Does anyone participate in a 401(a) After-Tax DC Plan?

[Buck]

If so I have some questions, namely about tax implications.

Let me know.

Thanks, Buck

[Mr_Tomahawk]

WWPMD?

[Buck]

So anyways, they don't offer any advisers into where I should stick my money.

I am 26 years old and just going to start the retirement plan. There are stable options, moderate options, and risky options. Common sense says that since I am young I can get away with risky options, but I don't know if the market is doing really shitty right now, or if it's peaked, and if I should wait to do something riskier later or what...

Any insight would be helpful.

[bevischief]

Ask Peyton Manning.

[WV]

So anyways, they don't offer any advisers into where I should stick my money.

I am 26 years old and just going to start the retirement plan. There are stable options, moderate options, and risky options. Common sense says that since I am young I can get away with risky options, but I don't know if the market is doing really shitty right now, or if it's peaked, and if I should wait to do something riskier later or what...

Any insight would be helpful.

Depends on your options, but considering your age I would invest a large percentage in high risk and a small percentage in a "safe" area. My retirement system is broken down pretty much the same way and considering I can't retire until around 2040 I have nearly all of mine in high risk.

[Mojo Jojo]

I do. The key is to diversify...spread your money out. Some aggressive and some very safe smaller growth. The upside is huge, but in case of a huge drop the safe option still keeps growing. I've seen my 401K move up and down...I've lost at times in the aggresive and during those times I was still making money on the safe.

[DaKCMan AP]

At our age you buy risky assets. Even if they go down then you're just buying more each pay period at lower prices. Long-term it'll work out in your favor. If it doesn't then the whole country will be in the shitter anyway and your retirement plan will be the least of your worries.

[DaKCMan AP]

You should look into a Roth IRA too.

[Mr. Flopnuts]

At our age you buy risky assets. Even if they go down then you're just buying more each pay period at lower prices. Long-term it'll work out in your favor. If it doesn't then the whole country will be in the shitter anyway and your retirement plan will be the least of your worries.

This. Never put all your eggs in 1 basket, but at your age you can afford to put most of them here.

[iowachieffan]

I work at Prudential and with an after tax plan you contribute the money after your taxes and upon retirement when you take the money out of the plan you will have to pay taxes on the earnings that you have in the account and the after tax money will not go towards your taxable income. With a Roth 401k, as long as you have it in the account for more then 5 years the contributions and the earnings will come out the account tax free also. As far as investing your money you have to comfortable with loses in your account if you do invest more aggressively. If your not comfortable with lose then dont invest in aggressive funds.

[Saul Good]

I work at Prudential and with an after tax plan you contribute the money after your taxes and upon retirement when you take the money out of the plan you will have to pay taxes on the earnings that you have in the account and the after tax money will not go towards your taxable income. With a Roth 401k, as long as you have it in the account for more then 5 years the contributions and the earnings will come out the account tax free also. As far as investing your money you have to comfortable with loses in your account if you do invest more aggressively. If your not comfortable with lose then dont invest in aggressive funds.

The fuck?

Ignore this, Buck. (That is assuming you can decipher it.)

[petegz28]

So anyways, they don't offer any advisers into where I should stick my money.

I am 26 years old and just going to start the retirement plan. There are stable options, moderate options, and risky options. Common sense says that since I am young I can get away with risky options, but I don't know if the market is doing really shitty right now, or if it's peaked, and if I should wait to do something riskier later or what...

Any insight would be helpful.

K so if you are contributing to the 401 on a regular basis in relatively equal amounts each time then don't worry so much about the market timing. You will be using a method called "dollar cost averaging" where you will automatically by more shares when the price is low and few when it is high. At 26 I would 50%-60% in the riskier options if you can stomach the rollercoaster ride. Put another 25%-30% on the moderate and 10% in the stable.

It all comes down to your risk tolerance. If looking at your 401k and seeing you are down 25% or so at any given time will keep you up at night then put less in the risky and more in the moderate and stable.

[Buck]

Shit I wish I would have come back here before spreading out my money.

I ended up puting 50% into the riskiest option, 20% into the next riskiest, 10% into a medium risk, and 20% into the low-risk option.

[Saul Good]

He's talking about a 401(a), not a 401(k). There are no employee contributions.

[Saul Good]

Shit I wish I would have come back here before spreading out my money.

I ended up puting 50% into the riskiest option, 20% into the next riskiest, 10% into a medium risk, and 20% into the low-risk option.

That's actually pretty good.

[petegz28]

He's talking about a 401(a), not a 401(k). There are no employee contributions.

Doesn't really matter how invests though. It's a retirement plan, he's 26 and I assume he will be investing regular amounts at regular intervals.

[Saul Good]

At our age you buy risky assets. Even if they go down then you're just buying more each pay period at lower prices. Long-term it'll work out in your favor. If it doesn't then the whole country will be in the shitter anyway and your retirement plan will be the least of your worries.

This is good advice.

K so if you are contributing to the 401 on a regular basis in relatively equal amounts each time then don't worry so much about the market timing. You will be using a method called "dollar cost averaging" where you will automatically by more shares when the price is low and few when it is high. At 26 I would 50%-60% in the riskier options if you can stomach the rollercoaster ride. Put another 25%-30% on the moderate and 10% in the stable.

It all comes down to your risk tolerance. If looking at your 401k and seeing you are down 25% or so at any given time will keep you up at night then put less in the risky and more in the moderate and stable.

So is this other than mixing up the 401(a) with a 401(k).

[Saul Good]

Doesn't really matter how invests though. It's a retirement plan, he's 26 and I assume he will be investing regular amounts at regular intervals.

Agreed. Just wanted to point out that the advice was solid even though it mentioned a (k) rather than an (a).

[Buck]

the (a) is because its a fixed contribution deal.

My max contribution is 6% of after tax pay, and they match 4.5% and after 20 years vested, they match the 6%.

[Saul Good]

the (a) is because its a fixed contribution deal.

My max contribution is 6% of after tax pay, and they match 4.5% and after 20 years vested, they match the 6%.

???

I'm pretty sure it's not a straight 401(a), then. Employees don't get to contribute into those.

[Saul Good]

???

I'm pretty sure it's not a straight 401(a), then. Employees don't get to contribute into those.

Maybe I'm wrong here.

[Hog's Gone Fishin]

You're just trying to break up our Peyton Manning party. Shut the fuck up!

[Buck]

???

I'm pretty sure it's not a straight 401(a), then. Employees don't get to contribute into those.

I dont know. That's what it says. Maybe its a 403b, fuck if I know. The website says its a 401a.

1% of my contribution and 2% of theirs goes into a DB plan, which is "guaranteed" money, and the rest (5% of mine, 2.5% of theirs) goes into the DC plan where I just chose my funds.

[Saul Good]

I dont know. That's what it says. Maybe its a 403b, fuck if I know. The website says its a 401a.

1% of my contribution and 2% of theirs goes into a DB plan, which is "guaranteed" money, and the rest (5% of mine, 2.5% of theirs) goes into the DC plan where I just chose my funds.

Is it mandatory?

[Buck]

Is it mandatory?

No.

[Saul Good]

This is strange. Half the sources I see say that employees may not contribute to 401(a)s, and the other half say they can.

I was always of the understanding that they couldn't. I've even seen a couple of places say that it depends on the state which seems strange. Doesn't impact you, just odd.

[Buck]

This is strange. Half the sources I see say that employees may not contribute to 401(a)s, and the other half say they can.

I was always of the understanding that they couldn't. I've even seen a couple of places say that it depends on the state which seems strange. Doesn't impact you, just odd.

I think that maybe it just means, you don't get to decide the max you can contribute.

[ArrowheadMagic]

I dont know. That's what it says. Maybe its a 403b, **** if I know. The website says its a 401a.

1% of my contribution and 2% of theirs goes into a DB plan, which is "guaranteed" money, and the rest (5% of mine, 2.5% of theirs) goes into the DC plan where I just chose my funds.

403b is for non profit organizations. Most likely a K but could be an A basics are the same. Generally, its advised to put 70 high risk and 30 at low for your age group. Since you have enough working years to make up any losses.

This is strange. Half the sources I see say that employees may not contribute to 401(a)s, and the other half say they can.

I was always of the understanding that they couldn't. I've even seen a couple of places say that it depends on the state which seems strange. Doesn't impact you, just odd.

Both right and wrong. 401 a is commonly an employee stock purchase plan, but you can contribute.

[Buck]

The company I work for is definitely non-profit. But their website says 401(a).

[Miles]

401(a) may also more generically refer to a qualified plan. If you work for a non-profit and you can contribute as you describe, it is likely a 403(b) plan.

If you want to know more about your plan and have online access to your account look around for a Summary Plan Description or ask your employer for a copy.

[ArrowheadMagic]

Regardless which one it is. If you can afford to match company match contributions, then do it. If not, invest what you can, do the math. Better at a young age to go majority high risk, because you can afford the misses. Its not going to make you rich, but will provide a dependable income.

[Rooster]

If so I have some questions, namely about tax implications.

Let me know.

Thanks, Buck

This is the perfect place to ask 401 K questions. :shake: You are young, go all in and scale back 40 years from now.:D

[Buck]

Regardless which one it is. If you can afford to match company match contributions, then do it. If not, invest what you can, do the math. Better at a young age to go majority high risk, because you can afford the misses. Its not going to make you rich, but will provide a dependable income.

Yeah, the max I can invest is 6% after tax, which ends up being about $1275 for one year. My employer's contribution will be about $955. Total that is $2230. I don't make that much money at this point. I took a major cut getting this new job, but the benefits make it so worth it. If my high-risk funds do fairly well , what should I be looking at at the end of the year (not December, the end of my first year)? You think $3000 is out of the realm of possibility?

[ArrowheadMagic]

Yeah, the max I can invest is 6% after tax, which ends up being about $1275 for one year. My employer's contribution will be about $955. Total that is $2230. I don't make that much money at this point. I took a major cut getting this new job, but the benefits make it so worth it. If my high-risk funds do fairly well , what should I be looking at at the end of the year (not December, the end of my first year)? You think $3000 is out of the realm of possibility?

Dont know what is being offered, but wouldnt be worried about short term. This is purely long term.

[DaKCMan AP]

Dont know what is being offered, but wouldnt be worried about short term. This is purely long term.

This. My retirement is invested in 100% equities, mostly high risk but high growth. On any given day I could be up a couple grand from the previous day or down a couple grand. Don't pay attention to it. It's a long-term investment. Don't plan on touching that money for a long, long time.

[MahiMike]

So anyways, they don't offer any advisers into where I should stick my money.

I am 26 years old and just going to start the retirement plan. There are stable options, moderate options, and risky options. Common sense says that since I am young I can get away with risky options, but I don't know if the market is doing really shitty right now, or if it's peaked, and if I should wait to do something riskier later or what...

Any insight would be helpful.

The market is overvalued right now. Ask them if they have a brokerage account option so you can pick anything on the stock market not just the mutual funds they push on you.

[Jawshco]

I'm in a Roth 403(b). I like the post-tax option because it gives me more penalty free roll over options (like an IRA) in the future. I'm 34, but my investments are pretty high risk / high reward. I invest in Oppenheimer minerals and watching my portfolio roller coaster is pretty crazy.

[ChiefaRoo]

So anyways, they don't offer any advisers into where I should stick my money.

I am 26 years old and just going to start the retirement plan. There are stable options, moderate options, and risky options. Common sense says that since I am young I can get away with risky options, but I don't know if the market is doing really shitty right now, or if it's peaked, and if I should wait to do something riskier later or what...

Any insight would be helpful.


Buy the aggressive funds until your in your late 30's. Look for the ones that are centric to the US recovery. The market is somewhat overbought right now but since you will be averaging in over a period of years it should even out. Make sure you max out your employer match.