Author Topic: Should I negotiate a paycut to get 401K matching?  (Read 2006 times)

phwadsworth

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Should I negotiate a paycut to get 401K matching?
« on: May 28, 2015, 07:41:11 AM »
My company currently doesn't offer a 401k match.  I am contributing the max, $18000/year.  My wife and I, age 36, are in the 28% tax bracket right now, and in a year we will be in the 39.6% bracket when she finishes medical residency, meaning that other tax advantaged savings plans (IRAs, etc) are gone for us.

I'm thinking if I take a pay cut right now it will put me below the "highly compensated employee" mark ($115k), and then I could ask my employer to pay me a 100% match instead, another $18k/year, in the 401k.  This wouldn't be "free" money, as it would be cut from my regular pay, but it wouldn't be taxable income in the highest marginal rate.

The pro: tax savings of $5000-$7000/year
The con: this retirement money is 24 years away and technically will not help our early retirement.

thoughts?  If I need to incentivize my employer to undergo the hassle of doing this, is it worth me taking an "real" paycut, for instance reduce my total compensation by $20,000 in order to get $18,000 in 401k match?

Gin1984

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Re: Should I negotiate a paycut to get 401K matching?
« Reply #1 on: May 28, 2015, 07:48:13 AM »
Your employer can't do it just for you.  A match has to be for all employees.
« Last Edit: May 28, 2015, 08:47:00 AM by Gin1984 »

willkp23

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Re: Should I negotiate a paycut to get 401K matching?
« Reply #2 on: May 28, 2015, 08:39:39 AM »
Have you look into any other methods of reducing your taxes?  Starting a business, having deductions etc?

Iron Mike Sharpe

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Re: Should I negotiate a paycut to get 401K matching?
« Reply #3 on: May 28, 2015, 08:43:43 AM »
Your employer can't do it just for you.  A max has to be for all employees.

This. 

Employers are not allowed to offer different 401K rules to employees.  The rules have to be uniform across the company.

phwadsworth

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Re: Should I negotiate a paycut to get 401K matching?
« Reply #4 on: May 28, 2015, 08:51:10 AM »
well, bummer.  I missed that in all my reading, thank you all.  Can't imagine that my company is going to offer a 1:1 match for everyone. So, that's probably out.

willkp23, as for other deductions, in order to get deductions one needs to spend money on something deductible, and I don't want to spend any more money.  As for starting a business, I want to do *less* work, not more.

themagicman

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Re: Should I negotiate a paycut to get 401K matching?
« Reply #5 on: May 28, 2015, 08:55:09 AM »
well, bummer.  I missed that in all my reading, thank you all.  Can't imagine that my company is going to offer a 1:1 match for everyone. So, that's probably out.

willkp23, as for other deductions, in order to get deductions one needs to spend money on something deductible, and I don't want to spend any more money.  As for starting a business, I want to do *less* work, not more.

Are you eligible for a HSA? Are you maxing this out? You could negotiate a paycut and get more non salary benefits (More vacation, less hours, ect.)

phwadsworth

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Re: Should I negotiate a paycut to get 401K matching?
« Reply #6 on: May 28, 2015, 09:01:55 AM »
No HSA, my health plan is quite good, not high deductible.
I'm already allowed to take all the vacation I want (generally take 4-6 weeks/year) and my hours are totally flexible (yeah, my job rocks).  The one big thing I can negotiate is more incentivized stock options, but I think this is too risky for me at this stage.  House and education debt will be gone in 1.5 months, then it's just build-the-stache mode and we're done.