Author Topic: Talk to me about FIRE savings without a 401k.  (Read 3205 times)

startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Talk to me about FIRE savings without a 401k.
« on: April 04, 2017, 11:19:45 AM »
I'm considering changing jobs.... and the new job does not offer a 401k or HSA. (Or health insurance, but I can get that through my husband.) The salary is almost exactly the same as I am currently making, but I'd be trading my benefits for a 15% decrease in hours, no late nights, and no weekends. (Going from a corporation to a family business.)

- I currently max my 401k, HSA, and my Roth IRA.
- We also save about $20k additional per year (currently paying for a new air conditioner this month, saving for some home repairs, saving for a new vehicle, and beefing up emergency fund... planning to start some taxable investments soon).
- We put about 10% of my husband's income into his retirement account.... but since his is a church pension plan, and therefore lacks a lot of the legal protections that go with other retirement plans, I don't want to increase that because the money could disappear.

So, what would I do without my 401k/HSA?

I know we need to open a Roth in my husband's name, so that will eat up a small amount of the money. But what else? Do I have to put it all in taxable investments? I make approximately $20k/yr in freelance income in addition to my 'day job'... I know that there are self-employment retirement plan options, any thoughts on those? I don't currently have my freelance work set up as a business (no LLC or whatever), so would I need to do that in order to take advantage of one of those plans and, if so, how do I start the ball rolling on doing that? I've tried reading various articles, but I think I need a "for dummies"-level brief overview to help the articles I'm reading fit into some sort of context that will make sense.
 
Any thoughts would be much appreciated! Thanks!

startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Re: Talk to me about FIRE savings without a 401k.
« Reply #1 on: April 05, 2017, 06:14:35 AM »
Yeah, but I already am doing that. Maxing both Roths is only $11k. I still need somewhere to put $40k or so of additional savings per year.

Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: Talk to me about FIRE savings without a 401k.
« Reply #2 on: April 05, 2017, 06:58:07 AM »
Here's a thought, if the family company isn't going to pay healthcare, 401k, or HSA why not ask them to 1099 you, and perhaps bump that pay a little since they won't be paying the employer incomes taxes on the money.

You can then form an LLC expense your healthcare from the business and open a Solo 401k which would let you put your 18k self contributions and upto $54k total with a max of 25% of business profits*

I can explain in more detail, but there are tons of topics around doing this on this forum.

I just can't see why they wouldn't agree to 1099 you and save them tax money if they aren't offering benefits.

ooeei

  • Handlebar Stache
  • *****
  • Posts: 1143
Re: Talk to me about FIRE savings without a 401k.
« Reply #3 on: April 05, 2017, 07:05:40 AM »
Here's a thought, if the family company isn't going to pay healthcare, 401k, or HSA why not ask them to 1099 you, and perhaps bump that pay a little since they won't be paying the employer incomes taxes on the money.

You can then form an LLC expense your healthcare from the business and open a Solo 401k which would let you put your 18k self contributions and upto $54k total with a max of 25% of business profits*

I can explain in more detail, but there are tons of topics around doing this on this forum.

I just can't see why they wouldn't agree to 1099 you and save them tax money if they aren't offering benefits.

I always thought the nature of the job is what qualified you as a 1099 vs a W2.  If OP is a full time employee with certain job characteristics, isn't using a 1099 illegal?


radram

  • Pencil Stache
  • ****
  • Posts: 933
Re: Talk to me about FIRE savings without a 401k.
« Reply #4 on: April 05, 2017, 07:12:30 AM »
Here's a thought, if the family company isn't going to pay healthcare, 401k, or HSA why not ask them to 1099 you, and perhaps bump that pay a little since they won't be paying the employer incomes taxes on the money.

You can then form an LLC expense your healthcare from the business and open a Solo 401k which would let you put your 18k self contributions and upto $54k total with a max of 25% of business profits*

I can explain in more detail, but there are tons of topics around doing this on this forum.

I just can't see why they wouldn't agree to 1099 you and save them tax money if they aren't offering benefits.

+1 on this.

Even if they do not want to do this, you can still SEP 25% of your side hustle income. You do not have to incorporate, LLC, S-corp, or any of that other stuff to qualify. You just need earned income.

I have never heard of a church pension plan. Your statement that the money "could disappear" scares the shit out of me. Can they really just take it? Is it in your husbands name? Is it optional? How is it invested? What are the fees? Is there a required period of vesting? Is it an earned benefit? So many questions here. It is very possible that money could be better off in a taxable account in your name.

My HSA knowledge is limited. I believe it is based solely on your health insurance plan and if from an employer, whether they decided to set up the HSA. Since you are using your husbands plan, it is all on them to select a qualified plan and set it up so you can contribute. Can someone confirm this?

Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: Talk to me about FIRE savings without a 401k.
« Reply #5 on: April 05, 2017, 07:15:34 AM »
As far as I'm aware 1099 vs salary vs hourly employee really only depends on your contract with the client and how taxes are handled.

If no overtime is expected or authorized I can't see how it would be different to be a 1099 vs a regular employee, especially if they aren't paying benefits.

My personal experience was going from a regular hourly employee to forming my own LLC and contracting my business with my previous company to do mostly the same type of work for more pay because my company takes on other expenses besides just labor.  That being said this company uses a lot of sub-contractors.

My mother in-law's company does construction and has maybe 5 regular employees and then 1099 subs out 100s of contractors that they have used for 10+ years so I don't think there is anything illegal about a dual party agreed contract that says you'll be paid as a 1099 vs a w2.  Just puts you on the hook for quarterly taxes and self employment tax.


marielle

  • Pencil Stache
  • ****
  • Posts: 861
  • Age: 26
  • Location: South Carolina
Re: Talk to me about FIRE savings without a 401k.
« Reply #6 on: April 05, 2017, 07:16:08 AM »
Posting to follow. My employer does not offer a 401k option and I'm a w2 employee. I just assume most of my investments will have to be taxable, never heard of any other options for a w2 employee past IRA.

tralfamadorian

  • Handlebar Stache
  • *****
  • Posts: 1195
Re: Talk to me about FIRE savings without a 401k.
« Reply #7 on: April 05, 2017, 07:42:01 AM »
Even if the job description could be adjusted to qualify as a 1099 instead of W2 job, there would be 15.3% in self-employment taxes.  There would have to be more than a little salary bump to make up for that. 

beltim

  • Magnum Stache
  • ******
  • Posts: 2823
Re: Talk to me about FIRE savings without a 401k.
« Reply #8 on: April 05, 2017, 07:49:52 AM »
As far as I'm aware 1099 vs salary vs hourly employee really only depends on your contract with the client and how taxes are handled.

If no overtime is expected or authorized I can't see how it would be different to be a 1099 vs a regular employee, especially if they aren't paying benefits.

My personal experience was going from a regular hourly employee to forming my own LLC and contracting my business with my previous company to do mostly the same type of work for more pay because my company takes on other expenses besides just labor.  That being said this company uses a lot of sub-contractors.

My mother in-law's company does construction and has maybe 5 regular employees and then 1099 subs out 100s of contractors that they have used for 10+ years so I don't think there is anything illegal about a dual party agreed contract that says you'll be paid as a 1099 vs a w2.  Just puts you on the hook for quarterly taxes and self employment tax.

ogee is correct, it's the nature or the work that determines whether someone is an employee (who generally receives a W-2) or an independent contractor (who generally receives a 1099).  There's a lot of literature on the subject: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
https://www.dol.gov/whd/regs/compliance/whdfs13.htm
and there can be substantial penalties for misclassification: https://www.law.cornell.edu/uscode/text/26/3509

CareCPA

  • Bristles
  • ***
  • Posts: 330
  • Location: Northcentral PA
    • Care CPA - Tax, Accounting and Payroll
Re: Talk to me about FIRE savings without a 401k.
« Reply #9 on: April 05, 2017, 07:53:00 AM »
Even if the job description could be adjusted to qualify as a 1099 instead of W2 job, there would be 15.3% in self-employment taxes.  There would have to be more than a little salary bump to make up for that.
Keep in mind, as an employee you're already paying ~1/2 of this tax. Self-employment is made up of the employee and employer portions.

radram

  • Pencil Stache
  • ****
  • Posts: 933
Re: Talk to me about FIRE savings without a 401k.
« Reply #10 on: April 05, 2017, 07:59:25 AM »
Posting to follow. My employer does not offer a 401k option and I'm a w2 employee. I just assume most of my investments will have to be taxable, never heard of any other options for a w2 employee past IRA.

Here is an article that shows your options. You are right, you do not have a lot of them.
https://www.fidelity.com/mymoney/saving-for-retirement-without-a-401k

A SIMPLE IRA plan could be great if you can convince your employer to start one, as it allows for $12,500 of pre-tax savings. Here is their site explaining the program. It requires 100 or fewer employees.
https://investor.vanguard.com/what-we-offer/small-business/simple-ira?WT.srch=1&cmpgn=PS:RE

You might want to take the initiative and investigate this for your employer to let them know what it would cost to setup($0 in fees) and maintain($25 per year, paid by the employee). It is possible they just think it costs too much. It looks like their max out of pocket would be 3% of salary for each person that signs up. Maybe they could factor that in to next years raises?

I know if it were me, I would consider volunteering my time to set it all up it if it meant an extra $12,500 of tax deferred savings annually.

Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: Talk to me about FIRE savings without a 401k.
« Reply #11 on: April 05, 2017, 08:26:21 AM »
As far as I'm aware 1099 vs salary vs hourly employee really only depends on your contract with the client and how taxes are handled.

If no overtime is expected or authorized I can't see how it would be different to be a 1099 vs a regular employee, especially if they aren't paying benefits.

My personal experience was going from a regular hourly employee to forming my own LLC and contracting my business with my previous company to do mostly the same type of work for more pay because my company takes on other expenses besides just labor.  That being said this company uses a lot of sub-contractors.

My mother in-law's company does construction and has maybe 5 regular employees and then 1099 subs out 100s of contractors that they have used for 10+ years so I don't think there is anything illegal about a dual party agreed contract that says you'll be paid as a 1099 vs a w2.  Just puts you on the hook for quarterly taxes and self employment tax.

ogee is correct, it's the nature or the work that determines whether someone is an employee (who generally receives a W-2) or an independent contractor (who generally receives a 1099).  There's a lot of literature on the subject: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
https://www.dol.gov/whd/regs/compliance/whdfs13.htm
and there can be substantial penalties for misclassification: https://www.law.cornell.edu/uscode/text/26/3509

Exactly, first line of the irs link is if you are a business contracted to another business.  Forming a free LLC in your state and then having your Statement of Work be between the company and your LLC makes the 1099 legitimate. 

Then ask if they are willing to increase pay by 8% or a little more to cover the employer part of income taxes, which they have to pay themselves if you are a W2 anyway.

Idk more work on the OP for more control over their retirement savings and benefits and less paperwork for the hiring company. Seems like a win win since they don't offer benefits to begin with.

startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Re: Talk to me about FIRE savings without a 401k.
« Reply #12 on: April 05, 2017, 08:42:15 AM »
The rules are pretty clear for veterinarians on 1099 vs W-2 pay. Having a set schedule rules out 1099 pay.

The info on SEP plans is very helpful - will look into that!! (Sorry, quoting on my phone while between appointments/surgeries at work isn't something I am capable of!) Thank you for the suggestion and I'll look into it further.

As for the church pension plans, it has been a while since I researched the exact details but the money in a church pension plan is not guaranteed. If the denomination runs into financial trouble, the money may not get paid out as expected. Our church contributes an  amount equal to 14% of his income and we contribute 10% (I think).


beltim

  • Magnum Stache
  • ******
  • Posts: 2823
Re: Talk to me about FIRE savings without a 401k.
« Reply #13 on: April 05, 2017, 08:54:30 AM »
As far as I'm aware 1099 vs salary vs hourly employee really only depends on your contract with the client and how taxes are handled.

If no overtime is expected or authorized I can't see how it would be different to be a 1099 vs a regular employee, especially if they aren't paying benefits.

My personal experience was going from a regular hourly employee to forming my own LLC and contracting my business with my previous company to do mostly the same type of work for more pay because my company takes on other expenses besides just labor.  That being said this company uses a lot of sub-contractors.

My mother in-law's company does construction and has maybe 5 regular employees and then 1099 subs out 100s of contractors that they have used for 10+ years so I don't think there is anything illegal about a dual party agreed contract that says you'll be paid as a 1099 vs a w2.  Just puts you on the hook for quarterly taxes and self employment tax.

ogee is correct, it's the nature or the work that determines whether someone is an employee (who generally receives a W-2) or an independent contractor (who generally receives a 1099).  There's a lot of literature on the subject: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
https://www.dol.gov/whd/regs/compliance/whdfs13.htm
and there can be substantial penalties for misclassification: https://www.law.cornell.edu/uscode/text/26/3509

Exactly, first line of the irs link is if you are a business contracted to another business.  Forming a free LLC in your state and then having your Statement of Work be between the company and your LLC makes the 1099 legitimate. 

That's necessary but not sufficient.  From the same site:

Quote
An employee is generally subject to the businessís instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
When and where to do the work.
What tools or equipment to use.
What workers to hire or to assist with the work.
Where to purchase supplies and services.
What work must be performed by a specified individual.

This is rarely ambiguous, and is certainly not ambiguous in this case.

beltim

  • Magnum Stache
  • ******
  • Posts: 2823
Re: Talk to me about FIRE savings without a 401k.
« Reply #14 on: April 05, 2017, 09:03:14 AM »
I make approximately $20k/yr in freelance income in addition to my 'day job'... I know that there are self-employment retirement plan options, any thoughts on those?

This is the key.  With that level of income, you could open a solo 401(k) and put almost all of your freelance income into it, since the limits are 25% of compensation (basically, you have to subtract 1/2 of self-employment taxes and your "normal contribution") PLUS $18k.
https://www.irs.gov/retirement-plans/one-participant-401k-plans

MoseyingAlong

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Talk to me about FIRE savings without a 401k.
« Reply #15 on: April 05, 2017, 09:07:30 AM »
startingsmall,

Please do not start a new job by asking your employer to do something that comes with large penalties if the IRS finds out. Not worth it. If you're an employee, you're an employee.

Especially in your situation. Since you have $20K in side gig income (I'm assuming that's profit, not gross income), set up a solo 401k and defer the $18,000 income into that plus a percent of the profit as profit sharing. You do not need to operate as an LLC or S-corp or anything else, just have self-employment income on a Schedule C. You can set one up at Vanguard. Search for their Individual 401k packet. Depending on your tax situation, you can even do the Roth contributions. So much more control and probably better options than if the new employer set one up.

(And if your side gig income picks up, employ your spouse and get him into the 401k.)

So you can max the 401k contribution that way. Then save the other $20K in a regular investment account, invest in a tax-efficient way and enjoy your new life with better working conditions.

By tax-efficient, I mean buy some index ETFs and just hold them. If their price drops, you can tax loss harvest. If the price goes up and you have charitable donations to make, contribute appreciated stock (all the charitable deduction, none of the capital gains tax). There's some freedom in having investments that aren't subject to the IRA/401k rules and restrictions.

Hope that helps.

radram

  • Pencil Stache
  • ****
  • Posts: 933
Re: Talk to me about FIRE savings without a 401k.
« Reply #16 on: April 05, 2017, 09:20:27 AM »

As for the church pension plans, it has been a while since I researched the exact details but the money in a church pension plan is not guaranteed. If the denomination runs into financial trouble, the money may not get paid out as expected. Our church contributes an  amount equal to 14% of his income and we contribute 10% (I think).

Is your 10% required in order to get their 14%?

Based on this description, I would seriously look into this further. One way to look at this is that you are buying company stock where you work. If given a discount, it can be a nice place for a small portion of your net worth. In general, however, it is a bad idea to be invested where you work, since bad company performance is a double whammy in lost net worth as well as job risk.

It really just sounds like you have very little idea as to where that money goes and what it is for. That reason alone would be a cause for pause. I would be very interested in learning more. Would you be willing to post more information once you receive it?

Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: Talk to me about FIRE savings without a 401k.
« Reply #17 on: April 05, 2017, 09:41:01 AM »
startingsmall,

Please do not start a new job by asking your employer to do something that comes with large penalties if the IRS finds out. Not worth it. If you're an employee, you're an employee.


Fair enough, job market is probably more relevant here. For most IT jobs this type of subcontracting happens constantly all over the place and I've never heard of the IRS caring as long as they get their tax money.  Since OP added that they are a Veterinarian, I am sure that comes with a ton of different issues and regulations. 

As others have said if the 1099 route doesn't work for the primary job, solo 401k is definitely an option for the side hustle income and if you do the leg work on a SEP IRA or Simple IRA you might just show the business how they can save some money and get everyone there some kind of retirement options.

marielle

  • Pencil Stache
  • ****
  • Posts: 861
  • Age: 26
  • Location: South Carolina
Re: Talk to me about FIRE savings without a 401k.
« Reply #18 on: April 05, 2017, 09:41:40 AM »
Posting to follow. My employer does not offer a 401k option and I'm a w2 employee. I just assume most of my investments will have to be taxable, never heard of any other options for a w2 employee past IRA.

Here is an article that shows your options. You are right, you do not have a lot of them.
https://www.fidelity.com/mymoney/saving-for-retirement-without-a-401k

A SIMPLE IRA plan could be great if you can convince your employer to start one, as it allows for $12,500 of pre-tax savings. Here is their site explaining the program. It requires 100 or fewer employees.
https://investor.vanguard.com/what-we-offer/small-business/simple-ira?WT.srch=1&cmpgn=PS:RE

You might want to take the initiative and investigate this for your employer to let them know what it would cost to setup($0 in fees) and maintain($25 per year, paid by the employee). It is possible they just think it costs too much. It looks like their max out of pocket would be 3% of salary for each person that signs up. Maybe they could factor that in to next years raises?

I know if it were me, I would consider volunteering my time to set it all up it if it meant an extra $12,500 of tax deferred savings annually.

This is great advice, but we have more than 100 employees. I have been suggesting to do all the legwork to set up a 401k program, but have not pushed too much for it yet. One issue is that we have more employees in Mexico, and it would be kind of crappy to leave them out in the dust if we only offered it to the 110 or so US employees. It may also be a funding issue, so I'm going to keep pushing for it and do some research in the meantime.

startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Re: Talk to me about FIRE savings without a 401k.
« Reply #19 on: April 05, 2017, 09:44:05 AM »
To be honest, my understanding of the church plan is embarrassingly small! My husband's salary accounts for only ~25% of our household income, so when he started his job I went with my pre-MMM "save 10%" strategy and didn't give it much thought. We don't expect him to remain in this job for more than 3-5 more years, so I haven't yet invested the time to really try figuring it out. Lazy, I know.

Here's the info:
https://pbucc.org/index.php?option=com_content&view=article&id=285&Itemid=347


Gin1984

  • Magnum Stache
  • ******
  • Posts: 4693
Re: Talk to me about FIRE savings without a 401k.
« Reply #20 on: April 05, 2017, 10:39:03 AM »
To be honest, my understanding of the church plan is embarrassingly small! My husband's salary accounts for only ~25% of our household income, so when he started his job I went with my pre-MMM "save 10%" strategy and didn't give it much thought. We don't expect him to remain in this job for more than 3-5 more years, so I haven't yet invested the time to really try figuring it out. Lazy, I know.

Here's the info:
https://pbucc.org/index.php?option=com_content&view=article&id=285&Itemid=347
It looks like it is a 403b, not a 457, which cannot be taken by the employer.  I'll do some more checking if you want, my mom does labor law, well did.

Sent from my SPH-L710 using Tapatalk


startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Re: Talk to me about FIRE savings without a 401k.
« Reply #21 on: April 05, 2017, 10:46:06 AM »
To be honest, my understanding of the church plan is embarrassingly small! My husband's salary accounts for only ~25% of our household income, so when he started his job I went with my pre-MMM "save 10%" strategy and didn't give it much thought. We don't expect him to remain in this job for more than 3-5 more years, so I haven't yet invested the time to really try figuring it out. Lazy, I know.

Here's the info:
https://pbucc.org/index.php?option=com_content&view=article&id=285&Itemid=347
It looks like it is a 403b, not a 457, which cannot be taken by the employer.  I'll do some more checking if you want, my mom does labor law, well did.

Sent from my SPH-L710 using Tapatalk

Maybe it's not as bad as I think, then? My aunt spent her entire career in HR and cautioned Mr to be careful with church plans because they aren't subject to the same legal protections as other plans. It would be great if she and Google were wrong!

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4693
Re: Talk to me about FIRE savings without a 401k.
« Reply #22 on: April 05, 2017, 10:48:08 AM »
To be honest, my understanding of the church plan is embarrassingly small! My husband's salary accounts for only ~25% of our household income, so when he started his job I went with my pre-MMM "save 10%" strategy and didn't give it much thought. We don't expect him to remain in this job for more than 3-5 more years, so I haven't yet invested the time to really try figuring it out. Lazy, I know.

Here's the info:
https://pbucc.org/index.php?option=com_content&view=article&id=285&Itemid=347
It looks like it is a 403b, not a 457, which cannot be taken by the employer.  I'll do some more checking if you want, my mom does labor law, well did.

Sent from my SPH-L710 using Tapatalk

Maybe it's not as bad as I think, then? My aunt spent her entire career in HR and cautioned Mr to be careful with church plans because they aren't subject to the same legal protections as other plans. It would be great if she and Google were wrong!
I'll ask my mom.  I think the employer portion may be less protected but my reading of the 403b section is that your money is still yours.  But I'm not an expert.  Also there may be state laws, what state are you in?

Sent from my SPH-L710 using Tapatalk


radram

  • Pencil Stache
  • ****
  • Posts: 933
Re: Talk to me about FIRE savings without a 401k.
« Reply #23 on: April 05, 2017, 11:02:46 AM »
To be honest, my understanding of the church plan is embarrassingly small! My husband's salary accounts for only ~25% of our household income, so when he started his job I went with my pre-MMM "save 10%" strategy and didn't give it much thought. We don't expect him to remain in this job for more than 3-5 more years, so I haven't yet invested the time to really try figuring it out. Lazy, I know.

Here's the info:
https://pbucc.org/index.php?option=com_content&view=article&id=285&Itemid=347

It doesn't look that bad to me. It is characterized as a 403(b). I do not see what happens to the 14% they invest on your behalf, but your 10% SB yours.

You have a list of 10 funds to buy:
https://pbucc.org/index.php?option=com_content&view=article&id=77&Itemid=315

The fees are kind of high, which is not anything new. I would think the deferred tax would be worth the extra fees. Do you know which of the funds you own?

Be careful on those target funds. From what I see,they are just a fund of other funds. I think that would mean the target fund has its fees, and EACH fund within it also pays their fees. If that is true, you could just buy portions of each fund yourself.

The equity fund charges .74% and has earned 3.88% annually for 10 years. Essentially they are taking 20% of the profits. That part kind of sucks, but you do get to sock away the money pre-tax. For reference, a comparable Vanguard fund would charge about 0.1%.

It looks like you can put $18,000 per year. Anyone have advice on whether she should max out this account to get it saved pre-tax? It could provide a home for some of that extra $40,000.

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4693
Re: Talk to me about FIRE savings without a 401k.
« Reply #24 on: April 05, 2017, 11:52:12 AM »
To be honest, my understanding of the church plan is embarrassingly small! My husband's salary accounts for only ~25% of our household income, so when he started his job I went with my pre-MMM "save 10%" strategy and didn't give it much thought. We don't expect him to remain in this job for more than 3-5 more years, so I haven't yet invested the time to really try figuring it out. Lazy, I know.

Here's the info:
https://pbucc.org/index.php?option=com_content&view=article&id=285&Itemid=347

It doesn't look that bad to me. It is characterized as a 403(b). I do not see what happens to the 14% they invest on your behalf, but your 10% SB yours.


You have a list of 10 funds to buy:
https://pbucc.org/index.php?option=com_content&view=article&id=77&Itemid=315

The fees are kind of high, which is not anything new. I would think the deferred tax would be worth the extra fees. Do you know which of the funds you own?

Be careful on those target funds. From what I see,they are just a fund of other funds. I think that would mean the target fund has its fees, and EACH fund within it also pays their fees. If that is true, you could just buy portions of each fund yourself.

The equity fund charges .74% and has earned 3.88% annually for 10 years. Essentially they are taking 20% of the profits. That part kind of sucks, but you do get to sock away the money pre-tax. For reference, a comparable Vanguard fund would charge about 0.1%.

It looks like you can put $18,000 per year. Anyone have advice on whether she should max out this account to get it saved pre-tax? It could provide a home for some of that extra $40,000.
That is what I thought.  I have been informed I'm wrong because churches don't have to follow ERISA: http://www.americanbar.org/content/dam/aba/publishing/aba_journal_labor_employment_law/v31n2/abajlel31-2_02herman.authcheckdam.pdf

Apparently, a church can chose to set up a ERISA compliant plan, but my mom has not heard of ANY that have.  That means they are not protected under bankruptcy UNLESS your states says so and ALL the funds belong to the church.

radram

  • Pencil Stache
  • ****
  • Posts: 933
Re: Talk to me about FIRE savings without a 401k.
« Reply #25 on: April 05, 2017, 03:55:49 PM »

That is what I thought.  I have been informed I'm wrong because churches don't have to follow ERISA: http://www.americanbar.org/content/dam/aba/publishing/aba_journal_labor_employment_law/v31n2/abajlel31-2_02herman.authcheckdam.pdf

Apparently, a church can chose to set up a ERISA compliant plan, but my mom has not heard of ANY that have.  That means they are not protected under bankruptcy UNLESS your states says so and ALL the funds belong to the church.

This is VERY valuable information. I would definitely want to learn more if it was me.

startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Re: Talk to me about FIRE savings without a 401k.
« Reply #26 on: April 05, 2017, 04:12:11 PM »

That is what I thought.  I have been informed I'm wrong because churches don't have to follow ERISA: http://www.americanbar.org/content/dam/aba/publishing/aba_journal_labor_employment_law/v31n2/abajlel31-2_02herman.authcheckdam.pdf

Apparently, a church can chose to set up a ERISA compliant plan, but my mom has not heard of ANY that have.  That means they are not protected under bankruptcy UNLESS your states says so and ALL the funds belong to the church.

This is VERY valuable information. I would definitely want to learn more if it was me.

I've had a hard time finding much info, which is why we only contribute $3k/yr to the church plan. If everything goes well, it's extra retirement savings. If we somehow lose some of it, we aren't out much.

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4693
Re: Talk to me about FIRE savings without a 401k.
« Reply #27 on: April 05, 2017, 04:16:55 PM »

That is what I thought.  I have been informed I'm wrong because churches don't have to follow ERISA: http://www.americanbar.org/content/dam/aba/publishing/aba_journal_labor_employment_law/v31n2/abajlel31-2_02herman.authcheckdam.pdf

Apparently, a church can chose to set up a ERISA compliant plan, but my mom has not heard of ANY that have.  That means they are not protected under bankruptcy UNLESS your states says so and ALL the funds belong to the church.

This is VERY valuable information. I would definitely want to learn more if it was me.

I've had a hard time finding much info, which is why we only contribute $3k/yr to the church plan. If everything goes well, it's extra retirement savings. If we somehow lose some of it, we aren't out much.
My mom is willing to send more info if you need it but she says it is state dependent as well because of the lack of federal protection. 

Sent from my SPH-L710 using Tapatalk


startingsmall

  • Pencil Stache
  • ****
  • Posts: 606
Re: Talk to me about FIRE savings without a 401k.
« Reply #28 on: April 05, 2017, 04:25:13 PM »

That is what I thought.  I have been informed I'm wrong because churches don't have to follow ERISA: http://www.americanbar.org/content/dam/aba/publishing/aba_journal_labor_employment_law/v31n2/abajlel31-2_02herman.authcheckdam.pdf

Apparently, a church can chose to set up a ERISA compliant plan, but my mom has not heard of ANY that have.  That means they are not protected under bankruptcy UNLESS your states says so and ALL the funds belong to the church.

This is VERY valuable information. I would definitely want to learn more if it was me.

I've had a hard time finding much info, which is why we only contribute $3k/yr to the church plan. If everything goes well, it's extra retirement savings. If we somehow lose some of it, we aren't out much.
My mom is willing to send more info if you need it but she says it is state dependent as well because of the lack of federal protection. 

Sent from my SPH-L710 using Tapatalk

We live in NC, so I tend to assume that we're pretty much screwed on anything involving state protections.

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4693
Re: Talk to me about FIRE savings without a 401k.
« Reply #29 on: April 05, 2017, 07:09:37 PM »

That is what I thought.  I have been informed I'm wrong because churches don't have to follow ERISA: http://www.americanbar.org/content/dam/aba/publishing/aba_journal_labor_employment_law/v31n2/abajlel31-2_02herman.authcheckdam.pdf

Apparently, a church can chose to set up a ERISA compliant plan, but my mom has not heard of ANY that have.  That means they are not protected under bankruptcy UNLESS your states says so and ALL the funds belong to the church.

This is VERY valuable information. I would definitely want to learn more if it was me.

I've had a hard time finding much info, which is why we only contribute $3k/yr to the church plan. If everything goes well, it's extra retirement savings. If we somehow lose some of it, we aren't out much.
My mom is willing to send more info if you need it but she says it is state dependent as well because of the lack of federal protection. 

Sent from my SPH-L710 using Tapatalk

We live in NC, so I tend to assume that we're pretty much screwed on anything involving state protections.
I'll ask, since she is Ca based it will take longer for her to check though, but I'll PM you if the thread is gone.