IRA and 401K limits increase for 2019

[Ouchie-Z-Clown]

The max only applies to YOUR contributions, then? The employer-matched funds are not counted?

The 402(g) limit of $19,000 (for 2019 - it indexes each year so it can, and often does, increase annually - it was $18,500 for 2018) only applies to the combination of pretax and/or Roth contributions the employee makes.

If you are turning 50 in a year you can make the catch up contribution of $6,000 in addition to the 402(g) limit. So a total of $25,000 in 2019 if you’re turning 50 in 2019.

Then there is an annual additions limit which includes all employee and employer contributions. For 2019 that number is $56,000. So unless your employer offers an incredibly lucrative match (I mean it would have to be something like $2 on 100% of pay deferred) or a profit sharing contribution (which isn’t tied to whether or not you contribute - these have become increasingly rare in today’s day and age) there’s little likelihood that you ever approach this limit on an annual basis.

 

[Russ Smith]

Not related but I didn't think it warranted a new thread. Robinhood announced yesterday 3% on savings and checking, no fees, no minimum balance etc. Apparently you have to have a brokerage account with them, don't know if it means active or not. It's NOT FDIC insured but it is insured some other way up to 250K.

With all my recent online issues I don't want to open another online account but I'm hoping this will push other banks to compete and up their rates. I'm getting 2.6 from Capital One on a CD, and 2 on a money market, I'm hoping the MM rate will go up a bit as a result of this.

 

[iLLmatiC]

There's a company in San Francisco called Zen Benefits that's trying to do just that. The CEO is Jay Fulcher, i went to HS with him he was a senior when I was a freshman we both played basketball. I don't think I've seen him since I was 16 years old so over 30 years.

If you read about him he's saying the exact same stuff, companies need to invest in their employees's health both medical health and financial health. The cost of constantly replacing unhappy employees far exceeds what they think they are saving by NOT doing it.

https://en.wikipedia.org/wiki/Zenefits

They have a spot off of Tempe townlake.

 

[iLLmatiC]

Not related but I didn't think it warranted a new thread. Robinhood announced yesterday 3% on savings and checking, no fees, no minimum balance etc. Apparently you have to have a brokerage account with them, don't know if it means active or not. It's NOT FDIC insured but it is insured some other way up to 250K.

With all my recent online issues I don't want to open another online account but I'm hoping this will push other banks to compete and up their rates. I'm getting 2.6 from Capital One on a CD, and 2 on a money market, I'm hoping the MM rate will go up a bit as a result of this.

You can also buy AT&T stock and collect 6% interest in the form of dividends. The principal may fluctuate however.

 

[iLLmatiC]

I've never actually understood the HSA so I don't think I'm contributing. I actually didn't realize it wasn't the same as FSA (use or lose) so that's actually something I should have been doing and will consider going forward. Do the funds go into an account like an IRA or just in some savings?

The company I work for offers an HSA that allows for you to start investing in Vanguard products once you hit $2000 so it's similar to an IRA in that regard.

 

[Ouchie-Z-Clown]

The company I work for offers an HSA that allows for you to start investing in Vanguard products once you hit $2000 so it's similar to an IRA in that regard.

It’s better than an IRA if you eventually take a distribution in retirement for medical reasons - you’ll have never paid taxes!!!

 

[iLLmatiC]

It’s better than an IRA if you eventually take a distribution in retirement for medical reasons - you’ll have never paid taxes!!!

Yeah I've just started using my HSA account as another investment tool.

 

[Ouchie-Z-Clown]

Yeah I've just started using my HSA account as another investment tool.

And you’re still ahead of likely 98-99% of Americans in doing so.

 

[AZCB34]

If only a person didn't need a high deductible plan to use one...

 

[puckhead]

If only a person didn't need a high deductible plan to use one...

Is there a reason why that is?

 

[Ouchie-Z-Clown]

Is there a reason why that is?

The law. It’s a dumb law imo

 

[puckhead]

The law. It’s a dumb law imo

Thank you. I was trying to figure out why they were attached to each other, if there was a reason the policy was designed that way.

 

[Russ Smith]

Side question, when they talk about the 4% rule do they mean 4% of total savings, or just cash savings? The reason I ask of course is in theory if you're still somewhat invested in the markets you should be able to earn at least 4% a year on your total nest egg so if you only spend 4% in theory you don't impact the total much?

Seems like much of the how much do you need to retire stuff is based on the assumption that you don't want your principle to go down much because you want to leave it to your heirs?

 

[Ouchie-Z-Clown]

Side question, when they talk about the 4% rule do they mean 4% of total savings, or just cash savings? The reason I ask of course is in theory if you're still somewhat invested in the markets you should be able to earn at least 4% a year on your total nest egg so if you only spend 4% in theory you don't impact the total much?

Seems like much of the how much do you need to retire stuff is based on the assumption that you don't want your principle to go down much because you want to leave it to your heirs?

I believe it’s total not cash. And I believe it was backed into using mortality tables. The goal for saving for retirement is to time it perfectly. Essentially run out of assets just after your funeral is paid for. It’s not meant to be a generational wealth transfer strategy.

 

[AZCB34]

They claim if you follow the 4% rule you shouldn't run out of money before you die. I don't exactly know how it ultimately works when it comes to RMD since at some point you will be taking out greater than 4% I would think.

 

[Ouchie-Z-Clown]

They claim if you follow the 4% rule you shouldn't run out of money before you die. I don't exactly know how it ultimately works when it comes to RMD since at some point you will be taking out greater than 4% I would think.

Just because you take a distribution doesn’t mean you have to spend it. Reinvest it until you need it.

 

[iLLmatiC]

Using dividends from stocks is another retirement strategy, you never touch the principle.

 

[Russ Smith]

BTW I'm not eligible for the ESPP program until mid May I just found out. I started right before the November ESPP opened but unfortunately was not aware of it, nor I think eligible although I'm not clear on that. So I've decided I'm going to go in May between 15 and 20% of salary since 20 is the max allowed. It's a 1 year cycle but you buy(and can sell) every 6 months. The 1 year is just so you can decide to opt out or re-up. If I have to lower my 401K contribution I will it just seems to me too good at my age to pass up on 15%(before tax) guaranteed(and possibly more). The stock was 18 when I started, it's 21 now, so if it were 21 in may I'd be looking at buying in around 15.50 and selling at 21 because it's 15% off the lowest of the 2prices opening of 6 months or closing of 6 months. That's a rare situation of about 1/3 profit so I wish I had been able to sign up right away