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otc

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Those of you who are ineligible for Roth IRAs - are you backdooring every year? (or waiting for xxx to accrue and then doing it all at once?
Every year in January. Waiting only generates taxes.

Most brokers it is just an online form. You have 2 accounts, deposit into the traditional and then backdoor into the existing Roth (and the traditional then sits empty for the rest of the year)
 

brokencycle

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Can I max the IRA > Roth IRA contribution and then still max my Roth 401k? I don't see any reason why not, right?
 

Piobaire

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Pretty sure that as they're separate buckets they have their own limits.
 

venividivicibj

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@Texasmade you were too early

"On Jan. 1, consulting firm KPMG U.S. LLP replaced its 401(k) match with a contribution of 6% to 8% of employee pay, including bonuses. The exact contribution varies according to a worker’s age and tenure. The firm’s more than 34,000 workers receive the money whether they contribute to the 401(k) or not. "

 

brokencycle

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@Texasmade you were too early

"On Jan. 1, consulting firm KPMG U.S. LLP replaced its 401(k) match with a contribution of 6% to 8% of employee pay, including bonuses. The exact contribution varies according to a worker’s age and tenure. The firm’s more than 34,000 workers receive the money whether they contribute to the 401(k) or not. "

6-8% is a solid number, but not requiring a match doesn't seem like it would matter to anyone. If you care about saving for retirement, you're still going to contribute. If you don't care about it, you won't see retirement money as a big deal.
 

Texasmade

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@Texasmade you were too early

"On Jan. 1, consulting firm KPMG U.S. LLP replaced its 401(k) match with a contribution of 6% to 8% of employee pay, including bonuses. The exact contribution varies according to a worker’s age and tenure. The firm’s more than 34,000 workers receive the money whether they contribute to the 401(k) or not. "

Is it still a 5 year vesting period? KPMG has like a 20% turnover and most people never last long enough to fully vest.
 

venividivicibj

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6-8% is a solid number, but not requiring a match doesn't seem like it would matter to anyone. If you care about saving for retirement, you're still going to contribute. If you don't care about it, you won't see retirement money as a big deal.
Considering the old match "25% of up to 5% of eligible base pay "? Yeah... it's a solid change...
 

Texasmade

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I also remember KPMG only paid out the match once a year either in April or May. If you weren't employed on the match date, you got nothing. KPMG was cheap as fuck when I was there so I did whatever I could to spend their money at happy hours.
 

brokencycle

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I also remember KPMG only paid out the match once a year either in April or May. If you weren't employed on the match date, you got nothing. KPMG was cheap as fuck when I was there so I did whatever I could to spend their money at happy hours.
IBM does that in December and has its annual layoff the day before, so if you get laid off, poof.

Considering the old match "25% of up to 5% of eligible base pay "? Yeah... it's a solid change...
No doubt.
 

otc

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6-8% is a solid number, but not requiring a match doesn't seem like it would matter to anyone. If you care about saving for retirement, you're still going to contribute. If you don't care about it, you won't see retirement money as a big deal.
Eh, I think there are a lot of people out there (even at KMPG) who would like to have retirement money, but either "can't afford" to contribute or neglect to set it up for some reason.

That said, I'm still kind of a fan of the behavioral nudge component of the match. The goal isn't for the company to pay you more, it is for them to encourage you to take advantage of a super powerful savings tool via a match (and also to encourage retention if that match has a vesting period).

Honestly, if more and more companies start giving large employer contributions without requiring employee contributions, I expect to see a push to change the tax treatment. What KPMG is doing now is purely income. Why shouldn't it be taxed like it? Why shouldn't payroll taxes be paid? Saying you make $100k with an 8% guaranteed retirement contribution is the same as saying you make $108k (or if you want to quibble, 108k minus the potential early-withdrawal penalty).
 

Texasmade

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What KPMG is doing now is purely income. Why shouldn't it be taxed like it? Why shouldn't payroll taxes be paid? Saying you make $100k with an 8% guaranteed retirement contribution is the same as saying you make $108k (or if you want to quibble, 108k minus the potential early-withdrawal penalty).
Not really. It's an employee benefit and not taxed because that contribution will be taxed at time of withdrawal.
 

brokencycle

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Eh, I think there are a lot of people out there (even at KMPG) who would like to have retirement money, but either "can't afford" to contribute or neglect to set it up for some reason.

That said, I'm still kind of a fan of the behavioral nudge component of the match. The goal isn't for the company to pay you more, it is for them to encourage you to take advantage of a super powerful savings tool via a match (and also to encourage retention if that match has a vesting period).

Honestly, if more and more companies start giving large employer contributions without requiring employee contributions, I expect to see a push to change the tax treatment. What KPMG is doing now is purely income. Why shouldn't it be taxed like it? Why shouldn't payroll taxes be paid? Saying you make $100k with an 8% guaranteed retirement contribution is the same as saying you make $108k (or if you want to quibble, 108k minus the potential early-withdrawal penalty).
If I wanted to quibble, I'd say it still is taxed on withdrawal no matter what.
 

otc

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If I wanted to quibble, I'd say it still is taxed on withdrawal no matter what.
Since when does the government prefer to collect taxes LATER? (also it is only subject to income taxes at withdrawal, not payroll/social security)

They are willing to go along with it and collect later (or never) when it promotes some sort of society-benefitting behavioral change.

Highly paid professional services workers getting more pay without having to do any savings themselves? You're not exactly buying much in exchange for that tax advantage. You're letting companies with deep pockets avoid a bigger chunk of payroll taxes, you're allowing high income people defer potentially more taxes, and you're not even getting a behavioral nudge out of the deal.
 

Piobaire

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Do employer contributions pay FICA? I know employee contributions do but not sure about employer contributions.
 

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