Prudential 401K plan

[104Feeder]

Pretty convenient this thread got bumped, because I've been looking into 401k contribution and need some advice..

Quite frankly, I can't afford to contribute much. I'm part time and I gross about $400/week, which results in a net of ~$300-315 after taxes, union dues, and DRIVE. After rent, gas, food, etc, there's not a whole lot left over and I've only recently started putting a little to the side in savings. I'd like to start now so I'm at least ahead of the game when and if I go full time. I can really only afford to contribute maybe ~2-3%/week, which is on the pitiful side. But it's never too early to start; I've got a few years before I even hit 30.

However, I have some questions:

If I contribute to the Teamsters/UPS 401k plan, I'm assuming that money is not portable/cannot be contributed to if I break employment from UPS in the next 5-10 years? I don't want to contribute to a fund before I go FT in case a "dream job" comes on my radar (very unlikely, but expect the unexpected..)

If I contribute to a Roth 401k, that money is pre-taxed and portable, correct?

If you left UPS you could leave the money in your 401k or have it transferred to an IRA (not a Roth IRA unless it was in a Roth 401k). You would want to do a fund-to-fund transfer and not have them mail you a check or you incur tax liability. Vanguard would be a great choice for an IRA. Clarkhoward.com has great investment guides and tips.

 

[Leftinbuilding]

It's a fine balance between socking everything away for the future and enjoying life now.

So true. Had a guy I worked with who wouldn't spend a dime. Saving every penny he and his wife could save. About three years from retirement they bought a retirement home on Morro Bay. About a year from retirement he got cancer. Had to quit UPS and I heard he had sold their dream home. Nothing wrong with planning for the future, but don't miss out on today. Believe me it goes by quick.

 

[Brownslave688]

When it comes to retirement, i'm not sure how much money I need to put away or where to put it. I'm 35 been with UPS for almost 10 years... driving for 8 of those 10 years. I invested in 401k earlier in my career which is up to about 7800 right now, but I was turned off because they didn't match. So I stopped the 401k and started putting money into UPS stock, as of right now i'm doing $150 a week.. and my stock is up to about 22k. Which is the best way to go when it comes to retirement....

Thanks in advance!

Never ever ever put all your eggs in one basket.

I do both the 401k and ups stock.

 

[brownmonster]

Never ever ever put all your eggs in one basket.

I do both the 401k and ups stock.

If if wasn't for the 401k or UPS stock plan I'm not sure how much I would have salted away. It sure made investing easy in my opinion.

 

[Logb17]

401ks, IRA's stocks and savings is putting all your eggs in one basket as well. Your putting all the fruits of your labor into DOLLARS. You need real assets like physical Gold and Siver, real estate, even firearms. You need something to insure all your cash investments. I like gold and silver because they cannot be taxed like real estate or documented like firearms, or even confiscated.

 

[FAVREFAN]

After a little more research, I think I was wrong about the fee's. Seems like there is a yearly fee of 23.50.....and 10.00bps investment fee and .28 bps custody fee. Not anywhere close to the over 1% I calculated. Need to learn more.

Yeah, our fees are the lowest I've ever seen. Reason being, most funds are index funds. We are lucky. My fiancee has zero index funds. All mutual funds in her offerings. 2-3% fees on each fund per year. 80% of all mutual funds under perform the market every year. (That's a statistical fact.) So her "Hartford" 401k sucks.

 

[FAVREFAN]

I read this article that said 401K balances have quadrupled in the last decade so I went through my statements this morning to see. For some reason I don't have the 1997-00 statements to give the yearly totals. My balance now is $285,500 - all stock funds. Feels good that sticking with it has paid off - wish I had started saving a little earlier.

Kick ass!

Year	Contributions	Balance
2001	28,278	28,202
2002	36,612	29,844
2003	45,376	48,077
2004	58,040	58,715
2005	71,490	65,617
2006	84,533	90,125
2007	98,783	114,455
2008	112,766	130,414
2009	127,206	101,191
2010	142,190	149,979
2011	158,052	197,842
2012	175,052	262,381

Kick ass!!!!!!!!!!!

 

[Brownslave688]

401ks, IRA's stocks and savings is putting all your eggs in one basket as well. Your putting all the fruits of your labor into DOLLARS. You need real assets like physical Gold and Siver, real estate, even firearms. You need something to insure all your cash investments. I like gold and silver because they cannot be taxed like real estate or documented like firearms, or even confiscated.

Your talking about the whole country tanking to the point that the dollar is worthless. If this happens weather or not your retirement is well funded will be the last thing many people need to worry about.

With that said gold and silver are my next investments once 401k and Ira are maxed.

Who do u buy thru?

 

[FAVREFAN]

When it comes to retirement, i'm not sure how much money I need to put away or where to put it. I'm 35 been with UPS for almost 10 years... driving for 8 of those 10 years. I invested in 401k earlier in my career which is up to about 7800 right now, but I was turned off because they didn't match. So I stopped the 401k and started putting money into UPS stock, as of right now i'm doing $150 a week.. and my stock is up to about 22k. Which is the best way to go when it comes to retirement....

Thanks in advance!

You're doing exactly the opposite of what you should be doing. Max your 401(k) first, and if you have anything left for UPS stock, have at it. You really need to re-examine what you are doing before it's too late.

 

[FAVREFAN]

They don't match because they give us a pension. It perfectly okay to invest without a match. It's also great to buy stock but I think the compounding effect of the 401K is better. You can contribute $17,500 to a 401K and $5500 to an IRA for 2013.

How much should I save and what was my goal, was a hard question for me at first. When I started reading about SWR or safe withdrawal rates (of your nest egg) it made things much clearer. They say (based on past market performance and monte carlo simulators) that a person should be able to withdraw 4% of his nest egg the first year and then 4% + whatever inflation was the year prior in subsequent years and have a 95% success rate making withdrawals for 30 years. 3.5% or even 3% withdrawals are even safer and have a near 100% success rate of not running out of money before you die.

So I looked at my worst case scenario - an early 25 yr, under age 57, pension in CS pays $2000/mo or $24,000/yr. I decided I wanted to at least replace this pension with my own money or double it if I made it to retirement with the pension intact or even better it and used the 4% SWR as a guideline.

If I wanted $24,000/yr for 30 yrs in retirement, only withdrawing 4% (so it would last 30 yrs), it meant that I had to somehow save $600,000. That's where the calculators came in and I began to play around with contribution rates and investment return rates to see what the outcomes would be.

We were making in the 20% range with the old 401K funds in the 90's and I really thought I had it licked and didn't max it out. But the ecomony got tough and I got very serious and decided I would have to live below my means to make my goal. I have a total retirement nest egg of $529,000 now (I also have dividend stocks in a brokerage acct, UPS stock, I bonds, Roth IRA and cash) and I wouldn't trade the security I feel for a bigger house or new car.

You are one smart cookie. Great job!

 

[Inthegame]

Quite frankly, I can't afford to contribute much. I'm part time and I gross about $400/week, which results in a net of ~$300-315 after taxes, union dues, and DRIVE... in case a "dream job" comes on my radar (very unlikely, but expect the unexpected..)

I hope your "dream job" has the words Teamster Official in it. You are wise beyond your years...

 

[BrownCrayon]

Am I able to transfer funds from other IRA and Mutual Funds into my Roth 401k?? If not... am I able to take money out of my Mutual Fund and purchase UPS stock with it and not get taxed on it? Sorry if these questions sound stupid...

 

[IVE GOTTA PACKAGE 4U]

Am I able to transfer funds from other IRA and Mutual Funds into my Roth 401k?? If not... am I able to take money out of my Mutual Fund and purchase UPS stock with it and not get taxed on it? Sorry if these questions sound stupid...

sorry no...and no and no questions are stupid...unless unasked

 

[104Feeder]

401ks, IRA's stocks and savings is putting all your eggs in one basket as well. Your putting all the fruits of your labor into DOLLARS. You need real assets like physical Gold and Siver, real estate, even firearms. You need something to insure all your cash investments. I like gold and silver because they cannot be taxed like real estate or documented like firearms, or even confiscated.

Most forms of precious metal holdings are considered a "collectible" by the IRS and taxed at a 28% rate when sold. Precious metal stocks are the only form subject to the standard capital gains tax rate.

 

[Brownslave688]

Am I able to transfer funds from other IRA and Mutual Funds into my Roth 401k?? If not... am I able to take money out of my Mutual Fund and purchase UPS stock with it and not get taxed on it? Sorry if these questions sound stupid...

407 is right no stupid questions. These questions though do show how little some people know about what to do with their money or even what they can do with it.

I'd love the teamsters to give a yearly seminar at each local about saving for retirement. Ok maybe not the teamsters themselves.

I'd prefer they hire someone who actually knows what they are talking about.

 

[probellringer]

407 is right no stupid questions. These questions though do show how little some people know about what to do with their money or even what they can do with it.

I'd love the teamsters to give a yearly seminar at each local about saving for retirement. Ok maybe not the teamsters themselves.

I'd prefer they hire someone who actually knows what they are talking about.

our local(804) --has started retirement seminars for employees with as little as 5 yrs in(vested)....its never too early--they had one last weekend..and 3 more lined up

 

[UpstateNYUPSer(Ret)]

407 is right no stupid questions. These questions though do show how little some people know about what to do with their money or even what they can do with it.

I'd love the teamsters to give a yearly seminar at each local about saving for retirement. Ok maybe not the teamsters themselves.

I'd prefer they hire someone who actually knows what they are talking about.

This is why I like the Bright Horizon funds. You simply choose the fund with the target year closest to your retirement date. The BH funds are in 5 year increments and tend to be more aggressive early on and them more conservative as you get closer to the target date. Let's say you are due to retire in 2019. You could choose the BH 2020 which is closest to your retirement date; however, as I explained above, the fund would be aggressive early on and then more conservative closer to 2020 which means you could possibly lose out on investment gains. I am due to retire in 2019 and consider myself to be more aggressive than conservative so I chose the BH 2025.

The BH funds are ideal for those who don't have a lot of time to spend or interest in handling their 401k's. It's almost like the chicken rotisserie grills--"Set it and forget it".

I have 25% going to my 401k and am up 4.04% for the year thus far and 11.67% for the previous year.

 

[pretender]

Am I able to transfer funds from other IRA and Mutual Funds into my Roth 401k?? If not... am I able to take money out of my Mutual Fund and purchase UPS stock with it and not get taxed on it? Sorry if these questions sound stupid...

First of all, even though there is probably a better way to do it, at least you are still putting money aside!

You cannot transfer funds from you IRA or Mutual Funds into your Roth 401K. However, you are allowed to set up a Self Managed Account within your 401K. This would enable you to continue purchasing UPS stock, and you would not be taxed on it. My only concern would be that depending on how much UPS stock you already have, you may want to diversify. As Upstate said, another option is to just invest in one of the Bright Horizon Funds. (I would also put a portion in the REIT index fund.) If you do decide to open a Self Managed Account, for $69 per quarter, you could sign up with Smart 401K--They provide mutual fund recommendations base on your age and risk level. It is a good starting place for a novice investor.

I should also note that you would not be able to get the employee discount if you purchase UPS stock in a Self Managed Account--another reason to diversify.