401k help

Cessnaflyer

Cessnaflyer

Wooooooooooooooooooooooooooooooo
I know nothing about 401k's. I invest in index funds for savings and can handle that pretty well. I switched back to corporate flying and they offer a (I think) 3% match then half anything above that. Sounds pretty good but when it hits the fidelity fund they use can I allocate what I want purchased or does it go into managed mutual funds? I've tried reading the website but I keep getting errors on my ipad so no learning much.
 
I also had a mandatory 401a when I worked at a college. Is there a way to roll this into a 401k?
 
Cessnaflyer said:
I know nothing about 401k's. I invest in index funds for savings and can handle that pretty well. I switched back to corporate flying and they offer a (I think) 3% match then half anything above that. Sounds pretty good but when it hits the fidelity fund they use can I allocate what I want purchased or does it go into managed mutual funds? I've tried reading the website but I keep getting errors on my ipad so no learning much.
Click to expand...


Match is free money, I wish I got that, awesome.

They'll give you a choice of a dozen or so funds. A good chunk of them are probably index funds, you get to pick what percentage of each contribution goes to each. You can go back and reallocate how much is in each whenever you want.
 
jtrain609 said:
Why do you say that?
Click to expand...


An IRA lets you:

1) Choose what you want to invest in, instead of the 401k plan administrator
2) Can be converted to a Roth IRA
3) More opportunities for penalty-free early withdrawals (like buying a house)
4) Can be inherited by your heirs (kids presumably), and continue to be tax deferred until they are 59.
5) Hold most options/spreads/equities
6) Move the account to the broker of your choice.
7) Fewer hidden fees. 401k plans often deduct from the return on your investments what the company considers to be their cost in running the plan (mine does this). It is many many millions of dollars per year, that would otherwise be going to the participants.
8) Disclosure of fees is still awful, as well as kickbacks between the providers and fund managers.
 
Cessnaflyer said:
I know nothing about 401k's. I invest in index funds for savings and can handle that pretty well. I switched back to corporate flying and they offer a (I think) 3% match then half anything above that. Sounds pretty good but when it hits the fidelity fund they use can I allocate what I want purchased or does it go into managed mutual funds? I've tried reading the website but I keep getting errors on my ipad so no learning much.
Click to expand...

You'll probably want to find out how your account works. In mine, I can move in and out of funds as I wish, which is preferable IMO.
 
Bringing this out of the dead since a few months ago I've been able to start using my 401K. Right now I am doing the 3% match so I can get at least the 100% part of my employer match. However the funds aren't the best from what I am used to with Vanguard. Should I be worrying about the expense average of 0.50%? The highest expense ratio I have before is 0.14% with VXUS.
 
I have my 401k money put directly into a money market account, so I can choose when to put it into the required funds. I'll wait for market bottoms throughout the year, then invest there. I don't like riding waves down.
 
Cessnaflyer said:
Bringing this out of the dead since a few months ago I've been able to start using my 401K. Right now I am doing the 3% match so I can get at least the 100% part of my employer match. However the funds aren't the best from what I am used to with Vanguard. Should I be worrying about the expense average of 0.50%? The highest expense ratio I have before is 0.14% with VXUS.
Click to expand...
Index funds will typically have expense ratios under 0.1%, managed funds will usually be 0.5%-1.5%. Typically the ones over 1% are considered "expensive" in the industry. However, historically the index funds do just as well as the managed funds on average, before fees. You may get lucky and get a winning manager who beats the market by more than his fee, that's what everyone hopes for, and what they are supposedly paid for. There's no guarantee, though. Therefore, the argument many make (and it seems you had followed in the past) is to just buy the index fund and avoid the higher fees. It's a personal choice, but statistically you will come out slightly ahead using the low cost index funds.
 
drunkenbeagle said:
No, but you can roll it into an IRA, which is better anyway.
Click to expand...

Actually, you can roll into a 401k also. I rolled my Pinnacle 401k into my AirTran 401k, and I'll probably roll my AirTran 401k into an IRA when I quit. You can do either. The brokerage that manages your plan should have standard forms for it that make it an easy process.
 
ATN_Pilot said:
Actually, you can roll into a 401k also. I rolled my Pinnacle 401k into my AirTran 401k, and I'll probably roll my AirTran 401k into an IRA when I quit. You can do either. The brokerage that manages your plan should have standard forms for it that make it an easy process.
Click to expand...

While you can, it is usually a better idea to put it in an IRA, since you have much more control of it. In my case, my employer skims off the top of my 401k funds, so the return would be much better on the same holdings, even if the IRA fees were higher.

The one exception I can thing of would be if you are converting IRAs into Roth IRAs every year to get around the Roth earnings limits - in that case, it is better not to have traditional IRA holdings for tax reasons.

I am not an expert on this by any means.
 
Cessnaflyer said:
Bringing this out of the dead since a few months ago I've been able to start using my 401K. Right now I am doing the 3% match so I can get at least the 100% part of my employer match. However the funds aren't the best from what I am used to with Vanguard. Should I be worrying about the expense average of 0.50%? The highest expense ratio I have before is 0.14% with VXUS.
Click to expand...

Not much you can do about it, and the 100% match makes up for the 40 basis points in fees...

I would fully fund an IRA before contributing past the amount of the 401k match.
 
drunkenbeagle said:
While you can, it is usually a better idea to put it in an IRA, since you have much more control of it.
Click to expand...

That's not necessarily true. I have full control of my 401k at AirTran. I can invest in just about anything I want, and I can take out a loan of up to 50% of the value of the fund, paying myself back the interest. A 401k plan can provide a lot of flexibility, depending on the plan design, so someone should look at their individual plan rather than thinking in terms of generalities.

Also, in regards to IRAs, whether a traditional or a Roth IRA is more advantageous is really tied to what your tax burden will be now and in retirement. And that usually involves some educated guesswork.
 
ATN_Pilot said:
That's not necessarily true. I have full control of my 401k at AirTran. I can invest in just about anything I want, and I can take out a loan of up to 50% of the value of the fund, paying myself back the interest. A 401k plan can provide a lot of flexibility, depending on the plan design, so someone should look at their individual plan rather than thinking in terms of generalities.
Click to expand...

Very true, but that could also very well change at any time.
 
drunkenbeagle said:
Not much you can do about it, and the 100% match makes up for the 40 basis points in fees...

I would fully fund an IRA before contributing past the amount of the 401k match.
Click to expand...
Right now the only thing besides the 401k I've funded for the past 6 months are my wife's student loans so we can get a home loan :mad:.
 
ATN_Pilot said:
That's not necessarily true. I have full control of my 401k at AirTran. I can invest in just about anything I want, and I can take out a loan of up to 50% of the value of the fund, paying myself back the interest. A 401k plan can provide a lot of flexibility, depending on the plan design, so someone should look at their individual plan rather than thinking in terms of generalities.

Also, in regards to IRAs, whether a traditional or a Roth IRA is more advantageous is really tied to what your tax burden will be now and in retirement. And that usually involves some educated guesswork.
Click to expand...
Besides the lack of funds to invest in it isn't too bad of a plan. I just wish it was a Vanguard plan.
 
NewYorkophile said:
I have my 401k money put directly into a money market account, so I can choose when to put it into the required funds. I'll wait for market bottoms throughout the year, then invest there. I don't like riding waves down.
Click to expand...
But you miss out on dividends. I just keep buying to amass more shares without risking the bottom. Plus I'm going to be hopefully 30 years at minimum from using it so it will be going through many ups and downs in that time.
 
You must log in or register to reply here.
Back
Top