRA if he can deduct the contributions. After that (during the same year), he should then put as much as possible into the 401k. But regardless, the TIRA gets first priority.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

retiredjg
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Re: No company match question.

Post by retiredjg » Mon Feb 13, 2017 2:37 pm

Generally, it is important to fill a 401k even without a match and even with poor fund choices. Tax deferral is a good thing. It is particularly good for people in the higher tax brackets.

However, if you can put as much as $18k of elective deferrals in your Solo 401k, it does not matter because you would not need to use work 401k at all.

Do you have enough income from your side business to do that? If not, put what you can in the "good" Solo 401k and put the rest of the $18k in the best fund in the employer's 401k.

You might want to list what is available - people often think they have a poor plan when they have a good or even excellent plan.

fantasytensai
Posts: 347
Joined: Fri Sep 30, 2016 3:30 pm

Re: No company match question.

Post by fantasytensai » Mon Feb 13, 2017 2:39 pm

willthrill81 wrote:
fantasytensai wrote:
willthrill81 wrote:
fantasytensai wrote:
willthrill81 wrote:
If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?


Because IRA limit is $5,500 while 401(K) is $18,000? I much rather have 18k off my taxable income then being able to deduct 5.5k.


That's not the point. The IRA can be funded first, then the 401k. If it's a choice between the two, IRA all the way. There's no reason at all not to.


Why IRA all the way?

Assuming 100k gross, funding IRA with no 401(k) gets you 5.5k deduction; taxable income becomes 94.5k.
Funding 401k to the max gets you a taxable income of 82k. What am I missing here?


Before he does anything else, he should fund the TIRA if he can deduct the contributions. After that (during the same year), he should then put as much as possible into the 401k. But regardless, the TIRA gets first priority.


You still have not explained why a $5,500 deduction gets priority over a $18,000 "deduction".

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willthrill81
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Re: No company match question.

Post by willthrill81 » Mon Feb 13, 2017 2:42 pm

fantasytensai wrote:You still have not explained why a $5,500 deduction gets priority over a $18,000 "deduction".


The TIRA is nearly always preferable to receive first priority because it can be held anywhere, giving you far greater flexibility than with almost any 401k.

The TIRA should be funded first. Assuming that the OP had enough funds to cover the TIRA and still have money left over, the extra money should then go into the 401k.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

retiredjg
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Re: No company match question.

Post by retiredjg » Mon Feb 13, 2017 3:11 pm

willthrill81 wrote:The TIRA is nearly always preferable to receive first priority because it can be held anywhere, giving you far greater flexibility than with almost any 401k.

The TIRA should be funded first. Assuming that the OP had enough funds to cover the TIRA and still have money left over, the extra money should then go into the 401k.

This approach has a problem. The poster is in the 33% tax bracket. If he uses the plan at work for even $1, his tIRA contribution will not be deductible.

What you are suggesting might work for some other people, but it is not the customary suggestion here for two reasons. Using Roth IRA instead of tIRA gives some tax diversification. Second, using the tIRA will interfere with using the back door. Since lots of people want to use the back door....tIRA is not usually suggested.

In this particular instance, it is possible the poster's Solo 401k will take care of the issue.

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ruralavalon
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Re: No company match question.

Post by ruralavalon » Mon Feb 13, 2017 3:17 pm

willthrill81 wrote:
ruralavalon wrote:In general it's usually still good to contribute to a 401k even without an employer match.


If he's eligible to deduct TIRA contributions, why should he go with a 401k instead, especially since his options are limited to target date funds?

I said "general" and "usually".

We don't know if Darthvader is eligible to make deductible contributions to an IRA, don't know the funds and their expenses offered in the 401k, don't know how much in total Darthvader is able to contribute annually to all of the various accounts, and don't know what is being contributed to the solo 401k from the side business.

Those were some of the reasons for the "in general" and "usually".

Since Darthvader is in the 33% tax bracket, a deduction for a traditional IRA contribution won't be available.
Last edited by ruralavalon on Mon Feb 13, 2017 3:27 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
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Re: No company match question.

Post by retiredjg » Mon Feb 13, 2017 3:18 pm

Darthvader wrote: I am still researching the ERs though...

Let's simplify that to just these. Make sure you get the ERs that apply to your plan, not just what you find on the ordinary internt.

___ %Calvert VP Investment Grade Bond Index Portfolio
___ % PIMCOTotal Return fund
___ %Calvert Income Fund A
___ %Calvert VP EAFE International Index Portfolio
___ %Calvert VP SErP 500 lridex Portfolio
___%Calvert VP Russell ~ooo Small Cap Index Portfolio

___ %Calvert Moderate Allocation Fund
___ %Calvert Conservative Allocation Fund
---~"'Calvert Aggressive Allocation Fund

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willthrill81
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Re: No company match question.

Post by willthrill81 » Mon Feb 13, 2017 3:18 pm

retiredjg wrote:
willthrill81 wrote:The TIRA is nearly always preferable to receive first priority because it can be held anywhere, giving you far greater flexibility than with almost any 401k.

The TIRA should be funded first. Assuming that the OP had enough funds to cover the TIRA and still have money left over, the extra money should then go into the 401k.

This approach has a problem. The poster is in the 33% tax bracket. If he uses the plan at work for even $1, his tIRA contribution will not be deductible.

What you are suggesting might work for some other people, but it is not the customary suggestion here for two reasons. Using Roth IRA instead of tIRA gives some tax diversification. Second, using the tIRA will interfere with using the back door. Since lots of people want to use the back door....tIRA is not usually suggested.

In this particular instance, it is possible the poster's Solo 401k will take care of the issue.


That's why I prefaced by statement with 'if he can deduct the contributions.'

Tax diversification is not a particularly big benefit for those who haven't yet amassed significant assets. For them, It's just hedging their bets in such a way that the odds are stacked against them.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Darthvader
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Joined: Sun Jun 07, 2015 2:48 pm

Re: No company match question.

Post by Darthvader » Mon Feb 13, 2017 3:19 pm

so your saying, I can contribute to my solo 401k or my new work 401k but not both? Sorry Im confused this is the first time I had options of two different 401ks.

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ruralavalon
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Location: Illinois

Re: No company match question.

Post by ruralavalon » Mon Feb 13, 2017 3:30 pm

Darthvader wrote:so your saying, I can contribute to my solo 401k or my new work 401k but not both? Sorry Im confused this is the first time I had options of two different 401ks.

About how much (in dollars, total all accounts) do you think that you might be able to contribute annually to investing?

Is there a High Deductible Health Plan offered at work, so that you could use a Health Savings account?

It's always easier to deal with concrete examples.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
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Re: No company match question.

Post by retiredjg » Mon Feb 13, 2017 4:13 pm

Darthvader wrote:so your saying, I can contribute to my solo 401k or my new work 401k but not both? Sorry Im confused this is the first time I had options of two different 401ks.

As an employEE, you can contribute a total of $18k to the two plans together. As an employER, you can put more into the Solo 401k.

I'm just thinking since your Solo 401k plan probably has better options and there is no match to lose, why not put the full $18k in there? Of course, you have to have adequate income to put all of the $18k in there.

Darthvader
Posts: 19
Joined: Sun Jun 07, 2015 2:48 pm

Re: No company match question.

Post by Darthvader » Mon Feb 13, 2017 10:11 pm

retiredjg, thank you thats an excellent point. I was confused after reading an article about multiple 401k on a different site. I am going to aim for that, just putting all of my Employee portion 18K in to my solo 401k since I have better index funds with lower expenses and not worry about the companies plan now.
thanks everyone.

retiredjg
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Joined: Thu Jan 10, 2008 12:56 pm

Re: No company match question.

Post by retiredjg » Tue Feb 14, 2017 6:31 am

It appears you do have several index funds available in your work 401k. You should go ahead and research the ER's in your plan for those funds just in case you find you do need to use it some year.

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