Comments on: One of My Biggest Personal Finance Pet Peeves

By: Taxes (or, GRR is the word) « Well-Heeled, with a mission

Taxes (or, GRR is the word) « Well-Heeled, with a mission — Tue, 14 Apr 2009 02:30:58 +0000

[...] brought down my taxable income by $15,500 if only my employer offered the 401(k) option to me. (Do you see why I am such a huge fan of a “universal” or “private” 401K? Any policy wonks listening? We need non-employer-based income-deferral program outside of IRA, [...]

By: Stephanie

Stephanie — Tue, 13 Jan 2009 19:35:53 +0000

I think sometimes the issue is that some 401(k) are far better than others. My last job was at a startup, so most of the funds available weren’t that great (2%+ expense ratio), but once I started working at a larger company, they had much better options (and a match!).

By: Cents in the City

Cents in the City — Tue, 13 Jan 2009 18:45:13 +0000

My 401k with my current company is at Nationwide and about to turn 2 years old. I don’t get a company match,(don’t get me started on that) so I also invest as much as I can in my Roth IRA as well. The Roth IRA is also about a little over 1 year old opened right before the economic downturn, was all my choosing and I haven’t done too well mostly due to an international ETF that tanked. I’ve estimated that I lost approximately 36% in my Roth. My company’s 401k didn’t turn out to be awful I lost 32.1% overall and 37.9% in the past year. I choose some of the lower fee mutual funds, so I haven’t felt too stifled by my plan’s choices. Previous employer plans have been with Fidelity, where I can’t figure out my losses, so maybe I’ve just been lucky.

By: Chantalle

Chantalle — Tue, 13 Jan 2009 15:58:45 +0000

I have been thinking about this idea as well. It pisses me off that so much gets taken out of my paycheck, and where does it go???

When I worked in a small city-state in SEA, they would take out your “taxes”, which were actually put into a savings account that you can’t touch until you retire or hit age 65…or, people can use those savings and put it towards paying for a house. Without a penalty. So the money that was taken out of your paycheck, the majority of it would go back to you someway or another down the road.

Unlike here. Paying for somebody else’s social security while there may be nothing left for us. On top of everything else. Bah.

By: SP

SP — Tue, 13 Jan 2009 15:41:53 +0000

I think that dog at my finances is wrong. Maybe some people wouldn’t save, but SOME of us (ie, you) would. I also have $$ direct deposited into my Roth IRA (and 3 other accounts) and payroll handles it.

(And this is not for self-employed people, this is for regularly employed people who don’t have a 401k at their company.)

This has never bothered me, because I haven’t been in your position. However, it is a good point. I wonder what the history of this is, and why it is not offered?

Have you considered investing in a traditional IRA rather than a roth? It might be something to think about, esp. if you are going to school in awhile and will be in a really low tax bracket (and could convert).

By: Cool Kid

Cool Kid — Tue, 13 Jan 2009 14:57:25 +0000

I completely agree. I hate my employer’s 401k options and would love to be able to manage my money myself. We only have 8 total options to invest in and 1 of them is company stock. Yeah, my options are bad.

By: savvy

savvy — Tue, 13 Jan 2009 14:45:06 +0000

Self-employed people have a number of retirement account options. One is the solo 401k (along the lines of what you described). There are also the SEP-IRA and SIMPLE IRA.

By: dogatemyfinances

dogatemyfinances — Tue, 13 Jan 2009 14:31:27 +0000

This one is easy. Most people wouldn’t save if it didn’t silently come out of your paycheck. It would be really hard (maybe impossible) for your employer to support every IRA through payroll. It’s hard enough to support one lousy 401k.

I think it would be great if it were just deductible, but then I really think people wouldn’t use it.

By: Fabulously Broke

Fabulously Broke — Tue, 13 Jan 2009 13:37:12 +0000

That's a great idea! We have something in Canada where they take your last year's earnings, take 18% of that and then that's the max that you can contribute to an RRSP the next year.. and employers can set up their own little plan under a different bank, but it contributes to your RRSP 18% amount. Or you can avoid the employer altogether and set up your own RRSP account. Was that what you were talking about? Fabulously Broke in the City Just a girl trying to find a balance between being a Shopaholic and a Saver...

By: One of my biggest personal finance pet peeves | forexintraday.com

One of my biggest personal finance pet peeves | forexintraday.com — Tue, 13 Jan 2009 07:55:18 +0000

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