New Driver questions 401k/pension

[LeddySS98]

I did 6 years in the Marine corps 98 - 04... I've been to Iraq twice. I got on as a preloader in aug 05, and started driving July 06. I'm new enough where I still REALLY like working for UPS, yes management does some backwards things some days, but MOST of the guys that complain about this job I think they just have'nt had a bad job for a long time... BUT i'm new, so it's possible in a few years from now I'll be eating my own words griping about how much UPS sucks.. MAYBE.

So with that out of the way my questions are this...I know nothing of the pension plan, is that just done automatically or do I need to wait for say a 5 year period, or is the pension no longer available for enrollment regarding the new drivers any more?

I've put 25% into my 401 since march 06 and for the year I put in aprox. 6k I've been reading on here where the 401k is a good thing because teamsters cant touch it or something, yet the site I go to is teamster-ups national 401 tax deffered saving plan... Is this the same one everyone has? am I okay? Do I need to change anything... I have lowerd my % down to 16% when 07 hit. Any thoughts?

And finally yes I"m doing the DRIP employee stock $75 a check each week...is the stock REALLY that bad to have or just more bad attitudes again...?

Thanks guys, sorry if I got tooooo wordy in here, Thanks in advance

 

[canon]

I did 6 years in the Marine corps 98 - 04... I've been to Iraq twice. I got on as a preloader in aug 05, and started driving July 06. I'm new enough where I still REALLY like working for UPS, yes management does some backwards things some days, but MOST of the guys that complain about this job I think they just have'nt had a bad job for a long time... BUT i'm new, so it's possible in a few years from now I'll be eating my own words griping about how much UPS sucks.. MAYBE.

So with that out of the way my questions are this...I know nothing of the pension plan, is that just done automatically or do I need to wait for say a 5 year period, or is the pension no longer available for enrollment regarding the new drivers any more?

I've put 25% into my 401 since march 06 and for the year I put in aprox. 6k I've been reading on here where the 401k is a good thing because teamsters cant touch it or something, yet the site I go to is teamster-ups national 401 tax deffered saving plan... Is this the same one everyone has? am I okay? Do I need to change anything... I have lowerd my % down to 16% when 07 hit. Any thoughts?

And finally yes I"m doing the DRIP employee stock $75 a check each week...is the stock REALLY that bad to have or just more bad attitudes again...?

Thanks guys, sorry if I got tooooo wordy in here, Thanks in advance

Thanks for your service.

You'll develope your own idea of what ups is like the longer you're here... don't go by what you read in these forums. It's great u're looking so far down the road with respect to retirement. Save as if the pension doesn't exist. If it is still there when you retire, then that will be a bonus to whatever you build on your own. Not sure why you lowered to 16% tho?

 

[browniehound]

I did 6 years in the Marine corps 98 - 04... I've been to Iraq twice. I got on as a preloader in aug 05, and started driving July 06. I'm new enough where I still REALLY like working for UPS, yes management does some backwards things some days, but MOST of the guys that complain about this job I think they just have'nt had a bad job for a long time... BUT i'm new, so it's possible in a few years from now I'll be eating my own words griping about how much UPS sucks.. MAYBE.

So with that out of the way my questions are this...I know nothing of the pension plan, is that just done automatically or do I need to wait for say a 5 year period, or is the pension no longer available for enrollment regarding the new drivers any more?

I've put 25% into my 401 since march 06 and for the year I put in aprox. 6k I've been reading on here where the 401k is a good thing because teamsters cant touch it or something, yet the site I go to is teamster-ups national 401 tax deffered saving plan... Is this the same one everyone has? am I okay? Do I need to change anything... I have lowerd my % down to 16% when 07 hit. Any thoughts?

And finally yes I"m doing the DRIP employee stock $75 a check each week...is the stock REALLY that bad to have or just more bad attitudes again...?

Thanks guys, sorry if I got tooooo wordy in here, Thanks in advance

Leddy,
This is my opinion. Why did you lower your 401k contributions from 25% to 16%? I would max that out because there is no garuntee that the pension will be there when you retire. And yes, your investment in the 401k is safe from the teamster predators. Its jointly run by UPS and the teamsters, but the money you put in is yours forever, unless of course you chose poor investments.

As far as the pension goes, UPS automatically contributes to it on your behalf. You don't need to enroll or sign any paperwork. However you need to work a certain amount of years before you have a vested right to a pension benefit.

And my opinion on purchasing stock is not to do so. You already depend on UPS for your paycheck so I don't think you should risk anymore of your assets in the company. Besides, there are so many better investments for your 75 bucks a week than UPS stock. It is surely a laggard in its industry group over the last 5 years. Taking your $75 a week in sticking it in an index fund is going to do MUCH better than purchasing UPS stock.

 

[LeddySS98]

I lowered the 25% down to 16 for a couple reasons. I spoke with a tax preparer, AND i went in and talked to my professor in college while I was taking the tax class for my business degree and both of them informed me that the 25% is'nt completly tax free that only the state tax gets less, and you owe the same to federal regardles... I MAY have that backwarks but it was something along those lines...

Next reason was my pay checks each week were'nt all THAT big taking a quarter of them out... my biggest paycheck I got for the year was 410 and that was with 50 going into stock...269.47 went into my 401k I just THOUGHT I was maybe going OVERBOARD on the saving for the future part, and not leaving room for living now. I'm 28 btw.

I"m Not running out blowing my money I made 27k this year, 6 went into my 401... 2400 went to ups stock, and I applied 14k into my house payments overpaying them each month by $900.

 

[Channahon]

Visit with a financial planner. I commend you for thinking about your future at a young age. Take advantage of saving as much money as you can -pretax and savings. Nowadays, you can't depend on much to be there when you retire. Do you have a background in finance?

 

[wily_old_vet]

Leddy-If you are doing a traditional 401k (not Roth) the amount you contribute is deducted pretax and makes your federal tax on your gross amount be based on your gross amount minus your contribution. EX:
Gross earnings= $1000
401k contribution=$250
Fed tax based on $750
I believe state tax is also calculated on the $750 but could be wrong on that.

 

[LeddySS98]

No real background in finance technically... my business degree was focused into the accounting direction. I'm VERY interested in finance and markets/stocks how it all works, but all I really have is simple self discipline and then a couple of those finance for dumbies books that tell you if you put X amount in an account at 24% you will be a millionare in 8 years... Of course finding these 24% stocks/bonds

I pulled up my W-2 and my wages tips other were 20,701
but the social and the medicare taxes were not effected by the 401 deduction they were both taxed at the 26,888 I made for the year.

So the 401 saves you on the federal but not the medicare and soc.

As far as 'picking' the good mutuals to have them go in I have made 400 in intest which put me right arround 6% so I did 'ok' I think...I was planning on just sticking with my same picks unless I get a lot of advice to change them.... Any thoughts?

 

[wily_old_vet]

Nothing saves you on the ss and medicare

 

[Cementups]

I would suggest taking your money elsewhere. Mainly because unlike most companies, the Teamsters are not matching a single cent tha tyou put into your 401k. Instead you could be putting your money into a Roth IRA and be turning your money over at a much better rate.

 

[Dutch Dawg]

Uh..admittingly I'm just a dumb truck driver, so with that said. My limited understanding is the tax code prevents a person covered by pension plan from IRA benefits, is that not true?

 

[Dfigtree]

Uh..admittingly I'm just a dumb truck driver, so with that said. My limited understanding is the tax code prevents a person covered by pension plan from IRA benefits, is that not true?

From: IRA Eligibility & Deductibility
Traditional IRA
Everyone under age 70½, with earned income, is eligible to contribute to a Traditional IRA — there's no income limit.

From IRS.GOV: Tax Topics - Topic 451 Individual Retirement Arrangements (IRAs)
If you, your spouse, or both of you are covered by a qualified retirement plan, your IRA deduction may be reduced or eliminated, depending on the amount of your Modified Adjusted Gross Income and your filing status.

Or read this one from Investopedia.Com:
Are You an Active Participant?

 

[mrvngrdns]

First, I commend you for paying attention to your future at such a young age. As for the advice to stop paying into your 401K, and instead contribute to an IRA, I say, "Do Both". You are capped at $4000 this year and $5000 next year for an IRA contribution. Do that, and put anything else you can afford into your 401K. And I also would purchase the stock if you can afford to. You can buy it at a discount, and although I agree that you shouldn't put too many eggs in one basket, I believe that it's OK for someone to trust in the company that they work for, and to own stock in that company. As for the pension, and Social Security, who knows if they'll be around in years, I personally believe that Social Security will be around in some shape or form, as for the pension, probably not. The key for a young investor is to invest what you can, diversify, and take advantage of your greatest asset.....time. You can be aggressive, and withstand the ups and downs of the stock market. Gradually become more conservative as you get older. As for the job at UPS, I firmly believe that any job is what you make of it. I drove a package car for 29 years, and retired last year. Of course I didn't enjoy every aspect of it, but all in all, I loved my job. I tried to grab on to the positive aspects of driving, being outside, meeting with customers and being a bright spot in their day, not having a boss look over my shoulder, good pay, etc. etc. Good luck to you.

 

[Just Lurking]

Nothing saves you on the ss and medicare[/QUOTE

Medicare does not have a cap on earnings but ss does cap out in the $90k range. So package/feeder that works that work 60 hrs/wk at full scale could max out. I'm sure that there is many premium drivers that made over $100k that only had no ss withdraws at the end of the year.

 

[Sammie]

My advice comes from 30 years with UPS; please continue with the 401K and the UPS stock but talk with a financial advisor concerning the amount of money you have to invest. I wouldn't put all those eggs in one BROWN basket.

 

[Dfigtree]

Nothing saves you on the ss and medicare[/QUOTE

Medicare does not have a cap on earnings but ss does cap out in the $90k range. So package/feeder that works that work 60 hrs/wk at full scale could max out. I'm sure that there is many premium drivers that made over $100k that only had no ss withdraws at the end of the year.

Medicare does not have a cap because that was part of the Medicare bailout, a hidden tax, dontcha know. Social Security is likely to be saved the same way, no 90K cap, no cap at all. You pay and pay and pay. There just aren't enough young folks to pay for the Social Security due the future retirees. No SS CAP seems the obvious solution since the method worked before for Medicare. Where else can you come with that kind of money except maybe AMT. Are you paying AMT tax this year? Check it out.

 

[wyobill]

The Roth IRA is great. Earning are all tax free. That should be ones first goal. I would max that out every year before anything else. The 401 is a gold mine. I have done 15% from day one and sure dont regret it. The stock purchace is a no brainer. You get the buy at a low and get a 10% discount on top of that. Take advantage of all these , diversify and in 25 yrs you will be whistling dixie. Dont count on SS or Teamster
controlled Slush fund.

 

[satellitedriver]

First, I commend you for paying attention to your future at such a young age. As for the advice to stop paying into your 401K, and instead contribute to an IRA, I say, "Do Both". You are capped at $4000 this year and $5000 next year for an IRA contribution. Do that, and put anything else you can afford into your 401K. And I also would purchase the stock if you can afford to. You can buy it at a discount, and although I agree that you shouldn't put too many eggs in one basket, I believe that it's OK for someone to trust in the company that they work for, and to own stock in that company. As for the pension, and Social Security, who knows if they'll be around in years, I personally believe that Social Security will be around in some shape or form, as for the pension, probably not. The key for a young investor is to invest what you can, diversify, and take advantage of your greatest asset.....time. You can be aggressive, and withstand the ups and downs of the stock market. Gradually become more conservative as you get older. As for the job at UPS, I firmly believe that any job is what you make of it. I drove a package car for 29 years, and retired last year. Of course I didn't enjoy every aspect of it, but all in all, I loved my job. I tried to grab on to the positive aspects of driving, being outside, meeting with customers and being a bright spot in their day, not having a boss look over my shoulder, good pay, etc. etc. Good luck to you.

I agree with everything you said. I hope he takes your advice.