bssc
Moderator Emeritus
- Joined
- Dec 27, 2005
- Messages
- 10,125
My megacorp just provided us with a training seminar on the changes that were being made to the defined contribution retirement plan. (The defined benefit plan went away years ago). Interesting highlights.
1) All new people are automatically signed up for the 401(k) when they start employment. They have to opt out if they don't want to save money. This seems to be a good trend.
2) Anyone starting after April Fools day while get less benefits (about 10% versus the current 12%) in terms of matching and profit sharing. Current employees get a conversion percentage. This seems to be a trend too.
3) Of course, to get the full 5% match portion, you have to contribute 5%. The FA indicated that this wasn't always possible and that people should start out with 1% if possible and work their way up. One of the other FAs asked my friend's class who paid less than $150 a month on cell phones and she was the only who held up her hand. In our class, at least one person asked about the maximum ($15,500 this year) and the FA seemed surprised. He also didn't mention that saving 1% didn't mean that your paycheck dropped by 1% but less because of lower taxes.
4) TPTB have limited options to six basic funds, company stock and a target fund. If you want anything else, you have to get a self managed brokerage account. I did just to get access to the S&P 500 index.
5) They limited the amount in company stock to 10%. I know some people who have all their retirement in the company stock. I think that this is a good thing.
So, the new employees will be working a little longer, hopefully paying lots into Social Security.
1) All new people are automatically signed up for the 401(k) when they start employment. They have to opt out if they don't want to save money. This seems to be a good trend.
2) Anyone starting after April Fools day while get less benefits (about 10% versus the current 12%) in terms of matching and profit sharing. Current employees get a conversion percentage. This seems to be a trend too.
3) Of course, to get the full 5% match portion, you have to contribute 5%. The FA indicated that this wasn't always possible and that people should start out with 1% if possible and work their way up. One of the other FAs asked my friend's class who paid less than $150 a month on cell phones and she was the only who held up her hand. In our class, at least one person asked about the maximum ($15,500 this year) and the FA seemed surprised. He also didn't mention that saving 1% didn't mean that your paycheck dropped by 1% but less because of lower taxes.
4) TPTB have limited options to six basic funds, company stock and a target fund. If you want anything else, you have to get a self managed brokerage account. I did just to get access to the S&P 500 index.
5) They limited the amount in company stock to 10%. I know some people who have all their retirement in the company stock. I think that this is a good thing.
So, the new employees will be working a little longer, hopefully paying lots into Social Security.