Author Topic: Overheard at Work  (Read 8473378 times)

fantabulous

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Re: Overheard at Work
« Reply #4100 on: September 09, 2014, 01:56:54 PM »
I had it all figured out.  The key to remember, obviously, is that you must keep hiding more money at different time intervals to keep a certain flow going for your future/past self.  This went on for a year or two.  I don't think I ever told my parents why I did it, but my mom would find the money around the house when cleaning and try to give it back to me.  She stopped asking for explanations eventually.

I think I just figured out the real reason I am a natural saver...

Party on. Excellent. (I know that's actually Wayne's World).

I know this was just a hair brained half baked idea...but I still don't understand why you have to hide it at different intervals or in different locations.  Wouldn't a single central location (that is still secret to everyone but you) and one large initial deposit as early as possible be the superior solution?  What exactly do multiple secret locations around the house accomplish that a tin in your sock drawer couldn't? And if you place a bunch of money there as early as possible, then why would need to keep hiding additional money at different intervals?  Where is that initial money going to go?  Your future self is going to rob you of it then skip away?  But wouldn't your future self know all of your secret hiding locations, and if he/she was so inclined to be an asshole and leave his/her past self broke, couldn't he/she just do that anyway?   

Obviously you can't know if that one location is going to be found and raided by someone else or even still exist in the past/future. Best to keep stashing in multiple locations.

Chranstronaut

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Re: Overheard at Work
« Reply #4101 on: September 09, 2014, 02:48:14 PM »
I know this was just a hair brained half baked idea...but I still don't understand why you have to hide it at different intervals or in different locations.  Wouldn't a single central location (that is still secret to everyone but you) and one large initial deposit as early as possible be the superior solution?  What exactly do multiple secret locations around the house accomplish that a tin in your sock drawer couldn't? And if you place a bunch of money there as early as possible, then why would need to keep hiding additional money at different intervals?  Where is that initial money going to go?  Your future self is going to rob you of it then skip away?  But wouldn't your future self know all of your secret hiding locations, and if he/she was so inclined to be an asshole and leave his/her past self broke, couldn't he/she just do that anyway?   

Obviously you can't know if that one location is going to be found and raided by someone else or even still exist in the past/future. Best to keep stashing in multiple locations.
[/quote]

Bingo.  Risk mitigation through diversification as interpreted by 8 year old me.  I only got $1 a week in allowance, so it wasn't possible for me to save much all at once anyway.  Plus my mom kept finding it and moving it, so I needed new locations to keep it secret.  Frugalnacho's perspective is sound as an adult, though.  As much money saved as early as possible would probably be the best strategy... good investment strategy, too :)

If time travel into the past ever IS possible, I will go back and hide extra money for my little self at one of these locations.  It's the only way to know that it's really me, again according to my 8 year old self.

Pooperman

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Re: Overheard at Work
« Reply #4102 on: September 09, 2014, 03:36:21 PM »
Went out to lunch with former coworker. Bill comes and we split it $30 each including tip. She temp me "I didn't know this place was so inexpensive!" I told her I bring my lunch every day and that it is expensive. She replies "I've dropped $100 on brunch sometimes. This isn't bad." I left it there. She makes 3x what I do (150k+). I kindof wish she'd point that firehose of waste in my direction. I'd FIRE in like 5 years with that amount of money!

klystomane

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Re: Overheard at Work
« Reply #4103 on: September 09, 2014, 04:42:57 PM »
I think this one counts.

So I recently got a new job with a new company, and joined the 401k plan. The way the 401k plan here works is that you can have up to 17% of your paycheck automatically deducted each month to be put towards the plan. On the site, it states that the maximum allowed per year is $17,500 (per IRS regulations). The employer match sucks, but I don't think is too relevant for this post (in case you're wondering, it's up to 5% each month, up to $1,750 annually).

Anyway, if you contribute 17% of your paycheck each month, you would need to make approx. $103,000 per year to automatically hit the $17,500 maximum. Since I make less than that, I can't reach the max through standard deductions alone. Nowhere on the 401k site could I find a way of allowing me to contribute the remaining amount (about $5k in my case).

So, I went to HR and asked them about this. After a bit of back and forth and me explaining what I understood the rules to be, their answer was: "17% is the max. or $17,500, whichever is lower."

Me: "So, if I make $100 a year, I can only contribute $17?"

HR: "Err...yes, it seems that way."

Me: "Weird...I'm guessing nobody has ever asked you this question before?" (company is 20+ years old).

HR: "Yeah, nobody's ever asked that before!"

Now granted, I might be the only person in the entire organization of 200+ people that makes less than $103,000 and thus be the only person that has had to think about this...but I highly doubt it.


*mind blown*

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Re: Overheard at Work
« Reply #4104 on: September 09, 2014, 04:54:48 PM »
I think this one counts.

So I recently got a new job with a new company, and joined the 401k plan. The way the 401k plan here works is that you can have up to 17% of your paycheck automatically deducted each month to be put towards the plan. On the site, it states that the maximum allowed per year is $17,500 (per IRS regulations). The employer match sucks, but I don't think is too relevant for this post (in case you're wondering, it's up to 5% each month, up to $1,750 annually).

Anyway, if you contribute 17% of your paycheck each month, you would need to make approx. $103,000 per year to automatically hit the $17,500 maximum. Since I make less than that, I can't reach the max through standard deductions alone. Nowhere on the 401k site could I find a way of allowing me to contribute the remaining amount (about $5k in my case).

So, I went to HR and asked them about this. After a bit of back and forth and me explaining what I understood the rules to be, their answer was: "17% is the max. or $17,500, whichever is lower."

Me: "So, if I make $100 a year, I can only contribute $17?"

HR: "Err...yes, it seems that way."

Me: "Weird...I'm guessing nobody has ever asked you this question before?" (company is 20+ years old).

HR: "Yeah, nobody's ever asked that before!"

Now granted, I might be the only person in the entire organization of 200+ people that makes less than $103,000 and thus be the only person that has had to think about this...but I highly doubt it.


*mind blown*

That's pretty mind blowing indeed.

johnny847

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Re: Overheard at Work
« Reply #4105 on: September 09, 2014, 05:56:00 PM »
I think this one counts.

So I recently got a new job with a new company, and joined the 401k plan. The way the 401k plan here works is that you can have up to 17% of your paycheck automatically deducted each month to be put towards the plan. On the site, it states that the maximum allowed per year is $17,500 (per IRS regulations). The employer match sucks, but I don't think is too relevant for this post (in case you're wondering, it's up to 5% each month, up to $1,750 annually).

Anyway, if you contribute 17% of your paycheck each month, you would need to make approx. $103,000 per year to automatically hit the $17,500 maximum. Since I make less than that, I can't reach the max through standard deductions alone. Nowhere on the 401k site could I find a way of allowing me to contribute the remaining amount (about $5k in my case).

So, I went to HR and asked them about this. After a bit of back and forth and me explaining what I understood the rules to be, their answer was: "17% is the max. or $17,500, whichever is lower."

Me: "So, if I make $100 a year, I can only contribute $17?"

HR: "Err...yes, it seems that way."

Me: "Weird...I'm guessing nobody has ever asked you this question before?" (company is 20+ years old).

HR: "Yeah, nobody's ever asked that before!"

Now granted, I might be the only person in the entire organization of 200+ people that makes less than $103,000 and thus be the only person that has had to think about this...but I highly doubt it.


*mind blown*

That's pretty mind blowing indeed.

That is pretty mind blowing.

It also didn't seem legal to me, and according to this: http://money.stackexchange.com/questions/18861/can-my-employer-limit-my-maximum-401k-contribution-amount-below-the-irs-limit it is not. I didn't see a direct link to IRS documentation on the matter, but I would look into it.

klystomane

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Re: Overheard at Work
« Reply #4106 on: September 09, 2014, 05:59:58 PM »
I think this one counts.

So I recently got a new job with a new company, and joined the 401k plan. The way the 401k plan here works is that you can have up to 17% of your paycheck automatically deducted each month to be put towards the plan. On the site, it states that the maximum allowed per year is $17,500 (per IRS regulations). The employer match sucks, but I don't think is too relevant for this post (in case you're wondering, it's up to 5% each month, up to $1,750 annually).

Anyway, if you contribute 17% of your paycheck each month, you would need to make approx. $103,000 per year to automatically hit the $17,500 maximum. Since I make less than that, I can't reach the max through standard deductions alone. Nowhere on the 401k site could I find a way of allowing me to contribute the remaining amount (about $5k in my case).

So, I went to HR and asked them about this. After a bit of back and forth and me explaining what I understood the rules to be, their answer was: "17% is the max. or $17,500, whichever is lower."

Me: "So, if I make $100 a year, I can only contribute $17?"

HR: "Err...yes, it seems that way."

Me: "Weird...I'm guessing nobody has ever asked you this question before?" (company is 20+ years old).

HR: "Yeah, nobody's ever asked that before!"

Now granted, I might be the only person in the entire organization of 200+ people that makes less than $103,000 and thus be the only person that has had to think about this...but I highly doubt it.


*mind blown*

That's pretty mind blowing indeed.

That is pretty mind blowing.

It also didn't seem legal to me, and according to this: http://money.stackexchange.com/questions/18861/can-my-employer-limit-my-maximum-401k-contribution-amount-below-the-irs-limit it is not. I didn't see a direct link to IRS documentation on the matter, but I would look into it.

My guess is that there's a way to contribute towards the maximum, but the administrator doesn't know how to. I'm still looking into it though.

Pat

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Re: Overheard at Work
« Reply #4107 on: September 09, 2014, 08:03:10 PM »
I'm 1 of 3 people at my work who regularly packs a lunch; it's amazing to me how so many people at work show up with take-out breakfasts, and go out to buy lunch and coffee daily.
Also, the parking lot at work is full of $50k+ luxury cars/SUVs  ...I'm 6'3", nearly 200lbs, and usually commute by bicycle or my little Honda Rebel 250. People think I'm crazy for bicycle-commuting almost 10 miles each way, and laugh their asses off when they see me on that little Rebel with my backpack/lunchbox, but I'm laughing too ...all the way to 'early' retirement.

viper155

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Re: Overheard at Work
« Reply #4108 on: September 09, 2014, 08:09:21 PM »

Sometimes it pays off...In my case, I spent thousands over the years taking my son to lacrosse events up and down the east coast. He always had excellent equipment and some private lessons. Not only did he get a generous academic package to college he got 2k a year to play lacrosse. 8 grand that does not have to come out of my pocket. Money well spent considering all the time we spent together traveling and bonding. I would do it all over again. Now, in retirement, I get to watch him play his sport, his passion at just about the highest level.

Isn't this survivorship bias?  It would be like a lottery winner explaining how his $500/mo investment in lottery tickets was great because it all worked out and he hit the multi million dollar jackpot.   Sometimes it pays off.

There is something a little more profound to spending quality time with your son than throwing money away on lottery tickets. A terrible anology....so, no

sky_northern

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Re: Overheard at Work
« Reply #4109 on: September 09, 2014, 09:26:58 PM »
9 year old showing off her new designer purse. Found out it cost $160, on sale! Yikes! I said something about the cost, and mom pipes up, 'She worked hard this summer, she deserves it!.'

The kicker, did the 9 year old have some sort of job to pay for the purse this summer? No.  The hard work mom talks about is that the 9 year old was at skating camp in the city for 3 weeks - paid for by mother of course. So was working hard at figure skating...


horsepoor

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Re: Overheard at Work
« Reply #4110 on: September 09, 2014, 09:57:47 PM »
2.  Co Worker who gets in large boxes from fancy stores all the time and routinely spends hundreds a week on clothes.   "Ugh, our home health aid wants a raise, I TOLD her 4 years ago when we hired her there would be no raises because we can't afford it".  Me: "Well how much are you paying her"  Her "800 a month for both of my parents who are on dialysis and live in NYC"  Her and her husband pull in over 200k (probably closer to 250) a year combined, this aid takes care of her parents 24-7 365 because she doesn't want to have to deal with them and when I asked she swore poverty that she couldn't afford an extra 50 a month to pay this woman (under the table mind you)...aaaand she just spent 3k, on a couch that she was flashing pictures in the office of...  We continued to talk and I brought up early retirement and got the "I don't know how you can save on our crappy salaries, we can only save 300 a month"....she earns about 20-30k more a year than me, and I'm pushing 90 a year.

If there is a category past face punching, to perhaps facial stabbing, this woman should get it.  Basically illegally paying someone $800/month for round the clock care of two people in NYC - that is fucking awful. 

firelight

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Re: Overheard at Work
« Reply #4111 on: September 09, 2014, 10:07:04 PM »
Why isn't the aid just threatening to leave? $800 per month for a 24*7 work in NYC is a crappy deal and the aid would know it.

austin

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Re: Overheard at Work
« Reply #4112 on: September 09, 2014, 11:10:23 PM »
Your coworker is cheating her household employee out of pay and social security. You need to report them.

http://www.irs.gov/Individuals/How-Do-You-Report-Suspected-Tax-Fraud-Activity%3F

Adventine

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Re: Overheard at Work
« Reply #4113 on: September 10, 2014, 05:37:07 AM »
Why isn't the aid just threatening to leave? $800 per month for a 24*7 work in NYC is a crappy deal and the aid would know it.

Without knowing anything else about this person, it's possible that this person is an undocumented worker... which would also explain why they are willing to accept that salary.

Zikoris

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Re: Overheard at Work
« Reply #4114 on: September 10, 2014, 08:07:57 AM »
Why isn't the aid just threatening to leave? $800 per month for a 24*7 work in NYC is a crappy deal and the aid would know it.

It presumable includes room and board as well, which might not be TOO bad a deal in NYC.

frugalnacho

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Re: Overheard at Work
« Reply #4115 on: September 10, 2014, 09:12:49 AM »

Sometimes it pays off...In my case, I spent thousands over the years taking my son to lacrosse events up and down the east coast. He always had excellent equipment and some private lessons. Not only did he get a generous academic package to college he got 2k a year to play lacrosse. 8 grand that does not have to come out of my pocket. Money well spent considering all the time we spent together traveling and bonding. I would do it all over again. Now, in retirement, I get to watch him play his sport, his passion at just about the highest level.

Isn't this survivorship bias?  It would be like a lottery winner explaining how his $500/mo investment in lottery tickets was great because it all worked out and he hit the multi million dollar jackpot.   Sometimes it pays off.

There is something a little more profound to spending quality time with your son than throwing money away on lottery tickets. A terrible anology....so, no

That wasn't your original point though, your original point was that it "paid off" financially.  I don't think the financial aspect should be a consideration.  Would you have made the same post if your son had never advanced beyond that final high priced lesson?  The entire tone of your post would be radically different.  Back to the original point that was made, you could get plenty of profound quality time with your son, if that is your goal, without spending $500/mo on specialized hobbies.

KBlynx

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Re: Overheard at Work
« Reply #4116 on: September 10, 2014, 09:22:19 AM »
My coworker (whom I really like as a person) drained her 401k because her husband was between jobs and she needed "buffer money". He makes 110k and she makes around 45k. He was out of work for an entire 2 weeks and they spent 20k of her 401k money to pre-pay for a Hawaiian vacation in a private condo and pay bills down on multiple mortgages, personal loans and CC's. She pays them via phone at work and on the day the are due, and only the minimum.  6 months later her husband bought a brand new pick-up as a commuter vehicle because "He works hard and deserves it".

She said her paychecks are half what they used to be because of the payback for the loan. She has to keep working to avoid the tax penalties.

Zamboni

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Re: Overheard at Work
« Reply #4117 on: September 10, 2014, 10:07:04 AM »
^There's only such much that providing a savings structure like 401k can do to stop people from pissing all of their money away.

Quote
"17% is the max. or $17,500, whichever is lower."

While it sounds like this is illegal, I suspect plenty of employers do it.  When I started working the max we were told we could contribute was 15%.  That only got you to the annual cap if you made $100K plus.  In fact, could be the same company for all I know, just bumping the percentage up slightly over time!  At the time I was not pushy enough then to question it even though it was shorting me the ability to max my contributions.  With age I have improved my pushiness factor, and I hope you don't just give up on questioning their policy.

dandarc

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Re: Overheard at Work
« Reply #4118 on: September 10, 2014, 10:25:35 AM »
^There's only such much that providing a savings structure like 401k can do to stop people from pissing all of their money away.

Quote
"17% is the max. or $17,500, whichever is lower."

While it sounds like this is illegal, I suspect plenty of employers do it.  When I started working the max we were told we could contribute was 15%.  That only got you to the annual cap if you made $100K plus.  In fact, could be the same company for all I know, just bumping the percentage up slightly over time!  At the time I was not pushy enough then to question it even though it was shorting me the ability to max my contributions.  With age I have improved my pushiness factor, and I hope you don't just give up on questioning their policy.

From IRS
Quote
Your plan's terms may impose a lower limit on elective deferrals http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics--401k-and-Profit-Sharing-Plan-Contribution-Limits
Not illegal - kind of a dick move by these particular companies though.  I mean, there probably has to be some sort of limit, to help ensure there is enough in the paycheck to withhold taxes and insurance premiums and such - that limit is likely much higher than 15-17% though.  I seem to recall 25% being the number at my last employer (self-employed now).  Not even on my radar that anyone would want to do more than that at that time, but clearly some would.  My wife's 457 has a limit of 75% - that is more reasonable as it allows room for various withholdings while being pretty darn high.

Petition management to get the plan changed, or see if you can't become an independent contractor and then provide your own 401K.  Or get another job that's more lucrative - the 401K rules are a valuable benefit there.

fantabulous

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Re: Overheard at Work
« Reply #4119 on: September 10, 2014, 10:30:34 AM »
9 year old showing off her new designer purse. Found out it cost $160, on sale! Yikes! I said something about the cost, and mom pipes up, 'She worked hard this summer, she deserves it!.'

The kicker, did the 9 year old have some sort of job to pay for the purse this summer? No.  The hard work mom talks about is that the 9 year old was at skating camp in the city for 3 weeks - paid for by mother of course. So was working hard at figure skating...

I am 31 and still don't own any designer purses. I guess I don't work hard enough to deserve it.

johnny847

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Re: Overheard at Work
« Reply #4120 on: September 10, 2014, 11:47:29 AM »
^There's only such much that providing a savings structure like 401k can do to stop people from pissing all of their money away.

Quote
"17% is the max. or $17,500, whichever is lower."

While it sounds like this is illegal, I suspect plenty of employers do it.  When I started working the max we were told we could contribute was 15%.  That only got you to the annual cap if you made $100K plus.  In fact, could be the same company for all I know, just bumping the percentage up slightly over time!  At the time I was not pushy enough then to question it even though it was shorting me the ability to max my contributions.  With age I have improved my pushiness factor, and I hope you don't just give up on questioning their policy.

From IRS
Quote
Your plan's terms may impose a lower limit on elective deferrals http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics--401k-and-Profit-Sharing-Plan-Contribution-Limits
Not illegal - kind of a dick move by these particular companies though.  I mean, there probably has to be some sort of limit, to help ensure there is enough in the paycheck to withhold taxes and insurance premiums and such - that limit is likely much higher than 15-17% though.  I seem to recall 25% being the number at my last employer (self-employed now).  Not even on my radar that anyone would want to do more than that at that time, but clearly some would.  My wife's 457 has a limit of 75% - that is more reasonable as it allows room for various withholdings while being pretty darn high.

Petition management to get the plan changed, or see if you can't become an independent contractor and then provide your own 401K.  Or get another job that's more lucrative - the 401K rules are a valuable benefit there.

The only literature that I've seen so far (unfortunately not directly from the IRS, but from a 3rd party), is that companies can legally restrict the contributions of highly compensated employees (HCEs)(defined as making more than roughly where SS Tax stops taking effect, ~117k at this time) or the top 5% of employees at the company. I have not see anything about restricting the contributions of non HCEs. If anybody can find direct documentation from the IRS on the matter of restricting non-HCE contributions, I think that would be great for people on this forum (myself included when I find a real job after graduation). I really can't imagine that it be legal for companies to restrict the contributions of non-HCE's (in fact, it could potentially make it harder for companies to meet the non discrimination test, where HCEs can't contribute significantly more as a percentage of non-HCE's, or something to that effect).

BlueHouse

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Re: Overheard at Work
« Reply #4121 on: September 10, 2014, 12:03:38 PM »

. If anybody can find direct documentation from the IRS on the matter of restricting non-HCE contributions, I think that would be great for people on this forum (myself included when I find a real job after graduation). I really can't imagine that it be legal for companies to restrict the contributions of non-HCE's (in fact, it could potentially make it harder for companies to meet the non discrimination test, where HCEs can't contribute significantly more as a percentage of non-HCE's, or something to that effect).
From IRS.gov
#1 seems to have nothing to qualify other than the plan's terms.

Plan-based restrictions on elective deferrals
These restrictions may further reduce the maximum allowable elective deferrals:
1. Your plan's terms may impose a lower limit on elective deferrals
2. If you are a manager, owner, or highly compensated employee, your plan might need to limit your elective deferrals to pass nondiscrimination tests

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Re: Overheard at Work
« Reply #4122 on: September 10, 2014, 12:35:28 PM »
Yup, that's correct.  Your company 401(k) plan can set any limit on deferral percentage they like.  Just like they can also restrict you to any set of funds they like, and make or not make any matching contributions they like.  It's all part of the compensation package.  But the ability to put a high percentage of your income each check away to meet the cap is something that most people don't run into.  If you are only saving 5%, you don't care that you can't contribute more than 15%. 

My current 401(k) plan allows me to contribute 75%.  I'm doing so right now to catch up - my net pay after that an $100 to an HSA is about 14.8% of my gross pay.  That's because the payroll taxes still get assessed on the 401(k) contribution.  So, if I really put 100% in I'd end up owing them money every month?  I'm guessing that's why it's capped there. 

Rural

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Re: Overheard at Work
« Reply #4123 on: September 10, 2014, 12:39:28 PM »
Check to see if there's a workaround: I don't know for sure if the percentage is capped at my place, because what I put in is actually a fixed dollar amount every month. If they'll let you do that, they might not check to see how much of a percentage of your pay a fixed dollar amount was.

johnny847

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Re: Overheard at Work
« Reply #4124 on: September 10, 2014, 12:48:20 PM »

. If anybody can find direct documentation from the IRS on the matter of restricting non-HCE contributions, I think that would be great for people on this forum (myself included when I find a real job after graduation). I really can't imagine that it be legal for companies to restrict the contributions of non-HCE's (in fact, it could potentially make it harder for companies to meet the non discrimination test, where HCEs can't contribute significantly more as a percentage of non-HCE's, or something to that effect).
From IRS.gov
#1 seems to have nothing to qualify other than the plan's terms.

Plan-based restrictions on elective deferrals
These restrictions may further reduce the maximum allowable elective deferrals:
1. Your plan's terms may impose a lower limit on elective deferrals
2. If you are a manager, owner, or highly compensated employee, your plan might need to limit your elective deferrals to pass nondiscrimination tests

Ugh, that's really disappointing to hear.

But the ability to put a high percentage of your income each check away to meet the cap is something that most people don't run into.  If you are only saving 5%, you don't care that you can't contribute more than 15%. 

True, but this is of high importance to many Mustachians--as you yourself noted.

Well, that's just the way it is I suppose. The tax code isn't really intended to be fair anyways.

klystomane

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Re: Overheard at Work
« Reply #4125 on: September 10, 2014, 01:07:07 PM »

. If anybody can find direct documentation from the IRS on the matter of restricting non-HCE contributions, I think that would be great for people on this forum (myself included when I find a real job after graduation). I really can't imagine that it be legal for companies to restrict the contributions of non-HCE's (in fact, it could potentially make it harder for companies to meet the non discrimination test, where HCEs can't contribute significantly more as a percentage of non-HCE's, or something to that effect).
From IRS.gov
#1 seems to have nothing to qualify other than the plan's terms.

Plan-based restrictions on elective deferrals
These restrictions may further reduce the maximum allowable elective deferrals:
1. Your plan's terms may impose a lower limit on elective deferrals
2. If you are a manager, owner, or highly compensated employee, your plan might need to limit your elective deferrals to pass nondiscrimination tests

Ugh, that's really disappointing to hear.

But the ability to put a high percentage of your income each check away to meet the cap is something that most people don't run into.  If you are only saving 5%, you don't care that you can't contribute more than 15%. 

True, but this is of high importance to many Mustachians--as you yourself noted.

Well, that's just the way it is I suppose. The tax code isn't really intended to be fair anyways.

There isn't an option to contribute a fixed amount, only a percentage from 1-17%.

I will call the plan provider directly and see what they have to say about it.

MikeBear

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Re: Overheard at Work
« Reply #4126 on: September 10, 2014, 01:43:27 PM »
Just demand a pay raise to $103,000, and at 17% you got your $17,500 401k deposit. Either that or offer them a compromise of raising the percentage withheld so that you can put in $17.5k at your present salary. Maybe they'll see the issue then.
« Last Edit: September 10, 2014, 01:45:23 PM by MikeBear »

Cheddar Stacker

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Re: Overheard at Work
« Reply #4127 on: September 10, 2014, 01:43:52 PM »
@ klystomane
@ johnny847

If your employer is willing, they can do a special payroll run for you to get around this ridiculous limitation. Here's a real quick breakdown of how it works:

You want to make a $5,000 contribution.
You write a check to your employer for $5,414 (The $414 is grossed up FICA taxes).
Employer runs a payroll with a memo entry of $5,414 taxable wages, no W/H other than FICA and $5,000 net pay.
But they don't pay you, that net pay goes into a due from employee account and your check clears that amount out.

We do this all the time. It's very easy, and as far as I know, completely legal. It's all reported via your W-2 so the IRS gets their cut.

johnny847

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Re: Overheard at Work
« Reply #4128 on: September 10, 2014, 02:03:48 PM »
@ klystomane
@ johnny847

If your employer is willing, they can do a special payroll run for you to get around this ridiculous limitation. Here's a real quick breakdown of how it works:

You want to make a $5,000 contribution.
You write a check to your employer for $5,414 (The $414 is grossed up FICA taxes).
Employer runs a payroll with a memo entry of $5,414 taxable wages, no W/H other than FICA and $5,000 net pay.
But they don't pay you, that net pay goes into a due from employee account and your check clears that amount out.

We do this all the time. It's very easy, and as far as I know, completely legal. It's all reported via your W-2 so the IRS gets their cut.
Interesting that this is possible, but this is a last resort solution as ideally you wouldn't have to pay FICA taxes twice to be able to contribute to the max (since that $5000 your'e contributing in that scenario represents post FICA tax wages). And for me personally this is not an issue at the moment, I'm a grad student and don't qualify for any retirement plans. I just wanted to know for the future.

Just demand a pay raise to $103,000, and at 17% you got your $17,500 401k deposit. Either that or offer them a compromise of raising the percentage withheld so that you can put in $17.5k at your present salary. Maybe they'll see the issue then.
Hahaha I like this solution =P

Cheddar Stacker

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Re: Overheard at Work
« Reply #4129 on: September 10, 2014, 02:16:45 PM »
You just saved me several thousand dollars. Thank you!

: ) Welcome.

Interesting that this is possible, but this is a last resort solution as ideally you wouldn't have to pay FICA taxes twice to be able to contribute to the max (since that $5000 your'e contributing in that scenario represents post FICA tax wages).

Good point. We tend to do this kind of thing for business owners who've already surpassed the SS Wage Base so it doesn't affect them as much.

And now that I think about it more, there's a way around the FICA part as well. This can all just go in as a memo entry in your payroll, it doesn't even need to run through gross wages. You are simply using the payroll reporting system to funnel more funds into your 401k - you still need to comply with all the ERISA/IRS limits. We do this a lot at year end so the details are always vague in my head during the year. This same method can be used to pay in a large chunk of payroll withholdings at year end if your income goes up for whatever reason during the year.

johnny847

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Re: Overheard at Work
« Reply #4130 on: September 10, 2014, 02:21:53 PM »
You just saved me several thousand dollars. Thank you!

: ) Welcome.

Interesting that this is possible, but this is a last resort solution as ideally you wouldn't have to pay FICA taxes twice to be able to contribute to the max (since that $5000 your'e contributing in that scenario represents post FICA tax wages).

Good point. We tend to do this kind of thing for business owners who've already surpassed the SS Wage Base so it doesn't affect them as much.

And now that I think about it more, there's a way around the FICA part as well. This can all just go in as a memo entry in your payroll, it doesn't even need to run through gross wages. You are simply using the payroll reporting system to funnel more funds into your 401k - you still need to comply with all the ERISA/IRS limits. We do this a lot at year end so the details are always vague in my head during the year. This same method can be used to pay in a large chunk of payroll withholdings at year end if your income goes up for whatever reason during the year.

Well the contribution still represents post income tax wages as well, which negates the benefit of putting that money into a traditional 401k. If that money is destined for a Roth 401k, then there's no difference. And even if you surpass the SS wage base, there's still the medicare tax (but like you mentioned, it's not much at 1.45%).

What exactly is a memo entry in payroll? How can it not run through gross wages? This part confuses me.

Cheddar Stacker

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Re: Overheard at Work
« Reply #4131 on: September 10, 2014, 02:27:41 PM »
I've only done a bit of payroll so I'm not an expert, but you can do memo entries. If memory serves and you go by my second example I believe you can use the memo entry as a reduction in Box1 (Federally taxable wages) and an increase in Box13 (or whatever the 401k contribution box is).

You're basically just altering the payroll records to more properly reflect what actually occurred. You are using this $5,000 contribution as if you'd made the contribution earlier in the year via regular net pay reductions. I think serpentstooth actually does some payroll regularly as part of her job so maybe she can add some insight here.

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Re: Overheard at Work
« Reply #4132 on: September 10, 2014, 02:32:58 PM »
Which payroll processors/401k administrators have you done this with? We have ADP/Fidelity here and I want to clear this with both of them and then present the plan to my boss. Our plan allows you to contribute 90% of eligible pay to the 401k, but new hires aren't eligible right away and I started midyear, so I can't manage to max it out this year. Would it go something like this?

I make $50,000/annum
401k plan rules allow me to contribute $12,500 this year

I write my boss a check for $5,000. He does a special payroll run and the entire $5,000 is deducted and sent to Fidelity as a 401k contribution.

My W-2 income at year's end is $32,500 ($50,000-17,500)? Or would it be $37,500 ($50,000-17,500+5,000)

We've done this with ADP and Paychex for payroll processors, and that's the key vendor you need to be clear with. The 401K TPA is largely irrelevant. They get a check designated for serpentstooth and they put it in your account. As long as it doesn't exceed 17,500 you're fine.

I would call your ADP rep either before or after you discuss it with your boss. If ADP won't do it for you, you're out of luck, but they've likely run something like this before for other clients.

W-2 would show as $32,500 if done properly. This is a federal income reduction. $32,500 in Box 1, $50,000 in Box 3 and 5 barring no other pre-tax deductions.

viper155

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Re: Overheard at Work
« Reply #4133 on: September 10, 2014, 02:48:35 PM »

Sometimes it pays off...In my case, I spent thousands over the years taking my son to lacrosse events up and down the east coast. He always had excellent equipment and some private lessons. Not only did he get a generous academic package to college he got 2k a year to play lacrosse. 8 grand that does not have to come out of my pocket. Money well spent considering all the time we spent together traveling and bonding. I would do it all over again. Now, in retirement, I get to watch him play his sport, his passion at just about the highest level.

Isn't this survivorship bias?  It would be like a lottery winner explaining how his $500/mo investment in lottery tickets was great because it all worked out and he hit the multi million dollar jackpot.   Sometimes it pays off.

There is something a little more profound to spending quality time with your son than throwing money away on lottery tickets. A terrible anology....so, no

That wasn't your original point though, your original point was that it "paid off" financially.  I don't think the financial aspect should be a consideration.  Would you have made the same post if your son had never advanced beyond that final high priced lesson?  The entire tone of your post would be radically different.  Back to the original point that was made, you could get plenty of profound quality time with your son, if that is your goal, without spending $500/mo on specialized hobbies.
[/quote

Since you know everything about me, including how much I spent on my son....you win!

NoraLenderbee

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Re: Overheard at Work
« Reply #4134 on: September 10, 2014, 03:17:03 PM »

 He was out of work for an entire 2 weeks and they spent 20k of her 401k money to pre-pay for a Hawaiian vacation in a private condo and pay bills down on multiple mortgages, personal loans and CC's.

*gasp*
Take out a 401k loan for a vacation?
Pay for a vacation when you are out of work?
Pay extra on loans when you are out of work?

theadvicist

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Re: Overheard at Work
« Reply #4135 on: September 11, 2014, 03:46:41 AM »
Co-worker: "I need some more ideas for my other half's Christmas present. I've bought him x, and y, and z [all useless shit, apart from one work shirt, which was, of course, a ridiculously over-priced brand]... I still need to spend about another 100... Any ideas?"

Me: Silence.

Me (in my head): We define the word 'need' very differently.

gooki

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Re: Overheard at Work
« Reply #4136 on: September 11, 2014, 03:59:37 AM »
I assumed x, y and z were presents from previous years. Oh how wrong I was.

theadvicist

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Re: Overheard at Work
« Reply #4137 on: September 11, 2014, 04:19:43 AM »
I assumed x, y and z were presents from previous years. Oh how wrong I was.

Ha ha! Yep, she was trying to get the cost of this year's total present haul up to some arbitrary number so that she had spent enough on him.

Obviously this is the same co-worker who complained about not seeing her 18 month old child in the week because she worked such long hours (and commuted so long) to buy the all the stuff.

tofuchampion

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Re: Overheard at Work
« Reply #4138 on: September 11, 2014, 06:42:17 AM »
Coworker was bitching about her commute - about a 45 min drive, I think, a few towns over.  I asked why she lived there and worked here.  She looked at me like I was crazy, and said, "What do you mean, why?  That's just where I live."  To which I replied, "Well, yeah, but you didn't have to live there, or work here.  You could live closer."  Judging from the look on her face, I don't think she'd ever considered the possibility...

I have another coworker who is literally counting down the days till she reaches retirement age and can quit.  Currently she works 6 (12-hr, overnight) shifts per week, has been burned out for ages... but has no money, because she lets her grown kids mooch off of her.  She also went on an vacation to Europe a few months ago. 

Another fellow employee (from another dept, I don't know her) was talking about our 401K plan and how she'd gone to HR to talk about the possibility of retiring early (by about 2 years).  Then she found out about the penalties for early withdrawal, etc.  I didn't think there would be any value in pointing out that people who retire early, don't rely on their job investment stuff to do so; they do it independently.  Clearly too late for that. 

FTR, I work in a hospital.  I'm a nursing assistant, CW's 1 & 2 are both RN's, and CW3 is a respiratory therapist.

jda1984

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Re: Overheard at Work
« Reply #4139 on: September 11, 2014, 08:42:07 AM »
I hired a guy to work in my department last summer.  He was just out of grad school.  One of the benefits at our company is company paid cell phones and plans for everyone.  It makes business sense since many/most of us spend significant time in the field (consulting engineers) but even the admin people have their phones covered.  So my new CW has a Samsung Galaxy S3 coming in.  I tell him about the benefit and suggest he port his number to our work plan (you can port it back if/when you leave).  He picks out a Galaxy S4.  A few days later it arrives and he's carrying around two phones, which seems fine for a short period (make sure he likes the new phone since we have a CDMA carrier and porting numbers/changing phones is slightly more difficult than with GSM).  Eventually this goes on long enough that I have to ask why he keeps both phones around.  CW says, "I don't want to accidentally send you a text intended for my wife."  He pays ~$80/mo just to prevent him from making a slightly embarassing mistake!

MsSindy

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Re: Overheard at Work
« Reply #4140 on: September 11, 2014, 09:06:42 AM »
I hired a guy to work in my department last summer.  He was just out of grad school.  One of the benefits at our company is company paid cell phones and plans for everyone.  It makes business sense since many/most of us spend significant time in the field (consulting engineers) but even the admin people have their phones covered.  So my new CW has a Samsung Galaxy S3 coming in.  I tell him about the benefit and suggest he port his number to our work plan (you can port it back if/when you leave).  He picks out a Galaxy S4.  A few days later it arrives and he's carrying around two phones, which seems fine for a short period (make sure he likes the new phone since we have a CDMA carrier and porting numbers/changing phones is slightly more difficult than with GSM).  Eventually this goes on long enough that I have to ask why he keeps both phones around.  CW says, "I don't want to accidentally send you a text intended for my wife."  He pays ~$80/mo just to prevent him from making a slightly embarassing mistake!

My new boss and husband have the same name, and I told him if I every sent him an inappropriate text or email, please know that it was intended for my husband!  ....luckily he has a sense of humor and took it for the light-hearted joke it was.  I don't ever send anything inappropriate, but still, there are some things that I send my DH that may raise eyebrows of my boss.     But no, I wouldn't keep 2 phones for that reason....just be extra careful.....and for gosh sakes, haven't we all learned that taking naked selfies are a bad idea anyways??!!

vivophoenix

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Re: Overheard at Work
« Reply #4141 on: September 11, 2014, 09:10:21 AM »
I hired a guy to work in my department last summer.  He was just out of grad school.  One of the benefits at our company is company paid cell phones and plans for everyone.  It makes business sense since many/most of us spend significant time in the field (consulting engineers) but even the admin people have their phones covered.  So my new CW has a Samsung Galaxy S3 coming in.  I tell him about the benefit and suggest he port his number to our work plan (you can port it back if/when you leave).  He picks out a Galaxy S4.  A few days later it arrives and he's carrying around two phones, which seems fine for a short period (make sure he likes the new phone since we have a CDMA carrier and porting numbers/changing phones is slightly more difficult than with GSM).  Eventually this goes on long enough that I have to ask why he keeps both phones around.  CW says, "I don't want to accidentally send you a text intended for my wife."  He pays ~$80/mo just to prevent him from making a slightly embarassing mistake!

My new boss and husband have the same name, and I told him if I every sent him an inappropriate text or email, please know that it was intended for my husband!  ....luckily he has a sense of humor and took it for the light-hearted joke it was.  I don't ever send anything inappropriate, but still, there are some things that I send my DH that may raise eyebrows of my boss.     But no, I wouldn't keep 2 phones for that reason....just be extra careful.....and for gosh sakes, haven't we all learned that taking naked selfies are a bad idea anyways??!!

i wonder about the security of work phones for my personal business

some companies install alot of extra softwarae

johnny847

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Re: Overheard at Work
« Reply #4142 on: September 11, 2014, 09:37:46 AM »
Another fellow employee (from another dept, I don't know her) was talking about our 401K plan and how she'd gone to HR to talk about the possibility of retiring early (by about 2 years).  Then she found out about the penalties for early withdrawal, etc.  I didn't think there would be any value in pointing out that people who retire early, don't rely on their job investment stuff to do so; they do it independently.  Clearly too late for that. 

If your coworker is at least 55, then another provision applies. If an employee leaves a company any time during or after the year in which he or she turns 55, there's no penalty on distributions from the 401k. But for this to work, the coworker has to leave the money in the 401k. It cannot be rolled over to an IRA.

johnny847

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Re: Overheard at Work
« Reply #4143 on: September 11, 2014, 09:41:25 AM »
I hired a guy to work in my department last summer.  He was just out of grad school.  One of the benefits at our company is company paid cell phones and plans for everyone.  It makes business sense since many/most of us spend significant time in the field (consulting engineers) but even the admin people have their phones covered.  So my new CW has a Samsung Galaxy S3 coming in.  I tell him about the benefit and suggest he port his number to our work plan (you can port it back if/when you leave).  He picks out a Galaxy S4.  A few days later it arrives and he's carrying around two phones, which seems fine for a short period (make sure he likes the new phone since we have a CDMA carrier and porting numbers/changing phones is slightly more difficult than with GSM).  Eventually this goes on long enough that I have to ask why he keeps both phones around.  CW says, "I don't want to accidentally send you a text intended for my wife."  He pays ~$80/mo just to prevent him from making a slightly embarassing mistake!

My new boss and husband have the same name, and I told him if I every sent him an inappropriate text or email, please know that it was intended for my husband!  ....luckily he has a sense of humor and took it for the light-hearted joke it was.  I don't ever send anything inappropriate, but still, there are some things that I send my DH that may raise eyebrows of my boss.     But no, I wouldn't keep 2 phones for that reason....just be extra careful.....and for gosh sakes, haven't we all learned that taking naked selfies are a bad idea anyways??!!

i wonder about the security of work phones for my personal business

some companies install alot of extra softwarae

I concur, privacy is a big issue. If the NSA can do it, then so can your company (whether it's legal or not is a different matter, but I'm pretty sure your company has some leeway when your service is being paid for by them).
Is it worth $80/month to me? Probably not. Then again, I would use a MVNO. Would it be worth say $20/month? Ugh. It's a hard decision. Depends on how much the salary is.

Cheddar Stacker

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Re: Overheard at Work
« Reply #4144 on: September 11, 2014, 11:09:40 AM »
I hired a guy to work in my department last summer.  He was just out of grad school.  One of the benefits at our company is company paid cell phones and plans for everyone.  It makes business sense since many/most of us spend significant time in the field (consulting engineers) but even the admin people have their phones covered.  So my new CW has a Samsung Galaxy S3 coming in.  I tell him about the benefit and suggest he port his number to our work plan (you can port it back if/when you leave).  He picks out a Galaxy S4.  A few days later it arrives and he's carrying around two phones, which seems fine for a short period (make sure he likes the new phone since we have a CDMA carrier and porting numbers/changing phones is slightly more difficult than with GSM).  Eventually this goes on long enough that I have to ask why he keeps both phones around.  CW says, "I don't want to accidentally send you a text intended for my wife."  He pays ~$80/mo just to prevent him from making a slightly embarassing mistake!

Perfectly reasonable, if you need one phone for your mistress and one for your wife. =D

Also perfectly reasonable if you are running a crystal meth empire and need a burner like Heisenberg.

dycker1978

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Re: Overheard at Work
« Reply #4145 on: September 11, 2014, 11:36:53 AM »
We just had a meeting with our PEPP (that is the defined contubution pension plan at work) and one of the comments that was stated is that if you are luck, and invest in this plan from the time you are 30-65 when you are ready to retire, you may have 500000 that you can draw off of.

It was also said that we should probally be investing in the money market fund so that we do not see any flucuation with the market... so you think that the two are co-orilated?

When we got back from the presentation, my CW stated that he could never retire.  The calculator online told him(he is about 55 now) that his current saving, if he lived off 110% of current income would last til 72 if he retired at 65.  I asked why he needed 110% of income and he stated to travel.
I told him that I live off of about 40% of my income now and travel every year... I got some wierd looks...

cavewoman

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Re: Overheard at Work
« Reply #4146 on: September 11, 2014, 11:52:53 AM »
I had a very short-term job as a teller in a bank inside of a retail store known for low prices.

I hated the job, but I'm grateful for it because it taught me a lot about banking.

This isn't quite as good as a lot of what I've read on here, just really annoying...

Customers would regularly open an account to cash their tax refund (better than a check cashing store at least).  But then, they'd spend all of that money in the store we were located in - like huge TVs - oftentimes going into overdraft.  Then they'd never come back until next tax refund time.  Our corporate office loved seeing new accounts, so when people owed money, we would give them a deal on what they owed "pay off 50% of this 500 you owe us, and we'll open a new account for your tax check, plus deposit 20 into a savings if you blah blah blah".

It made me so angry that these people basically got a free $250 for being dumb with money!

going2ER

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Re: Overheard at Work
« Reply #4147 on: September 11, 2014, 12:57:58 PM »
I was having a conversation with my co-worker about credit cards. We were discussing that if you pay for something like furnace oil on your card and can not afford to pay it off that month I feel that you are living beyond your means, she could not see this at all.

It doesn't matter what it is that you charge, clothing, furnace oil, a new purse. If you can not afford to pay it off when the bill comes in you are living beyond your means. Her argument is that you need the furnace oil, yes, you do need it, but if you can't afford it then it doesn't matter what it is. Plus, for her, she likely spent her pay cheque on a new purse, shoes, clothes thus causing her to use her credit card for furnace oil.

Why do people think its okay to spend their pay cheque on things they don't need and charge necessities on a credit card is okay? And we also have differing opinions on what a necessity is.

dycker1978

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Re: Overheard at Work
« Reply #4148 on: September 11, 2014, 04:41:09 PM »
Well this wasnt overheard at work, but seen on my ride home...

New condo for sale, starting at 1136 a month including condo fees with as little as 7050 down payment. 

I called the company as this is in an area that my SO and i are looking to but in, close to shopping etc. I was thinking that with 7050 down even at 5% calculation, that the cost of the units would be about 150000.  This is an exceedingly good deal in Regina right now, espically in the area that these were.

Anyways... the prices on these units are $384000.  The are willing to "help" people with the down payment(I am not sure how this works as I never asked to find out) but at 1136 a month that is almost 30 years of payments, if you sont take into account any intrest or condo fees... this must me a 35 or a 40 year mortgage... espically with the down payment help(we all know that you have to payfor it somewhere).

I thought the USA and Canada stoped these no down payment mortages with 40 year terms in 2008-2009...

dragoncar

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Re: Overheard at Work
« Reply #4149 on: September 11, 2014, 06:01:00 PM »
Well this wasnt overheard at work, but seen on my ride home...

New condo for sale, starting at 1136 a month including condo fees with as little as 7050 down payment. 

I called the company as this is in an area that my SO and i are looking to but in, close to shopping etc. I was thinking that with 7050 down even at 5% calculation, that the cost of the units would be about 150000.  This is an exceedingly good deal in Regina right now, espically in the area that these were.

Anyways... the prices on these units are $384000.  The are willing to "help" people with the down payment(I am not sure how this works as I never asked to find out) but at 1136 a month that is almost 30 years of payments, if you sont take into account any intrest or condo fees... this must me a 35 or a 40 year mortgage... espically with the down payment help(we all know that you have to payfor it somewhere).

I thought the USA and Canada stoped these no down payment mortages with 40 year terms in 2008-2009...

Wow, I'd inquire further just out of morbid curiosity.  Are the payments lower than comparable rent?  Comparable mortgage?