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Poll: Do You Save in 401(k) Without Company Match?

Posted by Sun on August 19, 2008
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We paid a sizable tax bill last April. One of the reasons was that I only made partial contribution to my 401(k) account in 2007.

After changing my job middle of the year, I didn’t make any contribution to my retirement account because 1) there was a three-month delay preventing me from contributing immediately; 2) I was a little lazy and was hoping to make another quick job change, that of course didn’t happen. Though I eventually set up an account early this year and started to make regular contributions since then, I missed more than half of the allowed pre-tax money in my 401(k) last year. Did I regret skipping part of the contributions in 2007? Yes, not just because of the tax bill, but also the missed contributions that can never be made up.

Right now 20% of my paycheck goes into 401(k) and at that rate, I will be done by the end of this quarter. And I am doing the savings without a penny match from my employer! Sure, a match will be nice, but I am saving for my own retirement. If I can afford to set aside money now for my future, then I will, regardless of the match, because I know at the time when I retire, my own savings will be the main source of my income.

A few days ago, there was an article on MSN Money titled No 401(k) match? Save anyway, which offered what seems to be so obvious

You don’t need a company match to save for retirement.

After all, we are saving for ourselves, right? If the answer is Yes, then you should be saving in your 401(k) retirement account regardless a match. Is that what you are doing? Cast your vote here.

How do you prepare your taxes?

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3 Comments
August 20, 2008

I work for state government. We have a defined contribution pension plan, essentially a employer-funded 403(b). I could make a contribution to my 403(b), but I decided against it. Although my taxable and Roth IRA accounts are my primary long-term investments, I do put a small amount into my employer’s 457 plan.

In short, a 457 is like a 403(b), except that contributions are only income tax exempt, not SS tax exempt, but funds can be withdrawn 30 days after leaving my employer instead of waiting until age 65. I belive 403(b) contributions are also Social Security exempt, hence the age 65 requirement.

I like the 457 plan because if I’m unemployed, I can always access my funds w/o penalty and pay regular income tax.

Posted by Mickey Blue Eyes
August 22, 2008

Also remember that part of all this retirement saving is tax diversification. contributing to 401k now reduces your tax burden now.

Posted by Tim
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