Pru 401(K) just started showing up in paycheck?

HardknocksUPSer · Apr 22, 2015

Hey guys, I'm still young and really don't know much about 401k, I've gotten a lot of papers from UPS through the mail talking about starting a 401k, I've kind of blew it off, I already save money each week via my savings account, I was wondering if it would be a better idea to start a 401k? Does this draw interest over time? How long does it draw interest for? Will I be able to withdraw any of this money anytime I want in case of emergency? Am I better off to continue to contribute 25$ each week to my savings account as I'm part timer, and then contribute more as I go full time? I plan to stick with the company as long as possible, I'm 20 now and want to save money as it doesn't look like I can count on a pension by the time I retire in 2055 or something like that lol, thanks.

UpstateNYUPSer(Ret) · Apr 22, 2015

Insaneasylum said:
Isn't there a max % amount you can have deducted from your check also? Last place I worked only let me do up to 12%

There is an annual limit which is set by the IRS.

HardKnocks, there is a tutorial on the 401k website which should answer all of your questions.

www.retirement.prudential.com

HardknocksUPSer · Apr 22, 2015

UpstateNYUPSer said:
There is an annual limit which is set by the IRS.

HardKnocks, there is a tutorial on the 401k website which should answer all of your questions.

www.retirement.prudential.com

Thank you[emoji106]

UpstateNYUPSer(Ret) · Apr 22, 2015

If you have any other questions feel free to ask them here; however, how you choose to invest your money is up to you.

Insaneasylum · Apr 22, 2015

UpstateNYUPSer said:
There is an annual limit which is set by the IRS.

HardKnocks, there is a tutorial on the 401k website which should answer all of your questions.

www.retirement.prudential.com

I know there is a yearly limit for total amount contributed. But I was wondering if there was a max % per check. Say I wanted to put 30% away till I maxed the total for the year. Could I do that

SnowCitizen · Apr 22, 2015

Insaneasylum said:
I know there is a yearly limit for total amount contributed. But I was wondering if there was a max % per check. Say I wanted to put 30% away till I maxed the total for the year. Could I do that

35%.

HardknocksUPSer · Apr 22, 2015

UpstateNYUPSer said:
If you have any other questions feel free to ask them here; however, how you choose to invest your money is up to you.

Thanks, I know a guy personally who retired from UPS as a package car driver, spending more money than he should have over the years, now he's scared to death now that he's got that central states pension letter, I just don't want that to be me, I don't like getting caught with my head in my ass.

Brownslave688 · Apr 22, 2015

HardknocksUPSer said:
Thanks, I know a guy personally who retired from UPS as a package car driver, spending more money than he should have over the years, now he's scared to death now that he's got that central states pension letter, I just don't want that to be me, I don't like getting caught with my head in my ass.

A driver now 30 or younger should easily be able to save a few million before retirement.

HardknocksUPSer · Apr 22, 2015

Brownslave688 said:
A driver now 30 or younger should easily be able to save a few million before retirement.

I'm quite a few years younger than 30 so I hope that by saving in my part time years and my full time years I'll be able to set up a good retirement, I feel as if I'm safer by keeping track of my own money and not counting on a pension. I will deffinately continue to save as I start driving.

undies · Apr 22, 2015

Don't forget you can take 1/2 of your 401k account out as a loan to go towards the purchase of a home. I'm taking $25k for a home and will pay about $32 per paycheck over 20 years. Not bad!

brownmonster · Apr 22, 2015

undies said:
Don't forget you can take 1/2 of your 401k account out as a loan to go towards the purchase of a home. I'm taking $25k for a home and will pay about $32 per paycheck over 20 years. Not bad!

That's 25k that won't grow into 75.

UpstateNYUPSer(Ret) · Apr 22, 2015

Brownslave688 said:
A driver now 30 or younger should easily be able to save a few million before retirement.

That's a bit ambitious, isn't it?

UpstateNYUPSer(Ret) · Apr 22, 2015

Insaneasylum said:
I know there is a yearly limit for total amount contributed. But I was wondering if there was a max % per check. Say I wanted to put 30% away till I maxed the total for the year. Could I do that

The max you can contribute is 35% and if you reach the annual limit before the year is over UPS will stop the withdrawals from your check so if you goal is to max out your 401k in 52 equal contributions per year you should take the annual limit ($18K) and divide that by 52, which equals approx. $346. You would then take your average gross pay and divide that by $346, which will give you your contribution percentage. Let's say you gross $1,000 to make the math easy. $346/$1000 = 34.6%

UpstateNYUPSer(Ret) · Apr 22, 2015

brownmonster said:
That's 25k that won't grow into 75.

http://www.preparewithpru.com/shared/content/taking-loans-or-withdrawals-can-be-costly.php

UpstateNYUPSer(Ret) · Apr 22, 2015

undies said:
Don't forget you can take 1/2 of your 401k account out as a loan to go towards the purchase of a home. I'm taking $25k for a home and will pay about $32 per paycheck over 20 years. Not bad!

32*52*20=$33,280

If you have to borrow to get the down payment perhaps you should not be buying a house.

brownmonster · Apr 22, 2015

UpstateNYUPSer said:
32*52*20=$33,280

If you have to borrow to get the down payment perhaps you should not be buying a house.

If the bank finds out you borrowed for the down payment it might be no home loan.

UpstateNYUPSer(Ret) · Apr 22, 2015

brownmonster said:
If the bank finds out you borrowed for the down payment it might be no home loan.

This would certainly be the case if the loan were from a bank but I don't know if they can look at our 401k's for loan activity.

I know when I first bought my condo they wanted copies of bank statements to make sure that they money that I was putting toward the purchase was indeed mine. I should state that my loan was a VA loan so the requirements are not quite the same as those for a traditional mortgage.

Babagounj · Apr 22, 2015

undies said:
Don't forget you can take 1/2 of your 401k account out as a loan to go towards the purchase of a home. I'm taking $25k for a home and will pay about $32 per paycheck over 20 years. Not bad!

That's $25,000 will not be making your account grow . Think of all the market opportunities you will have to miss during those 20 yrs while your account is flat .

UnconTROLLed · Apr 22, 2015

Baba gounj said:
That's $25,000 will not be making your account grow . Think of all the market opportunities you will have to miss during those 20 yrs while your account is flat .

It could also be paid back more quickly, therefore a moot point.
For the average person, borrowing from a 401k should be last resort. I wouldn't do it.

upschuck · Apr 22, 2015

Sleeve_meet_Heart said:
It could also be paid back more quickly, therefore a moot point.
For the average person, borrowing from a 401k should be last resort. I wouldn't do it.

You will never make it back up completely.

Pru 401(K) just started showing up in paycheck?

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