Author Topic: 401K? Never heard if it  (Read 7065 times)

FiguringItOut

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401K? Never heard if it
« on: December 12, 2016, 08:48:51 AM »
This morning I was talking to my HR person about my 11/30 401K contribution that still hasn't shown up in my 401K account as of today, 12 days later.

Turns out there was an internal issue with bank account and although HR send payment to 401K provider on 12/2, it only got proceeded on 12/9.  So hopefully I will see my contribution in my plan later today or tomorrow morning.  I'm not happy about it as missed the whole last week of capital growth, but nothing that I can do or could've done at this point.

But this is not the shame and comedy.

As HR person was showing me various paperwork to prove that the payment was made and my money is accounted for, he showed me that wire transfer for $8,457 that was made to the 401K plan.  This payment is for the total contribution made by our employees out of their 11/30/16 paychecks.

So about 50 people contributed a whooping total of $8,457.  $1,900 of that amount is mine.  So 49 people collectively are savings a grand total of $6,557 per paycheck into their 401K plans. 

This comes out to on average $3,212 savings per person per year. 

I knew that as a general population, people do not save enough into their 401K plans, but I really never saw numbers for myself. 

And, as far as I can tell, none of my coworkers have been inquiring about missing contribution in their 401K plans.  I was the only one who brought it up.








trollwithamustache

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Re: 401K? Never heard if it
« Reply #1 on: December 12, 2016, 09:34:55 AM »
In deference of the handful of employees who contribute, your employer has something like 30 days to make the transfer of your contribution to the 401k account. Some places I've worked use the whole time, some just transfer it over right away. 

The last company I worked for everyone complained when they were hired that the 401k was automatically set to a ~1 or 2% withholding.  "they" were taking "their money".  Turning off the 401k was the number one life pro tip floating around the lunch room.  Hey at least I wasn't the only one who brought my lunch right?

Undecided

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Re: 401K? Never heard if it
« Reply #2 on: December 12, 2016, 09:40:12 AM »
I don't see how you can draw a conclusion about annual contributions---maybe other employees have already contributed the max through earlier paychecks.

FiguringItOut

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Re: 401K? Never heard if it
« Reply #3 on: December 12, 2016, 09:42:56 AM »
In deference of the handful of employees who contribute, your employer has something like 30 days to make the transfer of your contribution to the 401k account. Some places I've worked use the whole time, some just transfer it over right away. 

The last company I worked for everyone complained when they were hired that the 401k was automatically set to a ~1 or 2% withholding.  "they" were taking "their money".  Turning off the 401k was the number one life pro tip floating around the lunch room.  Hey at least I wasn't the only one who brought my lunch right?

I didn't know about the 30 day period.  I'm glad I haven't seen it actually used by any employers.

As for automatic withholdings, when I started my last job, when I was signing all of my new employee paperwork on the first day, I was told that they do automatic 3.5% withholding,  but not to worry, I can change that to 1% or 2% as soon as I want.  And they gave me a paper to fill out to put in the % of my choosing.  I put in 20%.  They kept asking me if I meant to put in 0% or 2%. 

I am glad that at this job, when I set my withholding at a dollar amount that represents over 50% of my gross paycheck, the HR person hasn't said a word.  I fully expected to have to go into the 'nope, that's right, 50%, that's what I meant; nope, not 5%, I meant to have a zero in there" routine.


FiguringItOut

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Re: 401K? Never heard if it
« Reply #4 on: December 12, 2016, 09:43:43 AM »
I don't see how you can draw a conclusion about annual contributions---maybe other employees have already contributed the max through earlier paychecks.

It's possible.  However, based on my conversations with my coworkers, I seriously doubt  that that's the case.

trollwithamustache

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Re: 401K? Never heard if it
« Reply #5 on: December 12, 2016, 11:38:33 AM »
I don't see how you can draw a conclusion about annual contributions---maybe other employees have already contributed the max through earlier paychecks.

It's possible.  However, based on my conversations with my coworkers, I seriously doubt  that that's the case.

I wish I had Undecided's co-workers. Then I could talk MMM with people at work! :)

gimp

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Re: 401K? Never heard if it
« Reply #6 on: December 12, 2016, 02:23:04 PM »
Because of company matching, I can't max mine out early in the year without losing match for subsequent paychecks. I imagine a lot of people who max out do it similarly - either the most basic $max/paychecks, or as I do, front-load and reduce the contributions over time, calculated to never be less than (for me) 6%.

That said, one time the contribution was a day late, and I was already looking up who to ask about it...!

MilesTeg

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Re: 401K? Never heard if it
« Reply #7 on: December 12, 2016, 05:31:02 PM »
Because of company matching, I can't max mine out early in the year without losing match for subsequent paychecks. I imagine a lot of people who max out do it similarly - either the most basic $max/paychecks, or as I do, front-load and reduce the contributions over time, calculated to never be less than (for me) 6%.

That said, one time the contribution was a day late, and I was already looking up who to ask about it...!

Yep, I assumed this is how most companies handle it. Mine contributes x% per pay period, not per year so if I max my employee contribution before year end I lose out on match. Never bothered trying to "game" the contribution level as you do -- seems mostly pointless for a long term investment with the modern highly volatile market. Do you just try to front load or try to time the market?

Though most likely OPs observation is just the result of people not taking advantage of their 401k.

FiguringItOut

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Re: 401K? Never heard if it
« Reply #8 on: December 12, 2016, 06:31:05 PM »
Because of company matching, I can't max mine out early in the year without losing match for subsequent paychecks. I imagine a lot of people who max out do it similarly - either the most basic $max/paychecks, or as I do, front-load and reduce the contributions over time, calculated to never be less than (for me) 6%.

That said, one time the contribution was a day late, and I was already looking up who to ask about it...!

Yep, I assumed this is how most companies handle it. Mine contributes x% per pay period, not per year so if I max my employee contribution before year end I lose out on match. Never bothered trying to "game" the contribution level as you do -- seems mostly pointless for a long term investment with the modern highly volatile market. Do you just try to front load or try to time the market?

Though most likely OPs observation is just the result of people not taking advantage of their 401k.

We don't have any matching at all.

Tjat

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Re: 401K? Never heard if it
« Reply #9 on: December 12, 2016, 07:01:05 PM »
Because of company matching, I can't max mine out early in the year without losing match for subsequent paychecks. I imagine a lot of people who max out do it similarly - either the most basic $max/paychecks, or as I do, front-load and reduce the contributions over time, calculated to never be less than (for me) 6%.

That said, one time the contribution was a day late, and I was already looking up who to ask about it...!

Ugh, I still haven't figured this out at my company. Invariably, I get a pay raise (boo hoo) and have to continually check and adjust my contribution rates to hit the 18K, but not before my last paycheck so as to still get the 6% match. It would be so much easier if I could just set my contribution to $18,000 a year rather than a percent. Or, my company started doing matching true-ups...


gimp

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Re: 401K? Never heard if it
« Reply #10 on: December 12, 2016, 07:25:40 PM »
Yes, it would be nice if they matched the total yearly, not total per paycheck.

I do a front-load, no market timing. I start with ~20%, and reduce down to 6% over time. It only takes a few recalculations, I usually check every couple months. It feels like it's about 15% for the first half of the year, then 10, 8, and finally 6.25% at the appropriate time.

I believe I have it right this year, and will be off by only about a dollar or three.

teen persuasion

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Re: 401K? Never heard if it
« Reply #11 on: December 13, 2016, 10:54:09 AM »
In deference of the handful of employees who contribute, your employer has something like 30 days to make the transfer of your contribution to the 401k account. Some places I've worked use the whole time, some just transfer it over right away. 

The last company I worked for everyone complained when they were hired that the 401k was automatically set to a ~1 or 2% withholding.  "they" were taking "their money".  Turning off the 401k was the number one life pro tip floating around the lunch room.  Hey at least I wasn't the only one who brought my lunch right?

I didn't know about the 30 day period.  I'm glad I haven't seen it actually used by any employers.

As for automatic withholdings, when I started my last job, when I was signing all of my new employee paperwork on the first day, I was told that they do automatic 3.5% withholding,  but not to worry, I can change that to 1% or 2% as soon as I want.  And they gave me a paper to fill out to put in the % of my choosing.  I put in 20%.  They kept asking me if I meant to put in 0% or 2%. 

I am glad that at this job, when I set my withholding at a dollar amount that represents over 50% of my gross paycheck, the HR person hasn't said a word.  I fully expected to have to go into the 'nope, that's right, 50%, that's what I meant; nope, not 5%, I meant to have a zero in there" routine.

DH got bump in pay, and turned 50 this year.  I can adjust his 401k contributions % online, and it didn't give me any problem going to 50% right now (it's so late in the year, he won't hit the max this year, but next year he can).  Playing with the planning software, however, I found it refused to go higher than 45%!  Nope, nope, that's impossible, you can't possibly contribute 50% to retirement, we just won't even imagine it!

Davids

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Re: 401K? Never heard if it
« Reply #12 on: December 13, 2016, 11:01:05 AM »
Because of company matching, I can't max mine out early in the year without losing match for subsequent paychecks. I imagine a lot of people who max out do it similarly - either the most basic $max/paychecks, or as I do, front-load and reduce the contributions over time, calculated to never be less than (for me) 6%.

That said, one time the contribution was a day late, and I was already looking up who to ask about it...!

Ugh, I still haven't figured this out at my company. Invariably, I get a pay raise (boo hoo) and have to continually check and adjust my contribution rates to hit the 18K, but not before my last paycheck so as to still get the 6% match. It would be so much easier if I could just set my contribution to $18,000 a year rather than a percent. Or, my company started doing matching true-ups...
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

gimp

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Re: 401K? Never heard if it
« Reply #13 on: December 13, 2016, 07:40:59 PM »
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

Yeah, I don't get why this isn't an option.

My 401k provider allows us to click a checkbox for "maximize contributions," which calculates bi-weekly pay and sets the percentage for precisely $max/26 (or 25 or 27, if the year is weird.) So it'll set something like 8.59% without complaint.

But if you get a raise, which hopefully you do, you have to tell it to re-maximize so that it recalculates it.

If you take pay in lieu of vacation hours, you're off slightly. Want it perfect? Tell it to re-maximize.

If you take unpaid time off? Same thing.

If you get a cash bonus? Same thing.

It would be convenient if you could just tell it to do something like "$692.31 per paycheck, as long as there is enough money in that paycheck to do it." (Which obviously works out to $18k this year.)

Not sure why they have to make it so complicated.

Dicey

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Re: 401K? Never heard if it
« Reply #14 on: December 14, 2016, 06:05:45 AM »
^MPP", to be sure. Good stuff,

cheapass

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Re: 401K? Never heard if it
« Reply #15 on: December 14, 2016, 01:39:36 PM »
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

My plan is set up this way as well. It's bullshit. I think the reason for it is that psychologically, it's easier for people to type in "5%" rather than "$5,000" or whatever it may be. When you type in actual dollar terms, it gets scary so if we keep it in percentages, that extra calculation encourages people to contribute more.

jorjor

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Re: 401K? Never heard if it
« Reply #16 on: December 14, 2016, 06:14:41 PM »
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

My plan is set up this way as well. It's bullshit. I think the reason for it is that psychologically, it's easier for people to type in "5%" rather than "$5,000" or whatever it may be. When you type in actual dollar terms, it gets scary so if we keep it in percentages, that extra calculation encourages people to contribute more.

You can just make it an option. We can either defer a percentage or a dollar amount. No contributions come out of our off-cycle bonus payments, so I just have to set to a dollar amount per regular pay period to max it out. Done.

renata ricotta

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Re: 401K? Never heard if it
« Reply #17 on: December 14, 2016, 06:20:25 PM »
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

My plan is set up this way as well. It's bullshit. I think the reason for it is that psychologically, it's easier for people to type in "5%" rather than "$5,000" or whatever it may be. When you type in actual dollar terms, it gets scary so if we keep it in percentages, that extra calculation encourages people to contribute more.

My last company let you contribute a flat dollar amount - it was glorious. 

frugalnacho

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Re: 401K? Never heard if it
« Reply #18 on: December 15, 2016, 01:11:43 PM »
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

My plan is set up this way as well. It's bullshit. I think the reason for it is that psychologically, it's easier for people to type in "5%" rather than "$5,000" or whatever it may be. When you type in actual dollar terms, it gets scary so if we keep it in percentages, that extra calculation encourages people to contribute more.

My last company let you contribute a flat dollar amount - it was glorious.

Mine as well.  Of course they also do a flat 3% contribution so I don't have to worry about getting my match each pay period so I'm free to front load my account with no penalty.  My boss also does payroll so I can have him adjust it however I want regardless of what % or $ setting I put into the 401k login. 

exterous

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Re: 401K? Never heard if it
« Reply #19 on: December 16, 2016, 11:09:54 AM »
That is my one beef with 401k plans, I wish I could set my contribution as a flat dollar amount rather than a percentage so that I do not have to adjust it every April when our pay increases go into effect.

My plan is set up this way as well. It's bullshit. I think the reason for it is that psychologically, it's easier for people to type in "5%" rather than "$5,000" or whatever it may be. When you type in actual dollar terms, it gets scary so if we keep it in percentages, that extra calculation encourages people to contribute more.

My last company let you contribute a flat dollar amount - it was glorious.

Mine does both which is annoying. Actually the overall administration of the plan is annoying but they have a great plan provider (Vanguard with immediate access to Admiral class funds with no minimum) and great match and I suspect that the annoyance is partially related to that so I just deal with it. If you want any match at all you must put 5% of your pay into the first 403b account. The company then matches 2:1 (so 10%) into a 403a account. If you want to contribute more than 5% you must do a specific dollar amount into a second 403b account. So I still have to adjust the second dollar amount when my first 403b account goes up at raise time. They also offer a 457 account so I have 4 retirement accounts from the same employer. We also get paid biweekly but they only make 1 retirement plan contribution a month so they regularly make use of almost the entire 30 day window for some of our contributions
« Last Edit: December 16, 2016, 11:14:08 AM by exterous »

PhrugalPhan

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Re: 401K? Never heard if it
« Reply #20 on: December 20, 2016, 10:15:16 PM »
As for automatic withholdings, when I started my last job, when I was signing all of my new employee paperwork on the first day, I was told that they do automatic 3.5% withholding,  but not to worry, I can change that to 1% or 2% as soon as I want.  And they gave me a paper to fill out to put in the % of my choosing.  I put in 20%.  They kept asking me if I meant to put in 0% or 2%. 

I am glad that at this job, when I set my withholding at a dollar amount that represents over 50% of my gross paycheck, the HR person hasn't said a word.  I fully expected to have to go into the 'nope, that's right, 50%, that's what I meant; nope, not 5%, I meant to have a zero in there" routine.
Ha, reminds me of the routine I had at this job.  A Roth option with my 457 plan was added 5 years ago.  I decided to put in 20% salary into each option.  That is 40% total.  I got a call from HR saying I filled in the paperwork wrong, that I should only put in the 20% for one of the options.  I had to convince them I wanted 20% for each.  Thankfully they were ok with that.  Of course now I am at 26% Roth, 15% traditional, so I am a happy camper.

PhrugalPhan

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Re: 401K? Never heard if it
« Reply #21 on: December 20, 2016, 10:21:34 PM »
Because of company matching, I can't max mine out early in the year without losing match for subsequent paychecks. I imagine a lot of people who max out do it similarly - either the most basic $max/paychecks, or as I do, front-load and reduce the contributions over time, calculated to never be less than (for me) 6%.

That said, one time the contribution was a day late, and I was already looking up who to ask about it...!

Yep, I assumed this is how most companies handle it. Mine contributes x% per pay period, not per year so if I max my employee contribution before year end I lose out on match. Never bothered trying to "game" the contribution level as you do -- seems mostly pointless for a long term investment with the modern highly volatile market. Do you just try to front load or try to time the market?

Though most likely OPs observation is just the result of people not taking advantage of their 401k.

We don't have any matching at all.
Where I work we have no matching either (a "matching" amount goes into a pension instead).  So I do front loading, hitting the limit by August.  Most years this works to my benefit, overall I think it has given me a percent or two boost to my retirement accounts (2009 - when it hit bottom around March - my ROI for the year was something close to 50%!)

honeybbq

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Re: 401K? Never heard if it
« Reply #22 on: December 21, 2016, 12:19:46 PM »
This morning I was talking to my HR person about my 11/30 401K contribution that still hasn't shown up in my 401K account as of today, 12 days later.

Turns out there was an internal issue with bank account and although HR send payment to 401K provider on 12/2, it only got proceeded on 12/9.  So hopefully I will see my contribution in my plan later today or tomorrow morning.  I'm not happy about it as missed the whole last week of capital growth, but nothing that I can do or could've done at this point.

But this is not the shame and comedy.

As HR person was showing me various paperwork to prove that the payment was made and my money is accounted for, he showed me that wire transfer for $8,457 that was made to the 401K plan.  This payment is for the total contribution made by our employees out of their 11/30/16 paychecks.

So about 50 people contributed a whooping total of $8,457.  $1,900 of that amount is mine.  So 49 people collectively are savings a grand total of $6,557 per paycheck into their 401K plans. 

This comes out to on average $3,212 savings per person per year. 

I knew that as a general population, people do not save enough into their 401K plans, but I really never saw numbers for myself. 

And, as far as I can tell, none of my coworkers have been inquiring about missing contribution in their 401K plans.  I was the only one who brought it up.

I front load, I'm done contributing for the year. :) Though I wager to guess that this isn't the case with the 49 other people....

Apples

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Re: 401K? Never heard if it
« Reply #23 on: December 22, 2016, 12:55:09 PM »
I agree, that's a very sad amount for your coworkers.

But I admit I only contribute $1872 to my company's SIMPLE IRA to get the employer match.  The rest goes into my husband's account to get his match, then into our Roth IRAs.  We are aiming for FI, but not RE, and right now Roths offer the best option for us.  So I would look equally as shameful.  Maybe they all listen to Dave Ramsey and contribute to get the match then switch to Roth (that's sooo not why we do what we do).  :p  Our SIMPLE is expensive with a front load sales charge, operating expenses over 1% per year, and a $25 annual fee.  My Vanguard Roth funds feel much more efficient since I have a looooong investing horizon.  Does your employer plan suck equally as much?  Then your coworkers, or at least a few of them, might be rational.  Otherwise, yep, crazies won't have any money for their old age.

gimp

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Re: 401K? Never heard if it
« Reply #24 on: December 22, 2016, 03:23:31 PM »
My 401k just sent me an email!

"Save more in your 401(k) account in 2017

Save more in 2017.

You currently contribute 6.25% to the [redacted] 401(k) Plan and are on track to receive the maximum [redacted] Match for 2017. Consider increasing your contribution rate by 3-4% to work towards maximizing your savings for the future."



Little do you know, foolish software, that I've perfectly maxed out both my 401k contributions and my 401k match by my employer.

Though maybe, just maybe, before sending out emails like this, whoever designs the email heuristic might check for YTD contributions. Or the fact that I also contribute after-tax.

:)

Traveler15

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Re: 401K? Never heard if it
« Reply #25 on: January 09, 2017, 11:18:04 AM »
In deference of the handful of employees who contribute, your employer has something like 30 days to make the transfer of your contribution to the 401k account. Some places I've worked use the whole time, some just transfer it over right away. 

The last company I worked for everyone complained when they were hired that the 401k was automatically set to a ~1 or 2% withholding.  "they" were taking "their money".  Turning off the 401k was the number one life pro tip floating around the lunch room.  Hey at least I wasn't the only one who brought my lunch right?

I didn't know about the 30 day period.  I'm glad I haven't seen it actually used by any employers.

As for automatic withholdings, when I started my last job, when I was signing all of my new employee paperwork on the first day, I was told that they do automatic 3.5% withholding,  but not to worry, I can change that to 1% or 2% as soon as I want.  And they gave me a paper to fill out to put in the % of my choosing.  I put in 20%.  They kept asking me if I meant to put in 0% or 2%. 

I am glad that at this job, when I set my withholding at a dollar amount that represents over 50% of my gross paycheck, the HR person hasn't said a word.  I fully expected to have to go into the 'nope, that's right, 50%, that's what I meant; nope, not 5%, I meant to have a zero in there" routine.

Your employer technically has 15 business days following the month in which you contributed to remit your funds.  That only applies to employee funds.  Any employer funds can technically be remitted to the plan at any point during the year - i.e., you'll see some employers just do a huge year-end true up to fix any discrepancies.  Pretty frustrating, but lots of leeway here for messy HR/payroll departments.
 
Technically any employee contributions that are not remitted within the above timeframe are nonexempt transactions and your employer should go through corrective measures to calculate any lost earnings, etc.

Source: DOL