Are 401Ks a meme?

I'm in my early 20s with my first job and trying to figure out how to save for the future. I'm already saving more than half of my post-tax paycheck and have a brokerage account I'm stuffing right now. It looks like the 10yr annualized-returns on mutual funds by my broker (Fidelity) are 2-3x higher (with a .71% expense ratio) than the fund options for my 401k provider, what's the deal here? I ran some basic simulations and the higher return rate quickly outpaces the extra pre-tax principal, even with employer matching

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Yes.

If you are investing anyways then a 401k just lets you invest some of that money without having to pay taxes on it.

Also I'm pretty sure if you don't like the 401k options then you can just invest in whatever you want via an IRA instead. It won't have employer matching but still has tax benefits.

I'm not an expert so research it yourself.

If your employer offers a match then put money in. Otherwise you can max a Roth IRA. Anything left over can go to your 401k or crypto

Retirement analyst here.

No they are not a meme. Utilize your match, max out your 401k every year if you can, and your 457b if offered, along with an IRA.

This is what ALL the executives do at my company and they are very wealthy.

>actually believes the money will still be there when you turn 65

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>locking down significant portions of income for decades only to slightly offset the rate of inflation

There only good for the company match but other than that they have high fees and limited choice on what you can invest in. Roth IRA's are my preference for tax free retirement.

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And whats your preference at wealth preservation?

inb4 crypto or other speculative bullshit

I think they have some value but are obviously an inferior retirement vehicle versus a pension. I personally diversify. 50% of my portfolio in the boomer markets and 50% in the zoomer markets. If you need liquidity from your 401k you can always loan against it from yourself and pay "the loan" back with interest paid to yourself without paying the penalty tax. My 401k is roughly a quarter of my net worth only because I doubt how long this merry go round clown market can go on without completely wiping out the BUY THE DIP retards.

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aaaaaaaaaaaaaaaand it's gone

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Sorry I should have included, the employer match offered to me right now is only a minimum 3% of salary per year profit share. No contribution based matching and reaches 100% vestment after 6 years (I really don't see myself staying here for 6 years). I'll look into an IRA

Is that 6 year graded or cliff vesting?

3% (up to 285k) and no match is not very good at all.

If you don't plan on staying that long you're not missing out on anything then if it's a cliff vesting on that 3%. If you want to defer more of your income for tax purposes then use it but if it doesn't matter and you're fine with your IRA then do it.

At the very least get the match regardless and max out your IRA and diversify yourself outside of the traditional wealth vehicles.

if your employer is matching, then contribute up to the max match and index it to a total market fund and forget it exists, everything else should be managed by you or a broker that charges no commissions and a modest fee (

Graded vesting, 20%/yr after 2 years (I'm 1 year in, like I said it's my first job). I'm making 90k/yr so it looks like I could max out a Roth IRA if I set that up my self through Fidelity and then put whatever is leftover into my current self-managed account that's split across different funds? Can I just ask them to take $1/mo out of my paycheck into a 401k to make sure I capture that 3%/yr match and just forget about it for 40 years?

ngmi

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ok boomer

>Graded vesting, 20%/yr after 2 years (I'm 1 year in, like I said it's my first job)

Ok that is pretty standard. So yeah as long as you work there you're going to be getting free money, and more of it the longer you stay. Not a whole lot, but a decent chunk.

>I'm making 90k/yr so it looks like I could max out a Roth IRA if I set that up my self through Fidelity and then put whatever is leftover into my current self-managed account that's split across different funds?

Yeah you could easily do that. Sounds smart to me.

>Can I just ask them to take $1/mo out of my paycheck into a 401k to make sure I capture that 3%/yr match and just forget about it for 40 years?

Ok now I am confused. Now you're saying it's a 3% match? I thought it was an employer contribution?

Hardly anyone lets you set a dollar amount to take out per paycheck, its usually a % of your income. If it was 3% match, that means in order to get that 3% you need to contribute at least 3% of your paycheck to get that amount. And you wouldn't get it for 40 years unless you were working at the company for 40 years.

Sorry I might be using the wrong terminology here. My employer doesn't offer any matching on any contributions that I make, but they offer an annual profit sharing of at least 3% of my salary into my 401k plan (it's a small company)

Yeah terminology is important.

So if it's just a flat 3% profit sharing, and you don't have to contribute to the plan to receive it, (i'd check on that. it's not common) then don't contribute at all. Max out your Roth IRA and use anything else for other investments.

If you find yourself wanting to reduce your taxable income, then I'd utilize your contributions to the 401k. You won't get match but you could reduce your taxable income by 19k this year.

Thanks for the suggestions, I guess my main concern was that the funds available in my 401k plan had much lower returns than what I could setup on my own (and I'm guessing higher fees). The increase in principal contributions from using pre-tax income didn't seem to outweigh the difference in returns from the basic calculations I ran.

Nobody and I mean nobody outside of idiots on this board buy these stupid alt-coins. 99% of them are scam that produce nothing...

No fucking shot. You get taxed BIGLY if you don’t die before you want to pull it out. Fuck that bullshit the government isn’t holding my stocks hostage to so I “literally can’t cash out”

401ks are taxed WHEN YOU TAKE THE MONEY OUT. So any growth = TAXED. If you want to take the whole thing out when you are 65, you'll lose half its value in income tax on it.

There are Roth 401ks where you pay the taxes up front and both the growth and the dividends are not taxed.

The
>muh more money to grow
Is a meme. You are able to max it out to the same extent with post tax Roth 401k. $19,500 a year or so. Also, being put in a lower tax bracket is deleterious. Let's say you become disabled at 30 and contributed the full amount. Let's say you made 70k. That brings you down to around $50k/year so the amount you get from social security is a mere $1500 instead of $2500 a month. You not only have less money after taxes but you also get less benefits. The regular 401k is the most cucked plan to ever exist and is only worth contributing to if there is employer contribution and in any case there should be a roth 401k option with same contribution.

>Is a meme. You are able to max it out to the same extent with post tax Roth 401k. $19,500 a year or so. Also, being put in a lower tax bracket is deleterious. Let's say you become disabled at 30 and contributed the full amount. Let's say you made 70k. That brings you down to around $50k/year so the amount you get from social security is a mere $1500 instead of $2500 a month. You not only have less money after taxes but you also get less benefits. The regular 401k is the most cucked plan to ever exist and is only worth contributing to if there is employer contribution and in any case there should be a roth 401k option with same contribution.

Heh. Pretty based take. One of the reasons why I contribute ROTH ONLY to my 401k.

And it's gone

So what? Just invest in gold and silver? The stock market doesn't produce anything for the average person?

What is it with all the retarded larpers on this board? 401k contributions aren't except from FICA and if you had a job you would know this.