I am trying to get my act together and get serious about retirement planning. I am in the 401K and it seems OK but it would be nice to have more investment options. Do most of you invest in our 401K? If so how much are you putting in and what investment options are you going for? I am really suprised that many of my co-workers dont participate in the 401K when you consider how much overtime is taxed. Its really sick when you work 15 hours of OT and your takehome pay is killed by taxes. It seems that the 401K is one way to beat Uncle Sam. Its wierd how many people think you will only lose money in the 401K when you can go safe with the fixed income or stable value funds or GOV money fund.
UPS/TEAMSTERS 401K any good?
- Thread starter purplesky
- Start date
UpstateNYUPSer(Ret)
Well-Known Member
Investing is a purely personal thing and I would be hesitant both to ask or to give advice on how much and what to invest in. But, I will give you advice so that you can invest and your take home pay will remain about the same. There is a relationship between the % that you have withheld from your check and the allowances on your W-4 that will allow you to adjust both and keep your take home about the same. As you know, your 401k is pre tax money so when it comes time to file your taxes the amount that you have withheld will come off of your income for tax purposes. Now, if you would prefer a big tax refund, then do not adjust your W-4; however, if you would prefer to keep your take home pay about the same, adjusting your W-4 will reduce the taxes being withheld from your check and your tax refund should be about the same as the year before, all others things being the same. There are a number of calculators online which can help you adjust your W-4.
Bubblehead
My Senior Picture
Plain and simple the 401k plan is bar none your best and first line of retirement planning IMHO.
The tax break hard to beat.
There are many strategies as to how to invest.
I'm presently playing heavily in the S&P's which have been less than kind in the past few years.
I subscribe to the theory of peaks and valleys and the fact that they have historically always realized growth over an extended period of time.
The key to this strategy is the fact I have at least 16 years till I can start drawing out funds without penalty.
By maintaining my position in these funds, although they have lost in recent months, I buy in low now and will realize a bigger profit when the market rebounds by buying more shares at a lower price.
Once again I have 16 years to see this happen.
The popular view is to scale back on this somewhat aggressive position to more conservative investments the closer you get to retirement age.
Obviously savvy investors are able to ride the waves and shift back and forth.
As a truck driver, without a solid intuition as to market trends, I find this to be a reasonable "gamble" without being ultraconservative.
Time will tell, as I will be looking for one of those "peaks", hopefully within the next 10 years, so I can start to back into more conservative investments.
I'm guessing you will get a myriad of different views points from the members of this site.
Dont hesitate to seek the advise of an expert you trust.
I guarantee whoever you ask will not deny that the single biggest factor in the equation is time.
So don't delay, get started NOW!!!
The tax break hard to beat.
There are many strategies as to how to invest.
I'm presently playing heavily in the S&P's which have been less than kind in the past few years.
I subscribe to the theory of peaks and valleys and the fact that they have historically always realized growth over an extended period of time.
The key to this strategy is the fact I have at least 16 years till I can start drawing out funds without penalty.
By maintaining my position in these funds, although they have lost in recent months, I buy in low now and will realize a bigger profit when the market rebounds by buying more shares at a lower price.
Once again I have 16 years to see this happen.
The popular view is to scale back on this somewhat aggressive position to more conservative investments the closer you get to retirement age.
Obviously savvy investors are able to ride the waves and shift back and forth.
As a truck driver, without a solid intuition as to market trends, I find this to be a reasonable "gamble" without being ultraconservative.
Time will tell, as I will be looking for one of those "peaks", hopefully within the next 10 years, so I can start to back into more conservative investments.
I'm guessing you will get a myriad of different views points from the members of this site.
Dont hesitate to seek the advise of an expert you trust.
I guarantee whoever you ask will not deny that the single biggest factor in the equation is time.
So don't delay, get started NOW!!!
Thanks UPSTATE but I am really focused on putting away as much as possible in my 401K and the W-4 issue is not what I am talking about. You can put away $16,500 in 2009 so thats alot of deferred income that can avoid taxation for now. Im not asking for investment advice but I am just curious what other UPSERS are doing for retirement. I am more of an aggressive investor with a 80/20 mix of stocks/fixed income. I have a 11 to 18 year retirement window so I feel ok with that investment allocation. If you dont feel comfortable giving advice thats fine but if anyone wants to chime in they should. I doubt anyone on this website really expects to get investment advice. Like I said I am amazed that more people dont take advantage of the 401K with the pension issues of the near future. If you work alot of overtime and UPS drivers do it makes sense to defer as much taxable income as possible. Atleast the money you defer can hopefully get a 6% to 8% return.
UpstateNYUPSer(Ret)
Well-Known Member
You missed my point entirely. If your intent is to max out your 401k more power to you but if you want to do that and keep your take home pay about the same you will need to adjust your W-4, otherwise you will take home a lot less each week and then probably end up with a big tax refund next year. I am just trying to show you that you can do both--it is up to you if you want to take advantage of it or not.
Thanks BubbleHead,
We are on the same page. This year has been great so far for the markets. I like the 401K because there is no way in hell I could put away money on my own and not touch it. The great thing about the 401K is YOU CANT GET TO THE MONEY and thats just fine with me.
Sorry my bad,
I understand you now. You make a great point since a huge 401K contribution will really lower your takehome pay. So it might be wise to adjust your W-4 to get more money now versus at refund time.
Bubblehead
My Senior Picture
Maybe your missing the point.
That's not what he asked.
It would seem he's asking you to keep your eyes on the ball.
His original question was about investment stategies.
Maybe you could start a separate thread about income tax withholding strategies.
But if we are shifting gears I will agree you are always better off to strive for an income tax refund of $0.
Why let Uncle Sam use your money interest free.
A
anonymous6
Guest
you don't want to adjust your w4 too high or you'll end up paying uncle sam out of pocket to make up the shortfall. there are calculators that can help you on the right w4 claim. depends on if you want a refund , break even or what not.
btw i have saved over $56,000.00 in federal income taxes due to my 401k since I started. It;s the smartest thing you can do, tax savings wise.
UpstateNYUPSer(Ret)
Well-Known Member
He asked for investment advice and I said that I would be hesitant to either give or ask for advice as I felt investing was a personal decision. I then offered him a tax strategy which, when combined with your advice, should be very helpful for him.
BTW, I thought you gave him excellent advice. Dave.
I actually like getting a refund and I have a little side business that will also give me some additional refund money.
Bubblehead
My Senior Picture
Just messing with ya a little Upstate.
Didn't want you to think I was slipping.
It was a worthy tangent.
Hard Working Man
Ram Man
I should be @ $16,500 a week before Christmas. I have been in the 401k for 16 yrs, but I have never achieved the max before. I did not get real serious about the 401k until 5 yrs ago. Big mistake! I wish I had been maxing out every year. As much OT as I get, I have 23% taken out every week. After I max out I will roll it back to 20% and leave it alone. My advice to you on what to invest in is to find a finacial expert. ( mine is Edward Jones ) My guy is big on the ballanced fund and sp 400. Good Luck.
Catatonic
Nine Lives
Congrats on achieving this goal ... don't trust UPS or the Teamsters to take care of your retirement.
I have maxed out for as long as I can remember but the last three years, I got money kicked back to me because of IRS rules. The actual max (at least for management) is around $13, 000 ... I don't know about drivers but be aware. If you file your income tax early, you may have to file a corrected filing with the returned money added back into your wages. This limit does not affected your over age 50 contribution which is $5500 this year I think...last year it was $5500.
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Hard Working Man
Ram Man
Thanks for the advice Hoax. I have owed the IRS the last 2 yrs. That is the other reason I am maxing out. My wifes job holds no fed or state taxes out. Hopefully this will even everything out.
Thanks for the advice. You would think that they would not take more than the max allowed by the tax law. So Hoax they only allow you to put in $13,000? Is that a UPS cap? Is your 401K much different than the Teamsters? Just curious. I hope to be able to do the the max and catch up in my 50s if I can afford it?
UpstateNYUPSer(Ret)
Well-Known Member
The Teamsters' plan will simply stop taking out your weekly deduction once you have reached your program max. You can either do the 35% and have them stop or you can divide the contribution limit by the number of weeks to get a dollar amount per week and then divide your gross pay by that number and that will give you your weekly deduction percentage.
Thanks, Thats good to know. That would be a big hassle if they didnt stop at the max allowed.
Catatonic
Nine Lives
Actually, it is a IRS rule that is applied and the 401k administrator does not know what the limit is until all 401k contributions have been made for a given year. Therefore, the max amount allowed by law can be taken out ($16,500 for 2009) but the adjusted max can not be figured until all contributors can be added up. If most contributors put away more, there would be no problem.
Thanks for the advice. You would think that they would not take more than the max allowed by the tax law. So Hoax they only allow you to put in $13,000? Is that a UPS cap? Is your 401K much different than the Teamsters? Just curious. I hope to be able to do the the max and catch up in my 50s if I can afford it?
Rule: For a highly-compensated employee, the total of your elective deferrals and contributions made for you by your employer under a section 401k plan or SARSEP can be no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees in a calendar year.
Also, I believe this limit is only imposed on persons making $75,000 per year or more. So most full-time management and many full-time union employees could be subject to this limitation.
The limit is imposed because other people don't contribute enough - Socialism at it's finest ... pull down the able people to the less able people's level.
Maybe if I get lucky and there is no MIP, I will not be subject to this limit.
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