[chassis]

Originally Posted by Mosaud1998

Employee match for 401k is 3%. For how long, I will have to ask HR>

ROTH IRA? I thought that was part of 401k as an option. If not, I bank with Chase so I can open a ROTH IRA account with Chase I believe. Or I can go through Fidelity or SOFI

I have some money in stock and crypto. I can't consume interest. So, that's out. Religious reasons.

Lots of information coming at you in this thread, good job for starting it and asking the questions.

The questions for HR are:
1. "What do I need to do to receive the 3% match?"
2. "What is the vesting period for the 3% match funds?"

Fidelity offers everything any consumer needs to run their personal finances in 90%+ of cases, with the exception of loans (mortgage, car/boat loan, etc.).

Consider using Fidelity as "a one-stop shop". Simplification in financial accounts is freeing and a great way to live, speaking from experience on both ends of the financial complexity spectrum. You can open taxable investing, Roth and cash management accounts. You have mentioned your faith-based investment requirements in the past - I respect this and at the same time do not have recommendations for you. Something to research and ask your community for suggestions.

Spend some time on bogleheads dot org. A tremendous amount of actionable information on your specific questions. It's free and no advertising, it is a gem of a resource.

[Vindicator3]

Originally Posted by Mosaud1998

I am not taking a loan out on any car. I am done with that crap. Hate owing people money.

Well done, young jedi. Excellent approach, rare in a 20-something.

Take as much advantage as you can of the tax breaks on offer for retirement investing, without starving yourself in other financial areas or putting yourself in a liquidity bind, and you should be well rewarded by the time you retire.

[Mosaud1998]

Originally Posted by chassis

Lots of information coming at you in this thread, good job for starting it and asking the questions.

The questions for HR are:
1. "What do I need to do to receive the 3% match?"
2. "What is the vesting period for the 3% match funds?"

Fidelity offers everything any consumer needs to run their personal finances in 90%+ of cases, with the exception of loans (mortgage, car/boat loan, etc.).

Consider using Fidelity as "a one-stop shop". Simplification in financial accounts is freeing and a great way to live, speaking from experience on both ends of the financial complexity spectrum. You can open taxable investing, Roth and cash management accounts. You have mentioned your faith-based investment requirements in the past - I respect this and at the same time do not have recommendations for you. Something to research and ask your community for suggestions.

Spend some time on bogleheads dot org. A tremendous amount of actionable information on your specific questions. It's free and no advertising, it is a gem of a resource.

Hopefully, I can just do everything with Fedlity and not have millions of other apps. Other than Robinhood for stocks, coin base for crypto, and empower for previous employer retirement account.

So, I'll do both ROTH 401k(If available) and ROTH IRA. 3% employee match in the 401k and 12% into the ROTH IRA with I am hoping fidelity.

[bosstones]

Originally Posted by zx10guy

Just a point of clarification on something that was said. Contributing to a 401k does not provide a tax deduction per say. It lowers your AGI (adjusted gross income) when you file your taxes. So you're paying less income taxes now as a result.

That's where my head is at, too. I'm no tax expert but I've never been able to deduct my contributions, even when I had an accoutant do my taxes.

Put in what you can, OP, and take advantage of any/all company match you can. As already stated, when you move on to a new employer, you can either leave the 401k where it was or roll it over to the new plan. Money growing is money growing regardless of where it is so don't lose out.

[c1pher]

I like Vanguard MGK, VOO, VOOG and VYM. If you want it to be post tax, just place the money in a mix of these funds. They are indexes so the fees are low and will invest in the companies you are interested in.

[Vindicator3]

Originally Posted by bosstones

That's where my head is at, too. I'm no tax expert but I've never been able to deduct my contributions, even when I had an accoutant do my taxes.

When I originally said you can "deduct" your contributions to a traditional (ie non-Roth) 401k, I spoke inexactly. The point is the same - you don't pay current-year income tax on your contributions - but the clarification others made above is correct. 401k contributions aren't "deducted" from your taxable income (below the line). Rather, they are never included in your AGI (above the line) in the first place. So the amount in the box on your W-2 which you put on your 1040 as your total wages has already been reduced by the amount you contributed to the plan, and you don't need to search for some additional place to "deduct" the contributions - that has already been done for you.

Either way, you are reducing your taxable income by the amount of your contributions.

[zx10guy]

Originally Posted by Mosaud1998

Hopefully, I can just do everything with Fedlity and not have millions of other apps. Other than Robinhood for stocks, coin base for crypto, and empower for previous employer retirement account.

So, I'll do both ROTH 401k(If available) and ROTH IRA. 3% employee match in the 401k and 12% into the ROTH IRA with I am hoping fidelity.

A few things. The contribution limits for a Roth 401k and Roth IRA are independent of each other. So you can contribute up to the max of $23,500 in a Roth 401k and up to a max of $7000 in a Roth IRA.

Also, keep in mind that the company match is most likely going to be done as a standard 401k contribution and not a Roth 401k contribution. My company does this and I'm pretty sure it's the same for other companies as the company would have to pay the taxes on any Roth contributions.

[stbm5]

if employer is matching then participate in that, its free money. mine matches 6% which is really good. you are young, get all the matching you can and set extra aside in IRA, max out your IRA contributions.

[TallGibbs]

Originally Posted by Mosaud1998

Jesus 19-24% is alot. Basically no take home money

Best shot at becoming a millionaire and REALLY enjoying life in your later years is to stash away all the money in your 20s so you don't get used to spending it. Plus, that gives the money the most years to grow.

I just hit 41 years old now and loving that my wife and saved roughly 25% to 35% of our gross income for the past 18 years. Best decisions we ever made.

Now that we are reducing our saving to only 15% of our gross income, it feels like we have soooo much money because that extra 10% is now just total spending money every paycheck.

[XutvJet]

Take your old 401k money and open a traditional IRA with Fidelity, Vanguard, etc. Buy all S&P 500 index funds with the teansferrd proceeds. DO NOT BOTHER with the company 401k if you don't plan to stay if you stay long enough at the company to be fully vested in the plan (usually 2 years of employment).Take the 15% you were going to shove into the company 401k and save it until you get the minimum thresholds to open a Roth IRA and a brokerage account with a Fidelity, Vanguard, etc (typcially $3000-5000). Buy S&P 500 index funds for both.

[stbm5]

if you only max out your IRA contributions the payback even only ten years later is amazing. i started late but even after just 10 yrs in IRA i'm getting yearly dividends anywhere from 3-7K per year. it adds up fairly quick. its super super smart to do this when you are in your twenties compared to being like me and mid 50s playing catch up. in my opinion its really criminal how little the feds let you put into IRAs when hedge fund types pay so little. the system is rigged for the ultra rich but starting early and being consistent pays huge rewards 15-20 years down the road.

[eleven11]

Good advice in here, and congrats on having financial maturity beyond most your age.

I want to recommend a link to learn about Bogleheads. Not sexy, but it's everything you need, with a great forum community:
https://www.bogleheads.org/wiki/Main_Page

[Mosaud1998]

Originally Posted by XutvJet

Take your old 401k money and open a traditional IRA with Fidelity, Vanguard, etc. Buy all S&P 500 index funds with the teansferrd proceeds. DO NOT BOTHER with the company 401k if you don't plan to stay if you stay long enough at the company to be fully vested in the plan (usually 2 years of employment).Take the 15% you were going to shove into the company 401k and save it until you get the minimum thresholds to open a Roth IRA and a brokerage account with a Fidelity, Vanguard, etc (typcially $3000-5000). Buy S&P 500 index funds for both.

I'll have to call Empower to see if I can withdraw money from my old 401k and open a traditional IRA with fidelity. I think I called them a while ago and I have to for some reason pay a $2k "fine"? From what I remember, I enrolled in a ROTH 401k. So, taxes should not be taken out

[Mosaud1998]

Alright, so I opened a ROTH IRA with Fidelity Go. It'll be professionally managed, and I'll be adding $400 a month at 10%. Once that account hits a balance of $25k, I get kicked out of Fidelity Go.

I think I am going to keep the money I have with Empower. If I'm not mistaken, I must pay a "fine" if I withdraw the money. So, I'll let it grow in that account and put 3% of my check into my 401k with Fidelity every week.

[RockCrusher]

Originally Posted by Mosaud1998

Jesus 19-24% is alot. Basically no take home money

Years ago I landed a job in which I could contribute to a 401(k). (There was some employer match, too, but I forget how much.)

Talked to my Dad. He said max out my contribution. I said that's a lot of money.

He replied if I went hungry he'd buy my groceries. That made me mad -- a bit. I vowed to contribute the max amount and even if I was hungry not ask for any food.

Well, of course, I never went hungry. And early on I got into the habit of maximizing my 401(k) plan contribution.

The benefit of having this money invested over the decades has been quite impressive.

I shudder to think how much money I would have left on the table had I *not* taken full advantage of company sponsored 401(k) plans.

[kscarrol]

I will say I am confused by the OP's "fine" for withdrawing his funds from his 401K. I moved jobs several times in my career and never had to pay a fine for moving my money to another firm/IRA.

[stbm5]

some employers/funds mandate that money be held for a certain amount of time until its actually yours. or, that "fine" is tax that needs to be collected if you liquidate the account.


OP you could see if theres a way to rollover those funds without paying penalty.

[chassis]

Financial institution customer service reps are intentionally obtuse when the client asks, as Mossaud did, about withdrawing funds. There are no fines but rather a 10% additional tax, plus ordinary income tax, payable to the IRS on amounts withdrawn. The customer service rep probably did not ask the client if he really meant “transfer” and not “withdraw”. ACAT transfer to another custodian is cost free, or involves a nominal processing fee.

Customer service reps, even or especially at the biggest custodians, want AUM and both transfer and withdrawal are counter to the institution’s goals.

[zx10guy]

Originally Posted by Mosaud1998

Alright, so I opened a ROTH IRA with Fidelity Go. It'll be professionally managed, and I'll be adding $400 a month at 10%. Once that account hits a balance of $25k, I get kicked out of Fidelity Go.

I think I am going to keep the money I have with Empower. If I'm not mistaken, I must pay a "fine" if I withdraw the money. So, I'll let it grow in that account and put 3% of my check into my 401k with Fidelity every week.

I think you're confusing some things. There should never be any fine, penalty, or fee for transferring money out of a retirement account into another retirement account. What this is called is a rollover not a withdrawal. There are distinct differences. A rollover just moves the money from a retirement account into another qualifying retirement account. A withdrawal is if you actually take out the money and it's issued to you.

To do a rollover, you have to request this. There is a specific form you fill out. There is a check cut and this is the important part. The check would be made out to the new financial institution for benefit of (FBO) you (your name). So in this case Empower will cut a check payable to Fidelity FBO Mosaud1998. The check is not made out to you. And the account at Fidelity which the monies are being deposited has to be a retirement account.

A withdrawal is when a check is cut out to you directly. So the check would be payable to Mosaud1998. When this happens, Empower automatically withholds 20% for Federal taxes. Also, you'll be subject to a 10% early withdrawal penalty since you're not at the age where you can freely access the funds. And the money is taxed at your ordinary income tax rate.

[chassis]

^correct^ withdrawal and transfer have entirely different meanings and tax consequences.

[Mosaud1998]

Originally Posted by zx10guy

I think you're confusing some things. There should never be any fine, penalty, or fee for transferring money out of a retirement account into another retirement account. What this is called is a rollover not a withdrawal. There are distinct differences. A rollover just moves the money from a retirement account into another qualifying retirement account. A withdrawal is if you actually take out the money and it's issued to you.

To do a rollover, you have to request this. There is a specific form you fill out. There is a check cut and this is the important part. The check would be made out to the new financial institution for benefit of (FBO) you (your name). So in this case Empower will cut a check payable to Fidelity FBO Mosaud1998. The check is not made out to you. And the account at Fidelity which the monies are being deposited has to be a retirement account.

A withdrawal is when a check is cut out to you directly. So the check would be payable to Mosaud1998. When this happens, Empower automatically withholds 20% for Federal taxes. Also, you'll be subject to a 10% early withdrawal penalty since you're not at the age where you can freely access the funds. And the money is taxed at your ordinary income tax rate.

If I remember correctly, the empower rep said she'd cut a check to me so I can deposit the check into my fidelity 401k. So, I'm assuming empower was going to hold 20% for taxes. Of that's still the case, I'll just keep the money that's in empower. It's not harming anything.

[DrVenture]

Originally Posted by Mosaud1998

Alright, so I opened a ROTH IRA with Fidelity Go. It'll be professionally managed, and I'll be adding $400 a month at 10%. Once that account hits a balance of $25k, I get kicked out of Fidelity Go.

I think I am going to keep the money I have with Empower. If I'm not mistaken, I must pay a "fine" if I withdraw the money. So, I'll let it grow in that account and put 3% of my check into my 401k with Fidelity every week.

All good, but keep an eye on the "professionally managed" aspect. It may be more beneficial to go with a passive S&P fund or passive large cap growth fund. Don't assume that these "pros" will be trading or adjusting regularly in real time. They will pick a set & forget allocation and adjust annually, according to programmed instructions, and not always at the best times.

Pro managed usually means higher fees and often lower returns. They will "deworsify" into things that hurt returns, such as foreign stocks or bond funds.