Author Topic: Employer 401K changed, now what?  (Read 1409 times)

rxmurphy

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Employer 401K changed, now what?
« on: February 23, 2017, 04:54:32 AM »
Work for privately held company > 10 years, generous 401K (4% match of salary, no cap). Company just acquired by large publicly traded company. New 401K is 3% match with $3000 cap. Both 401K plans are at Fidelity. In my case, loss of free money is over $4000/year plus any gain or loss of those invested dollars. My question, if I continue to contribute the way I am, 13%, I'll hit the max match in 6 months. What should I do the rest of the year? I am 60 years old and have an IRA and a taxable account at Vanguard.

NoStacheOhio

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Re: Employer 401K changed, now what?
« Reply #1 on: February 23, 2017, 06:14:32 AM »
If you have good fund choices and no debt, then contribute up to the federal maximum (18k plus your catch-up amount).

Heroes821

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Re: Employer 401K changed, now what?
« Reply #2 on: February 23, 2017, 06:30:20 AM »
I have to agree with NoStacheOhio, and not just because I'm a Buckeye! 

At that age range you shouldn't need to worry about early withdrawal issues like some people on here so take full advantage and cap that 401k.  Whats the 2017 limit after 55 $24k? Your employer is still going to add 3k more onto that regardless, but the 24k drops your tax burden. Depending on your income and tax bracket that might not be a number you're willing to put away, but if you can it is probably the way to get the most savings.

rxmurphy

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Re: Employer 401K changed, now what?
« Reply #3 on: February 23, 2017, 07:17:23 AM »
Thanks to both Buckeyes. I have always maxed the contribution plus catch up, I was wondering if I should stop the 401K when I hit the match max, then max the IRA which I usually do not contribute to, then go back to the 401K and contribute to 24K (it is 18 + 6 catch up for 17)?
I think I am just upset that we are losing so much with the change, but it was after all, free money!

Heroes821

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Re: Employer 401K changed, now what?
« Reply #4 on: February 23, 2017, 07:21:02 AM »
That is awesome that you did that anyway.  I guess if you are able to fund both then I'd knock out he IRA now so you get compounding for the year, because most 401k matches won't let you front load so that will take the year to fund anyway.

With This Herring

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Re: Employer 401K changed, now what?
« Reply #5 on: February 23, 2017, 08:15:24 AM »
Effectively, this change has cut your pay.  Would you sit still for a salary decrease if it was stated as such?  If you think it might work, go to your boss and say "This new 401(k) match decrease has cut my annual compensation by $4000.  I would like a raise of that much."  Is there anyone else in your office who is similarly affected that could join you in this request?

NoStacheOhio

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Re: Employer 401K changed, now what?
« Reply #6 on: February 23, 2017, 08:21:31 AM »
That is awesome that you did that anyway.  I guess if you are able to fund both then I'd knock out he IRA now so you get compounding for the year, because most 401k matches won't let you front load so that will take the year to fund anyway.

It sounds like the matching just stops when you hit the cap, so funding an IRA now or later doesn't really matter (again, assuming the 401k has good fund choices).