Help w/ 401 K thinking of starting one

Can I stop contribution at anytime or take a break if I cant financially continue ? Its pre tax right so I would pay a penalty if I withdraw ?

Where I work they contribute so little, .25 to my every $1.00 i elect to defer up to a max of 1% of compensation. If I defer 4% or more I'll receive the greater of 1% of compensation or $360.00.

Help, what does this mean??

Help w/ 401 K thinking of starting one

You can stop at any time I think it takes 1 payroll cycle

Help w/ 401 K thinking of starting one

They are giving you free money, just not a whole lot.
You can stop contributions any time, restart when able,
Anything withdrawn before 59 1/2 will be taxed at a higher penalty rate.

Your last sentence needs clarification.is that per pay period, month, or year ?
I contribute 17%, will up it to 18 or 19% of my gross salary. My company contributes 5% of my gross salary.

Re: Help w/ 401 K thinking of starting one

Message edited 5/29/2017 6:00:51 PM.

Re: Help w/ 401 K thinking of starting one

Re: Help w/ 401 K thinking of starting one

Please make sure to put in at least to the employer match. Not doing so is walking away from free money. You will lower your taxable income, and the money is yours if you leave a job. You might have to vest into the employer match to keep their portion of the contribution over a few years.

If you are not good at picking stock, most employers have target date funds for when you are going to retire. For now, maybe invest in them? You should look for funds with the lowest fees and the expenses to get the best bang for your buck. Right now the stock market is doing really well. It can and does go down. Just keep investing and stay the course, don't panick sell to lock in losses.

Every year, when you receive a raise, take a portion of the raise or all of it if you can, to contribute more to the 401k. Currently, you can put away $18,000 a year in your 401k. That does not include your employer match. As for percentage contribution, it would depend upon your salary. The more you make, you might be limited by highly compensated employee laws which could limit contribution amounts.

Re: Help w/ 401 K thinking of starting one

Can I stop contribution at anytime or take a break if I cant financially continue ?

Yes. You can start and stop at any time. You can take a break if you can't afford it.

Its pre tax right so I would pay a penalty if I withdraw ?

It is pre tax. You would get a tax deduction in your gross income for contributing so it will reduce your taxable income when you contribute pre tax dollars.

You would get a penalty if you withdraw funds under certain circumstances depending upon your age.

Where I work they contribute so little, .25 to my every $1.00 i elect to defer up to a max of 1% of compensation. If I defer 4% or more I'll receive the greater of 1% of compensation or $360.00.

Help, what does this mean?

If you earn over $36,000 a year, and contribute 4% (or more) of your salary, your company will contribute 1% of your salary to your 401k.If your salary is under $36,000, and you contribute 4% or more to your 401k the company will contribute $360 to your 401k.

Help w/ 401 K thinking of starting one

thank you all and LSP2005 for explaining

Re: Help w/ 401 K thinking of starting one

Re: Help w/ 401 K thinking of starting one

Re: Help w/ 401 K thinking of starting one

Re: Help w/ 401 K thinking of starting one

There should be a list of funds to pick from within the 401k. If it is too overwhelming, then putting it into a target date retirement fund might suit you. I would try to read up on each fund choice. In general, you have large cap (big American companies), Medium cap (medium size American companies), Small cap (small American companies). International, emerging markets, bond funds. You might have a few different options in each category. If you ask, you can see something called the prospectus. It will tell you what companies the funds invest in. Some people want environmentally friendly stock funds, or care if they invest in gun manufacturers, or cigarets. Some funds will have overlapping investments. If you go on line, you can look for a test for your investing comfort levels. Fidelity and schwab both offer them. It can tell you how risky or risk adverse you are and make recommendations based on how you feel about things. I would try to read up about it. Then annually, rebalance your portfolio to make sure you are close to your targets. As you get older the targets or your desired asset mix can change.

As for the amount to put in, it is a shock at first, but you will need to plan for your future. Your future self will thank you for being wise and investing into your self now. If you have a trusted family member, or mentor you might ask their opinion on allocation (what percentage to invest into each asset class). I cannot make any recommendations.

Help w/ 401 K thinking of starting one

thank you :)

Message edited 5/31/2017 10:19:49 PM.

Re: Help w/ 401 K thinking of starting one

Delete the personal info above. They are very good. They have a fantastic calculator that can help you determine a good asset mix to help you reach your goals. If you are having trouble with it, call their customer service who can walk you through it on the website. Also know, if you have their credit card, they will deposit 2% do your spending into an account. There is no limit on the 2% either.

Help w/ 401 K thinking of starting one

FM U

Re: Help w/ 401 K thinking of starting one