Discussion in 'UPS Discussions' started by BrandonUPSER, Dec 16, 2012.

  1. AndUPSER

    AndUPSER Active Member

    Hi everyone! Been with UPS for over 4 months now as a loader. Really enjoy it. Have also been reading BC since July. I've decided to finally start a 401k plan. I'm just wondering: 1. How much should I put in it? And 2. Is there an age limit? I'm only 17, so do I have to wait until I'm 18, 21, or can I start one now? Thanks!
  2. Monkey Butt

    Monkey Butt You can call me Chappy Staff Member

    I don't know the answers but you have your thoughts in the right place.

    Upstate will have good answers and even better advice.
  3. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Good questions. There is no minimum age to participate. As for how much you should contribute, that is something that only you can decide. The one question you should ask yourself is do you plan on making UPS your career or is this just a job. You also need to decide whether you want to contribute to the traditional or Roth 401k. The former is funded with pretax dollars while the latter is after tax dollars. The former gives you a tax break now while the latter gives you a tax break when you start withdrawing, which you cannot do until you are 59 1/2 and must do when you turn 70 1/2.

    You are only 17 so I am going to assume that you are still living at home with no bills. I would go with the Roth 401k and start at 5%. Good luck.
  4. AndUPSER

    AndUPSER Active Member

    Thanks. 1. Yes, I do plan on making UPS as a career, and staying union. My supervisors are surprised that a 17 year old kid still in high school is actually working at UPS. But I know the earlier I start, the better off Ill be in a few years. Same goes with the 401k. I think 5% is a good amount, but I plan on going with the traditional 401k plan. Any other reasons why I should go with the Roth?
  5. serenity now

    serenity now Guest

    i believe scratch started when he was 17 * he can now see the promised land * unlike Moses, scratch will be able to enter
  6. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Contributions to the Roth are made with after tax dollars which means you are not taxed when you start making withdrawals. With the traditional the amount that you contribute is not taxed and is deducted from your gross pay for income tax purposes; however, withdrawals are taxed at the income tax rate in place at the time you start taking your money out.

    My 401k is the traditional one but if I had to do it over again I would be in the Roth.

    I applaud you for being forward thinking at such a relatively young age.
  7. barnyard

    barnyard KTM rider Staff Member

    It all depends on your current plans for college. If you will be attending, you should pay cash for as much of your college expenses as you can. It is stupid to take out loans while stashing money in savings. Put together a realistic budget. Any extra should be divided between long-term and short-term savings.

    Once you are done with college (if that is your plan), then you should plow money into paying off student loans and then work on 401k.
  8. Funfact

    Funfact Well-Known Member

    Taxes when you withdraw the money in 42 years are most likely going to be at a higher rate and you would also pay taxes then on everything included interest. With a Roth account your only paying taxes on what you put in not on the interest too. In other word your pay a little taxes up front and don't have to pay the bigger taxes on the other end.

    Your still in high school go talk to your economics teacher and ask them what the differences are and what the benefits are talking to a person face to face will give you a better understanding of the benefits.
  9. AndUPSER

    AndUPSER Active Member

    I see. The Roth does make a lot more sense.
  10. Anonymous 10

    Anonymous 10 Guest

    I would start at 14% from the get go. Get another job if you are planing on making this place a career.

    HEFFERNAN Huge Member

    Being as young as you are and your part time status, I would definitely say do the Roth.

    You are already being taxed at a low level right now, so I say take the tax hit now and contribute into the Roth.

    Also, not to make you think of it this way, but if you ever needed to take the money out for any reason, you are allowed to take out your contributions penalty free. If it was a regular 401k, you would have to pay tax and a penalty. And I believe you can only do that if you leave UPS ( Upstate can verify that for me :) )

    HEFFERNAN Huge Member

    Considering he is still in high school, I don't think he would have the time and/or energy. :)
  13. AndUPSER

    AndUPSER Active Member

    I plan on going to trade school after high school. And yes, another job right now is out of the question. 7-2 each day for school, 4-10 for work(11 on Mondays). I'm going with the 5% Roth.
  14. As long as you have earned income you qualify!!!! Put as much as you can afford into the Roth 401k as you can afford! It is nice to hear somebody at your young age thinking ahead instead of a buying new Iphone or Xbox
  15. Baba gounj

    Baba gounj pensioner

    Another reason for using the Roth is that UPS does not include any matching funds into your 401K .
  16. Monkey Butt

    Monkey Butt You can call me Chappy Staff Member

    Per the contract.
    I doubt if the teamsters would allow it but that would be something good for the Union members.
  17. Brownslave688

    Brownslave688 You want a toe? I can get you a toe.

    I disagree. The money he stashes away now will grow to be much much larger than what he will save in interest with no school loans. This type of thinking is what gets people into their 50's with no savings. It's always oh ill pay this off and then ill start saving. No you save first and plan all your spending around that saving.
  18. Brownslave688

    Brownslave688 You want a toe? I can get you a toe.

    Curious as to why u think its too late to switch to a Roth? I would stop all traditional contributions and go Roth but that's just me.
  19. scratch

    scratch Least Best Moderator Staff Member

    I did start as a 17 year old at the beginning of my Senior year in high school. We had a savings plan back then called the Thrift Plan that would have left me much better off if I had not withdrawn money out of it for stupid stuff like fixing up my car. That plan was done away with and I bought some UPS stock when it went public, and I also bought some mutual funds at that time. You are very wise to start saving at an early age, you will retire with much more than the average person. I would go with the Roth 401K too, you won't be taxed as bad as I will be when I have to do something with my traditional 401K.
  20. DriveInDriveOut

    DriveInDriveOut The One Who Knocks

    A 401k at 17 sounds like a great idea, but on second thought... do you have a savings account? You really want to have 5k or so in a savings account for emergencies first. Living with your parents is nice but once you get your own place and you have bills, and your car breaks down and you have to pay to fix it to get to work, that 401k won't help.

    5% contribution is a great idea, but make sure you have emergency savings set aside first.

    I've got 8k in a 401k but that didn't help when my transmission went out, or when my dog caught a nasty case of giardia and I got a nice 600 dollar vet bill.

    Props to you for looking out for your future though, no one else is going to do it for you. Sounds like you've got a strong head on your shoulders so you've got a jump on most people your age.