What's the catch with 401ks?

Try not having a shit plan.

so did I.

Are those I shares? How did you get those in your 401k?

By not having a shit plan.

You'd have to have a pretty big employer that directs a LOT of business into the fund to qualify for those share classes usually. Who do you work for?

My bad, that's 71% CAGR, 121% total since I opened the account.

I have my own S-Corp and thus use the best retirement plan in existence - the Solo 401(k). Similar to a SEP IRA, I can defer a great deal of income into my 401(k), capped at $54,000/year for age 50 and under (over 50 is $60k) maximum or a lower amount depending on business income - and this calculation is where the two plans differ:

SEP-IRA is capped at 25% of total compensation. If your self employed income is $172k, you max annual contribution is $43k

Solo 401(k) allows for a standard employee wage deferral of $18000 ($24000 for ages 51+). Corporate contributions are capped to 25% *of wages* - if I pay myself $100k in wages, I can contribute $25k from my business income (tax deferred) to the 401(k) plan for a total contribution of $43k.

The benefit here is you can maximize the contribution with far lower business income with the Solo 401(k) than the SEP IRA. In the above example, the SEP requires $172k income for a $43k deferral, but the Solo 401(k) only needs $43k more than the cost of the $102k wages (ballparked to $110k for FICA), resulting in a revenue equivalent of $153k

SEP-IRA 25% cap on self employed income (compensation is misleading)

>2017
>not knowing you can use both a SEP-IRA and an individual 401(k) in the same year to get to the maximum much easier

>2017
>ignorantly posting about topics
Nothing changes in my situation if I have both a 401(k) and SEP IRA, dipshit; total contributions to both are at the same caps.

>Nothing changes in my situation
>hurr durr my situation is everyone's situation
Fucking retard. Next time don't make stupid posts about how i401(k)'s are better than SEP-IRAs. They're not. Different contribution rules work better for different people depending on their situation, including a combination of both.

You're like every other moron on this board who "discovers" something that every adult already knows -- and you only know part of it -- and you think you're a genius. Child.

What's the advantage of having both a SEP-IRA and Solo 401(k) - how can one live the dream and get to the maximum faster when the same limits and contribution rules exist?

kaganao0515.wixsite.com/saveme

>What's the advantage of having both a SEP-IRA and Solo 401(k)
fool.com/knowledge-center/can-a-person-have-a-401k-and-sep-ira-simultaneousl.aspx

The key is that the $18k to the i401(k) has no earnings qualifier. So if you can't get to the annual max due to your comp being low, there are circumstances where your best play is to max the SEP-IRA, and then do an employee contribution to the i401(k).

It's also worth nothing that you can't backdoor a 401(k), so having the SEP-IRA gives you more options down the road.

>Next time don't be a faggoty troll and just ask the question.

Your post referenced SEP IRAs and individual/solo 401(k). The only beneficial scenario from your cited link (bullet point 3) is when you have a 401(k) with an employer (i.e. not an individual 401(k)) and a SEP IRA through you own company.

In addition, this benefit is not limited to the 401(k)/SEP IRA pairing - one can achieve the same benefit from a 401(k) with an employer and a Solo 401(k) with their own business, making your point moot.

I would think it obvious multiple plans from multiple business entities will benefit over a single plan from a single business.

TL;DR: There is no benefit to having a Solo 401(k) and SEP IRA as the contribution limits are shared by both and the benefit is the same as only having a Solo 401(k). Your cited example only benefits with multiple plans from multiple business entities. Such benefits are obvious and outside the scope of this discussion. Get fucked.

Ah, so you really are stupid. As I suspected.

For purposes of the employee contribution limit, there is no difference between a 401(k) and an individual 401(k). The benefit of having both a 401(k)/i401(k) and a SEP-IRA is exactly as the article stated and as I described.

Also, you fail to grasp that as a self-employed person, you don't have the option of a 401(k) since its an employer-sponsored plan. The only 401(k) you can open is an individual ("solo") 401(k). So again, the distinction is irrelevant.

Not to mention the backdoor conversion option, which you either don't understand or are just ignoring.

>multiple plans from multiple business entities
WTF kid, no one is talking about multiple employers here. You're so confused I'm beginning yo understand why your posts are so full of shit.

>There is no benefit to having a Solo 401(k) and SEP IRA
Other than that a combination of both will allow some people to contribute as much as $18,000 more than could without the combination. I'd call that a benefit. You should too, moron.

It's not free in that 401k matching is yet another form of compensation. You're working for it just like your base salary/wage - everyone is - and the company budgets for that. Some retards just don't take the % matching.

The downsides are minor if you know about them. Most of the target and mutual funds have absurd expense ratios. You're stuck with a small amount of funds.

You can do direct rollovers from your 401k to rollover IRA an unlimited amount of times. The 401k assets don't count as contributions to your annual IRA contribution limit. You usually have a lot more options in your rollover IRA account than in your 401k - such as cheap index funds.

Usually if you do rollover within the same institute, it will count as a direct rollover. So in theory, you can do this type of rollover after every paycheck.

When you do attempt to rollover your 401k, watch out for any indication that it's an indirect rollover. You're limited to only one of these every 365 days or you get the 10% + taxes penalty.

On one more note, a 401k is worthless once you max out your company sharing unless you really love tax-shelters and want to work until you're 60.

>There's no such thing as "free money"
you are right
that match is money that isn't part of your salary
it's an easy way for the employer to:
1. reduce your pay if you are a turbogoy and don't match, so they can get away with paying you less
2. give incentive for you to save for retirement, reduce your taxes, and invest your money instead of blowing it on stupid nigger garbage like, again, a massive fucking turbogoy

Companies offer benefits, which generally include retirement plans which match up to a certain percentage of income/hard limit, to employees to incentivize them to stay.

That makes no sense at all
why would you work to 60 if you max out a 401k and can withdraw starting at 55? Why would you want to get taxed on money and then put it in a taxable account over maxing a 401k for the express purpose on retirement? Why do you earn so little that maxing out a 401k is a big deal? How do you not hate taxes enough to know that if you don't max it out, your money will be going to the united single mom and basketball american fund

the difference between base institutional class and institutional plus is 5 mil vs 200 mil total assets

if the employer 401k contains nothing but that s&p 500 stock they can manage that
if they somehow have all three large/mid/small cap institutional plus that's insane

Yes, that is one advantage to a 401k. You can easily take advantage of this by keeping enough in your 401k to last for 4.5 years of spending at age 55. You just have to keep in mind that the funds must be in the 401k of the employer you retire from at 55+.

I plan to retire earlier than 55. Working at a decent enough place to aford this.
>Contribute up to company matching in 401k, rolling over to traditional IRA
>Contribute up to annual limit for Roth IRA
>Contribute to max for ESOP (~12% guaranteed return, even more on good years). Cashing out after distribution and investing.
>Put the rest of money budgeted for retirement into diversified accounts.

You can do a ROTH IRA ladder from your 401k, you only need enough in taxable for the 5 year wait period before you can remove from the IRA

Is there any benefit to a 401k if I have self control and am not retarded when it comes to saving and budgeting?

but on the downside you can't access your money without penalty.

There are two limitations, the 402g deferral and 415 annual additions. The latter is a combination of deferral, match and nonelective contributions. This year that is 53,000 or 100 percent of eligible salary. There's also an additional catch up limit that doesn't go towards either.

The SEP guy has the right idea, but if you own a company and are trying to run a 401k and max out your limits but also have other employees then you'll have to worry about other variable limitations that arise from compliance testing. Owners and highly compensated employees will be limited by ADP/ACP testing unless you have your plan adopt safe harbor provisions, giving all employees either a match or nonelective contribution that is immediately vested.

Could go on about this shit for hours if you anyone has 401k/403b/401a and even a bit of 457 questions.

T. Worked in retirements since college (15 years), mostly with above mentioned compliance testing but pretty well rounded in other aspects.

You can if you aren't retarded.

A chance to beat inflation

no you can1t that's the entire point. either you grow old or you pay out of your ears to get out of it.

No. You're just ignorant of the rules around them.

A lot of the penalty exemptions for IRA withdrawals (medical, student, first time home purchase) don't apply to 401ks. But they do allow for borrowing from yourself, which is basically a temporary withdrawal that only becomes taxable/subject to penalty if not paid back. The problem with 401k loans is you pay yourself back with after tax money yet it goes back in again in its deferred state. What the market does while you're paying back can work for or against you.

You still have no idea what you are talking about.

I'm not that guy, I'm the one that works with 401k plans. Albeit I haven't processed withdrawals or loans for like 12 years I would like to hear about the rules I'm ignorant of. Really all I keep up on is ROE type stuff because I'm into the testing part.

So please enlighten us and prove that you're not talking out of your ass.

financialducksinarow.com/9471/16-ways-to-withdraw-money-from-your-401k-without-penalty/
Literally the first search result.

Lol, but I thought you were talking about ways for anyone to access money before retirement age. This is all situational shit I know about. The equal parts withdrawal was something discussed but I've never witnessed because it was stupid.

This list is missing non spousal qdro or bene accounts, because you're not able to rollover those they're not penalized either. Once again, highly situational, but I didn't know about that age 50 public sector one, which is pretty cool.

There are plenty of ways listed there to access money before age 59.

OK, buddy. I didn't know we were discussing a 402f statement. Carry on, badass.