Author Topic: 401K Questions - Overage, Fund Choice, etc.  (Read 1525 times)

mrrobot

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401K Questions - Overage, Fund Choice, etc.
« on: August 25, 2015, 02:06:35 PM »
Hi All!

My first post on MMM forums! I just found this site this week, and loving it! I'm trying to start from the first MMM post and read all the way to current, has anyone or everyone done this? :)

I've recently transformed from being in massive debt to having a large savings and retirement, it was a long process but I feel like a new person!

Here's my current situation.

I max out my 401K each year. $18,000 this year. I'm already at $16,000 for the year, and looking to contribute each paycheck to take max advantage of company match. The match is 100% up to 3% and then 1/2 percents up to 5%. So basically if you contribute 5% you get the full 4% max match. I currently contribute 21% of my paycheck and get a 4% max match, for a 25% total.

The issue I have (first world problem) is that I get commission checks every quarter based on my performance, and I cannot not have the 401K deduction come out of here, or change the % of deduction for this separate deposit/check. The commissions can be anywhere from $5-15K depending on how well I did. It's almost impossible for me to know when to time any changes in % deduction for 401K and I'm having a hard time figuring out how to ensure I get a contribution with every 2 week pay period until the end of the year. I was thinking of dropping my deduction to 5% after a few more pay periods, and then upping it at the end? How do I time it perfectly, or is it not possible?

Some other questions...

Top line info: ADP Paycheck Provider using VOYA Financial
Current Balance: $33,500
Age: 29

1. What happens if I over contribute? Will my company/payment provider stop it? Does it automatically not contribute?

2. Where should I allocate the extra funds I have after I stop contributing? I'm already maxing out my Roth IRA using Vanguard Index fund (VSTMX)

3. Which funds should I be using in my 401K? Here's the offerings (they are eh):

www.voyadelivers.com/adpts/FundFactSheets/ffs/adpts_fund_grid.pdf

I'm currently 100% in Voya Target Solution 2050 it's aggressive since I changed the year manually to a longer retirement date.

The fund has a 0.92% expense ratio, which seems awfully high. Any other suggestions?

Thanks in advance! You guys are awesome. I will be reading these forums for the next few weeks. Any sections/pages/threads you recommend reading? I've read about 10 personal finance books, and just starting to hit the blog/forum scene. I can't wait to post a bunch!

-mr robot!
« Last Edit: August 25, 2015, 02:10:51 PM by mrrobot »

matchewed

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Re: 401K Questions - Overage, Fund Choice, etc.
« Reply #1 on: August 25, 2015, 02:55:17 PM »
1) Usually yes it is halted. Double check w/ HR or the 401k company.

2) Depends on your goals. If you've filled up the 401k and the IRA (should be using a traditional IRA for most people depending on various tax situations) you have a normal taxable account as your next bet if traditional investments are your plan.

3) Whatever funds have the lowest fees and reflect your desired Asset Allocation. Write up an Investment Policy Statement. You could always go with the Vanguard Balanced Index Fund and just go with more equity in your IRA and after tax for a more aggressive while low cost asset allocation.

mrrobot

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Re: 401K Questions - Overage, Fund Choice, etc.
« Reply #2 on: January 18, 2016, 01:55:45 PM »
Hi Guys,

I just wanted to follow up on this post. I did find out there is no overage, as I maxed out my 401K last year without a problem. It just stopped at $18,000 and everything else went to checking for the last pay period. I'm planning on maxing it out again this year and every year.

I'm still a bit confused about my fund choice, and a little upset after seeing the actual expenses, although not sure if the returns outweigh the expenses.

Here's my choices:
http://www.voyadelivers.com/adpts/FundFactSheets/ffs/adpts_fund_grid.pdf

I'm in the 2050 target date fund. I originally thought the fees were 0.91% as stated, but after reviewing even more it looks like the total fees could be over 1%. I haven't found the exact fees anywhere, and not sure as I see a Net Expense Ratio, and see other fees listed as well? Does anyone know the actual fee?

The only fund that seems worth going into is - Vanguard Balanced Index Fund, which is only .08% Expense, and seems to have a higher 5 year return, although it looks like it would have less overall since it's 60% stocks and 40% bonds. Does anyone have any insight?

I also noticed - BlackRock Russell 3000 Index Fund, which might be worth it due to the aggressive allocation, and 0.28% Expense Ratio, I looked it up and it says 0.20%. Could ADP be adding .08?

Also, if changing funds, do I keep the existing funds in the old fund and start allocating to new one? OR am I able to sell the existing fund and put into new one? It also states - Closed to new participant directed investments.
would this only be for brand new 401k participants?

Let me know what you guys would choose. Thanks!

Thanks guys!
« Last Edit: January 18, 2016, 02:09:17 PM by mrrobot »