SomeGal recently became eligible to participate in her employer’s 401(k) program. Unfortunately they do not offer a match at this time, but we are big believers in automatic savings so she is contributing. They also unfortunately limit the contribution as a percentage of salary, so she will only be able to contribute about $11K per year instead of the IRS max of $15.5K. The asset allocation is pretty much 100% stocks, with a mixture of big and small cap, and NYSE and overseas.
As mentioned in the most recent net worth update, I will max out my 2008 contribution at $15.5K as I did my 2007. My employer does offer a match so I except total deposits for the year to be ~$20K. My asset mix is similar to SomeGal’s. I am currently contributing approximately $2000 a month to my 401(k) and so will hit the limit about 75% of the way through the year. At that point, I will either go ahead and keep up the contributions (post-tax), or set it to zero and see a huge take home increase. About that time I will also fulfill the FICA max of $97,500 and see another substantial bump in take home for the rest of 2008. This works out nicely for the holiday season, and because the ‘Gal and I tend to travel to the beach in the winter.
I also hope to continue last year’s trend of putting around $15K post-tax into our mutual fund account, although that may be more subject to change, particularly if we buy additional investment properties.
3 responses so far ↓
1 Improving Financial Literacy - A personal finance blog about money, budget, investing and its effect on life // Apr 30, 2008 at 6:37 pm
[…] didn’t know the difference between a company pension, a 401(k), and Social […]
2 JoeTaxpayer // Apr 30, 2008 at 7:14 pm
Is somegal making an IRA deposit to make up the difference? Does your company match when you’re maxed? Mine matches the first 5%, so I need to bring my withholding down as the year goes on, to try to hit the 15.5K limit in December.
Joe
3 SomeGuy // May 1, 2008 at 7:57 am
Unfortunately in both 2007 and 2008 we filed jointly. Our CPA couldn’t believe it but we came out several thousand ahead both years by doing so. With IRAs, I believe you must file jointly if you are married. We are also substantially above the $160K income cutoff for tax deductibility.
As far as 401(k), my employer matches 50 cents on the dollar up to 6% but they include bonus and other income. They do it on an annual basis so the timing of my contributions doesn’t really matter. I’m just front-loading for my own purposes.
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