Issue #57: The Lowdown on 401(k) & Beyond!

HEADS UP!!!

I will be adding more content to the newsletter, still make it a shorter read but with more…stay tuned. I will tease for a couple of weeks..so bare with me.

What Options Do I Have As An Employee????

The King: 401k

Yeah, you've heard the buzz. 401(k) is like the rockstar of retirement plans, touted in the media as the go-to choice for building your golden nest egg. But let's break it down and get real here. This ain't just some straightforward savings scheme. It's a goddamn labyrinth of options and possibilities, both for you and your boss. Strap in, folks, 'cause this ride's about to get wild.

So, you're grinding it out, busting your ass for the company. What do they offer? The 401(k). Sounds fancy, right? But it's more than just a friggin' plan. It's a universe of investment choices, contribution decisions, and don't forget the frickin' match. The usual drill? A 50% match up to 6% of your hard-earned salary, and these days, a Roth option too. Picture this: you throw in 6% of your paycheck (say $5,000), and the company matches half of that (that's $2,500, folks!). You can go all out with the yearly max contribution (2023 = $22,500), but most bosses ain't dishing out matching dough beyond a certain point. Gotta keep those costs in check, right? Simple math, my friends. Now, where can you toss your dough? Yeah, you got choices, pal. If your plan allows it, dump 100% of YOUR hard-earned greens into the Roth 401(k) (up to $22,500 in 2023), even smashing the Roth IRA max limit of $6,500 (2023). Madness, right? And guess what? The employer's match? That's lining up in your Traditional 401(k) piggy bank! So, the next time you're debating 401(k) versus IRA, don't be a dumbass. Grab that freebie match and load up your Roth 401(k) till it's bursting at the seams!

If you are not sure about your contribution amount, use the calculator that your 401k provider has or here is one.

Now, here's the kicker. You thought you knew it all? Nope, there's more. Your boss can sweeten the deal with a "Profit Sharing" boost. This sweet baby comes in all shapes and sizes, usually siphoning off 2-10% of Net Revenue. Say the business rakes in $100,000. They're slinging out $2-10K and spreading the love across the whole damn crew. They might throw a straight-up wad of cash at you instead. All to keep your lazy ass on your toes and cranking out the dollars. Ain't that a bitch?

Less Desirable, Yet Still Beneficial SEPs & SIMPLEs

But hold your horses, we're just getting warmed up. We got more tricks up our sleeves. Ever heard of Pension plans? Yeah, they're like friggin' unicorns these days - rare as hell and fading fast. Ain't nobody got time for that ancient history. Forget that noise. Next up, we got the SEP IRA and SIMPLE IRA, the lovable cousins of the IRA family. How the hell do they work, you ask? Sit down and listen up. SEP IRA is like a baby pension, where your boss slaps a fat percentage of your salary (up to 25%) into your retirement fund. No option to chuck in some extra cash yourself. Done. Kaput. Simple, right?

On the flip side, you got the SIMPLE IRA, like a mini 401(k) but without all the bells and whistles. The match is capped at a measly 3%, and your contribution limit is a sad $15,500 (2023). Your employer's stashing away 3% of your salary, and you're stuck with whatever they toss in. No Roth option, no loan provisions, but at least you're instantly vested. Pros and cons, folks. We're always rootin' for the 401(k) for our business peeps. It's the holy grail of flexibility for all involved.

Keep it simple, folks. Max out that sweet match your boss is tossing your way, slap your money into the Roth option, and don't forget to consult the investment advisor to help guide you. Oh, and that advisor? Yeah, they might be MIA most of the time, but they're your ticket to financial sanity. If they're not around, hit me up.

Seriously, get your financial advisor in on the action, or if you're feeling frisky, reach out to us or follow our content. We're here to make sense of this madness, one dollar at a time.

Next Week’s Issue

For all my business owner’s you there, this next issue is for you! What plans/benefits effect you!

#NoBSWealth Clip of The Week

Cannot wait until next week or just want more, check out our podcast @nobswealth and catch us on Youtube. You can always follow me on Instagram and Twitter as well! Or just email me, [email protected].

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