 This topic is empty.

AuthorPosts

Mickey
Just looking for some clarification. I have a new job, 50K salary, 401K is “matched 100% on first 1% deferral, 55% on deferrals 2%6%, and total will equal existing match.” What exactly does this mean and how should I set this up. It’s my first time with a 401K.
I have a Roth IRA that I’ve had for many years.
I’m single with no dependents if that matters.
Thanks in advance for any help!
Benjamini.e. say you make $100k, you put in $1000 (1%) so the company matches that 100% and also puts in $1000.
You then put in another $5000, and the company matches that 55% so they put in $2750 – you now have put in $6000, the company put in $3750 and your 401k balance is $9750 before making any investments.
MichaelNote that with a $50k salary, you will likely be in the 12% bracket so Roth 401k would be very good.
JuliettYou should contribute a minimum of 6% no matter what.
It means they match dollar for dollar on the first 1%.
So, if you make $50,000 a year. 1% is $500.
So, when you contribute $500, they contribute $500.
If you contribute another 5%, which is $2500 on your salary, they match 55% of your contribution. So $1375.
If you contribute $3,000 per year, they will contribute $1875.
You should contribute as much as you can afford.
Don’t forget to take a look at: 401K Penalty vs Employer Match â€“ Strategy Question
MichaelFind out when the employer matches are deposited in the 401k account. Some deposit each pay period, some do it quarterly, some do it annually.
If you decide to max out your 401k, it is important to know so you don’t leave free money on the table.
AliciaCongratulations on your new job! The 401K matching terms you mentioned mean that your employer will match your contributions to your 401K retirement account based on a percentage of your salary.
 They will match 100% of your contribution on the first 1% of your salary that you put into the 401K.
 They will then match 55% of your contributions on the portion of your salary between 2% and 6%.
 The “total will equal existing match” part means that when you follow the above contribution percentages, the total match they provide will add up to a certain percentage of your salary.
For example, if you earn $50,000 and contribute 6% of your salary to the 401K ($3,000), your employer would contribute:
 100% match on the first 1% of your salary: $500
 55% match on the next 5% of your salary: $1,375
This would result in a total employer contribution of $1,875, which would be in line with their matching terms. It’s a great way to maximize your retirement savings by taking advantage of your employer’s contributions.

AuthorPosts