MM Question (Update)

jtmh2012

hoffse said:

 

I think @vlagirl and her husband are self-employed so probably don't have a match.  But for those of us who are not self-employed, YES.  This is huge.

Even without the employer match, you're still losing out on compounding.

hoffse

jtmh2012 said:

hoffse said:

 

I think @vlagirl and her husband are self-employed so probably don't have a match.  But for those of us who are not self-employed, YES.  This is huge.

Even without the employer match, you're still losing out on compounding.

Yes that's true.

On the "matching" IRA thing, my parents did this for me.  Roth IRAs became a thing when I was in middle school.  My parents opened one, and there was suddenly a day when I had to start doing kind of random chores (that had never been my "job" before) in order to receive my allowance, and that was the year I started signing tax returns.  

I didn't realize it at the time, but my parents were paying me for that work, reporting it on my tax return, and matching whatever I earned in my Roth IRA at 100%.   My parents finally turned the account over to me to manage when I started law school.  I actually never held a part-time job until I was a senior in college, but I still started law school with about $8K in my Roth IRA... and that was after I lost half of it when the economy tanked in 2008 (I graduated college in May 2009).

It was a huge boost, especially when the economy came roaring back a few years later.

hoffse

To clarify: My parents paid me a stated, hourly rate for things like yard work, helping my dad code his research, etc.  Being a kid, I considered it an allowance.  However, they treated it like wages.  

I also did some babysitting, and I tutored a few kids in math and music in high school, all of which was paid work.  But I didn't have a job where I received a 1099 or W2 until I was in college.  

For Roth contributions, you can contribute $5,500/year or 100% of your gross income for the year, whichever is less.  Most kids earn less than $5500/year.

My dad kept a spreadsheet for every time I was paid for ANY type of work - and they reported it and paid taxes on it and kept their records for the audit period, etc.  They treated it exactly like any other self-reported income. That enabled them to legally match it in my Roth IRA.

vlagrl35

LillibetteV said:

vlagrl35 said:

When we were building up our e fund we didn't put any towards retirement. Even when we were paying off our medical bill and small cc balances we didn't contribute then either. I would focus on building your e fund then home updates.

Were you passing up an employer match though? That would be my main concern with this approach. 

we are self employed so yes - it was maybe for just 1 year though.  Also I want to add that we still are paying off my school loan - I"m not willing to give up retirement contributions for 10 years as we pay it off.  Combined DH and I have about 200k in IRAs

cbee817

I'm so jealous of all of these employee matches! Mine is 1.5% (we do have a pension) but new employees hired after the 1st of next month receive no pension with 8% match. Given the way our pension keeps changing, I doubt there will be much left for me by the time I retire. I wish they would just buy us out and change to a 401K match. DH has a 403b and receives 0% match however his pension is much more stable (with the state teachers' retirement system- he's also part of a union). 

LillibetteV

cbee817 said:

I'm so jealous of all of these employee matches! Mine is 1.5% (we do have a pension) but new employees hired after the 1st of next month receive no pension with 8% match. Given the way our pension keeps changing, I doubt there will be much left for me by the time I retire. I wish they would just buy us out and change to a 401K match. DH has a 403b and receives 0% match however his pension is much more stable (with the state teachers' retirement system- he's also part of a union). 

Don't worry I have no match AND no pension! I'm told there is an annual profit share contribution to the 401k (once I'm eligible in another 3 months...) but there is no guarantee on how much that is! I worked at one firm for 7 years that matched 6% AND did the profit share. However - that was the only really good part about that firm so.... I'll take nicer people and better pay I guess. 

jtmh2012

LillibetteV said:

Don't worry I have no match AND no pension! I'm told there is an annual profit share contribution to the 401k (once I'm eligible in another 3 months...) but there is no guarantee on how much that is! I worked at one firm for 7 years that matched 6% AND did the profit share. However - that was the only really good part about that firm so.... I'll take nicer people and better pay I guess. 

This is the first company I've worked for that has a profit share and honestly, I'm not quite sure how I feel about it.  They lock ours into an ESOP so until I leave the company, there's nothing I can do with it and the value of the ESOP is based off the company "share price" (not publically traded).  And it takes 6 yrs to fully vest.

We have a 401k match up to 6%, but they only match $0.50 on the dollar.