Voya 401k or Not! Not enough in 401ks?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
snowox
Posts: 125
Joined: Wed Nov 08, 2017 9:17 am

Voya 401k or Not! Not enough in 401ks?

Post by snowox » Wed Dec 06, 2017 6:13 am

So my wife and I retired 3 years ( 50 /46) ago this coming April and and with the BS on the Healthcare we decided that with 4 kids lets one of us just find a job that had great benefits (primarily Healthcare), that was flexible and not worry so much about the income. Well it was a good move in that my wife found a job she actually really enjoys and it allows us about a 5k difference when you add up what we were paying for Healthcare vs what her company is covering now. Its Humana with all the points bonus features we fully take advantage of as well and we max out the HSA and some income. Shes a year in and she is now eligible for there 401k plan. Where we did make our mistake in our accumulation phase was only 15.38% of our portfolio is made up of 401ks the rest is in taxable Vanguard accounts which is also where our previous 401ks are sitting. Our HSA is behind as well around only 15k. We were of those folks that just thought about smart savings later in life. Dumb :oops: I know. So anyhow back to this Voya thing. Right now for the last year what we have been doing is using our 4% SWR to live on and banking her income after the HSA deductions etc.. and have been doing some remodeling and using it off the books for some other things but mostly saving it. As our kids go off to college which for the most part thats handled each one our expenses our dropping so this year we will probably less than the 4%. In addition we have to much in cash about 12% which is more like 4-5 years expenses so we were thinking instead of living of that to bring down to the preferred two year expenses unless there is a large enough dip to put some $ back into the market vs withdrawing anything at all out of our investments. The plan is basically 1$ for 1$ up to 3% but your not full invested till 6 years employed and while we said we were only doing this (her working) for 3 years I could see it going longer BUT just not sure. The good thing is they do offer almost all the Vanguard funds at low cost ratios.

The other thing we were thinking is the two oldest are set for college via scholarships except my second is graduating early and leaving January. Gets 100% out of state Scholarship but were paying as a gift this first early on semester as a gift so they will be their 4.5 years, gets an advantage and helps a bit if they go on to grad school. Since its about a 250k scholarship and the school did still find some $ to help with this one semester its about 15k vs closer to 25k. So we were thinking of paying for this out of our flux of cash and rolling down to the younger two her balance who are not yet at the point we had saved for the older two in 529s and contribute 12k for the deduction as well at the end of the year then we would be done with all 4.

We are 100% debt free, no mortgage, no car payments etc... and so after our deductions for property taxes etc...right now were around 50k net to pay tax on.


So thats the big picture and I hope I put enough detail in there. While I know I should of been smart after the fact and put in 401k all these years I cant go back and change that mistake. We have 40 years expenses based on my withdrawal rate if we did not cut it so good there so just not sure what is the smart thing to do here. I like just having that extra income off the books to do what we want but I want to do the smart thing here. So what say you?

UncleBen
Posts: 241
Joined: Wed Feb 19, 2014 8:43 pm

Re: Voya 401k or Not! Not enough in 401ks?

Post by UncleBen » Wed Dec 06, 2017 6:31 am

Is your question whether or not to contribute to your wife's 401k?
Is there a match?
What are your marginal federal and state tax brackets?
What will your marginal brackets be when DW retires in a few years?

snowox
Posts: 125
Joined: Wed Nov 08, 2017 9:17 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by snowox » Wed Dec 06, 2017 6:40 am

UncleBen wrote:
Wed Dec 06, 2017 6:31 am
Is your question whether or not to contribute to your wife's 401k?
Is there a match?
What are your marginal federal and state tax brackets?
What will your marginal brackets be when DW retires in a few years?

Yes should we or do something different
The match is 1$ for 1$ up to 3%

Were married filed Jointly
Fed-15%
State-6.27%

Both now and after she retires

basspond
Posts: 914
Joined: Wed Nov 27, 2013 4:01 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by basspond » Wed Dec 06, 2017 6:44 am

Yes, never turn away free money.

User avatar
teen persuasion
Posts: 374
Joined: Sun Oct 25, 2015 1:43 pm

Re: Voya 401k or Not! Not enough in 401ks?

Post by teen persuasion » Wed Dec 06, 2017 8:07 am

If I understand correctly, she can contribute to her 401k, and you both can contribute to IRAs. You would effectively be shifting $$ from taxable accounts to tax deferred, or tax free.

You will have to explore some scenarios to see if you are eligible to contribute to Roth accounts, if you want to shift some of your savings to tax free. Also look at the possibility of a tax cost to pursue this, and a financial aid cost.

snowox
Posts: 125
Joined: Wed Nov 08, 2017 9:17 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by snowox » Wed Dec 06, 2017 8:12 am

teen persuasion wrote:
Wed Dec 06, 2017 8:07 am
If I understand correctly, she can contribute to her 401k, and you both can contribute to IRAs. You would effectively be shifting $$ from taxable accounts to tax deferred, or tax free.

You will have to explore some scenarios to see if you are eligible to contribute to Roth accounts, if you want to shift some of your savings to tax free. Also look at the possibility of a tax cost to pursue this, and a financial aid cost.

I will look into that thanks!

UncleBen
Posts: 241
Joined: Wed Feb 19, 2014 8:43 pm

Re: Voya 401k or Not! Not enough in 401ks?

Post by UncleBen » Wed Dec 06, 2017 8:27 am

I would say contribute to get the 3% (no brainer).
Anything else = optional.

JW-Retired
Posts: 6530
Joined: Sun Dec 16, 2007 12:25 pm

Re: Voya 401k or Not! Not enough in 401ks?

Post by JW-Retired » Wed Dec 06, 2017 9:38 am

snowox wrote:
Wed Dec 06, 2017 6:13 am
While I know I should of been smart after the fact and put in 401k all these years I cant go back and change that mistake. We have 40 years expenses based on my withdrawal rate if we did not cut it so good there so just not sure what is the smart thing to do here. I like just having that extra income off the books to do what we want but I want to do the smart thing here. So what say you?
As others have said, at least contributing enough to the 401k to get all of the match you can is a no-brainer.

We don't have a detailed picture, but it sounds like you have little or no tax deferred savings right now? Do you foresee having very much taxable income at all in retirement besides social security? If SS and taping your taxable account savings is most of your retirement income, you may not be paying any federal & state tax then at all. In that case it would be silly not to be contributing much more to the 401k over the next few years (getting a 15% + 6.26% tax reduction on the contributions), because you will be paying little or nothing in taxes when when you draw money from the 401k in retirement.

A fuller picture of your prospective retirement income & assets would help everyone be more specific. Something like our preferred format here: viewtopic.php?f=1&t=6212
JW
Retired at Last

snowox
Posts: 125
Joined: Wed Nov 08, 2017 9:17 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by snowox » Wed Dec 06, 2017 9:52 am

JW-Retired wrote:
Wed Dec 06, 2017 9:38 am
snowox wrote:
Wed Dec 06, 2017 6:13 am
While I know I should of been smart after the fact and put in 401k all these years I cant go back and change that mistake. We have 40 years expenses based on my withdrawal rate if we did not cut it so good there so just not sure what is the smart thing to do here. I like just having that extra income off the books to do what we want but I want to do the smart thing here. So what say you?
As others have said, at least contributing enough to the 401k to get all of the match you can is a no-brainer.

We don't have a detailed picture, but it sounds like you have little or no tax deferred savings right now? Do you foresee having very much taxable income at all in retirement besides social security? If SS and taping your taxable account savings is most of your retirement income, you may not be paying any federal & state tax then at all. In that case it would be silly not to be contributing much more to the 401k over the next few years (getting a 15% + 6.26% tax reduction on the contributions), because you will be paying little or nothing in taxes when when you draw money from the 401k in retirement.

A fuller picture of your prospective retirement income & assets would help everyone be more specific. Something like our preferred format here: viewtopic.php?f=1&t=6212
JW

I will look at that thanks. I guess I was questioning it because it takes 6 years to be vested and doubt she will work that long so despite that is it still worth at at 20% after 1 year and so on till 6 years

JW-Retired
Posts: 6530
Joined: Sun Dec 16, 2007 12:25 pm

Re: Voya 401k or Not! Not enough in 401ks?

Post by JW-Retired » Wed Dec 06, 2017 10:09 am

6 years to be vested in the 401k! Meaning they take some of the match back if she leaves earlier. It's a sliding scale so they take less of it back for each of the 5 years so the match is worthwhile after a couple of years. It's been a long time, but I recall my 401k was something like that too. The 5 years went by poof!

You could also do 2 traditional IRAs.
JW
Retired at Last

snowox
Posts: 125
Joined: Wed Nov 08, 2017 9:17 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by snowox » Wed Dec 06, 2017 12:00 pm

JW-Retired wrote:
Wed Dec 06, 2017 10:09 am
6 years to be vested in the 401k! Meaning they take some of the match back if she leaves earlier. It's a sliding scale so they take less of it back for each of the 5 years so the match is worthwhile after a couple of years. It's been a long time, but I recall my 401k was something like that too. The 5 years went by poof!

You could also do 2 traditional IRAs.
JW

Thats just it. If she only works two more years which was our original plan I think were better off taking the income and looking at other options ,perhaps as you suggested a traditional IRA

moghopper
Posts: 87
Joined: Fri Oct 18, 2013 10:07 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by moghopper » Wed Dec 06, 2017 1:26 pm

snowox wrote:
Wed Dec 06, 2017 12:00 pm

Thats just it. If she only works two more years which was our original plan I think were better off taking the income and looking at other options ,perhaps as you suggested a traditional IRA
Why? You'll still get some sliding scale percentage of the match right? 20% a year? so after 2 years, 40% is better than 0% right?

snowox
Posts: 125
Joined: Wed Nov 08, 2017 9:17 am

Re: Voya 401k or Not! Not enough in 401ks?

Post by snowox » Wed Dec 06, 2017 1:33 pm

moghopper wrote:
Wed Dec 06, 2017 1:26 pm
snowox wrote:
Wed Dec 06, 2017 12:00 pm

Thats just it. If she only works two more years which was our original plan I think were better off taking the income and looking at other options ,perhaps as you suggested a traditional IRA
Why? You'll still get some sliding scale percentage of the match right? 20% a year? so after 2 years, 40% is better than 0% right?
Good Point..

JW-Retired
Posts: 6530
Joined: Sun Dec 16, 2007 12:25 pm

Re: Voya 401k or Not! Not enough in 401ks?

Post by JW-Retired » Wed Dec 06, 2017 5:47 pm

Can't you do the 2 tIRAs and 3% to the 401k? Even if the match is not very much the tax reduction on 3% is the same.
JW
Retired at Last

Post Reply