401k

>>1432899
Yes, they are matching your salary up until 4.5% your salary. It's free money. You can take it with you when you leave as long as you are vested. If you plan on being there long enough to be vested you would be a fool not too match it.

>>1432899

Yeah its 4.5% free money. That's better returns that most dividend paying stocks.

Sure you are limited to to withdrawing it early or face tax consequences, but consider it a rainy day fund if you get screwed.

Oh and start with a SP500 fund for your 401K, but the older you get convert more to bond funds as you get screwed if the market crashes and you need the money.

>>1432899
Man it's whatever. Most of the time you can request a full payout when you leave the company, so I'd contribute until you leave. Like it's been said above, it's free money.

>>1432899
Does your bank add up to 4.5% to your account each time you make a deposit?

Take the program, dumbass.

Thanks for the replies.

Okay, so I was missing one key point in my (lack of) understanding of 401ks... the invested money comes from your pre-tax income. You're basically investing money before you pay taxes on it, then you pay taxes on it when you withdraw it.

I'm still going to get raped by the 10% early withdrawal penalty, but if I do that in a year where my regular income (like W2, 1099, etc.) is $0 and I'm in the lowest possible tax bracket, it will still be way better than paying the normal 28% + 10% CA tax.

>>1434392
if you withdraw it in a year, you may not be vested in your employer contributions.

check with your employer about the vesting schedule. If you dont vest immediately (probably not) you should NOT withdraw the funds from the 401(k). because then you will pay the 10% penalty AND get 0 from your employer.

>>1434409
Yeah, I'm aware of the vesting schedule, thanks senpai

>>1434392
You can roll it over into an IRA or another 401k and there is no penalty.

>>1434424
do you vest immediately?
do you NEED to pull the funds out of the 401(k)?
can you do it without penalty (first time homebuyer, college expenses)?

401k programs are generally shitty and the fund choices are lousy.

But 4.5% match is still free money even if it's invested in slow growth, high-fee shit. Contribute enough to get the max match, put any remaining retirement savings into a ROTH ira instead.

You can literally disregard every other post in this thread aside from this one.

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>>1434437
>do you vest immediately?
No vesting period.

>do you NEED to pull the funds out of the 401(k)?
Yes, I would need to make periodic withdrawals from my investment accounts (whose gains/dividends/interest are automatically reinvested) for cost of living expenses. Maybe 2-4 times per year for the rest of my life. Since I'll have no regular income, the money I take out will be tax free as I'll be under the threshold. This is the ultimate goal: live 100% off of tax-free capital gains.

>can you do it without penalty (first time homebuyer, college expenses)?
No, I'm not buying a house in the US and definitely not going to college again here.

>>1434448
This is what I'm concerned about.

4.5% of the max $18,000/yr contribution is only $810/yr... I'm locking up $18,000/yr into potentially crap investments in exchange for slightly better tax treatment in the future (even factoring in the 10% penalty) for $3,230 (pre-tax) over four years.

I'm concerned about the opportunity cost of a short term (roughly ~5 years) 401k vs just continuing to invest the money in my portfolio normally.

I realize this is an unusual situation and most people are investing into a 401k with the expectation of having it for like 30+ years. I just happen to be in an interesting situation where it is actually feasible for me to effective retire in five years.

Thanks for the comments, everyone. Hopefully this thread is helpful to some other anons.

>>1434598
That's called opportunity cost m8.

If you get gud at investment/managing a portfolio you can make more than they'll match plus whatever rate of return your 401k would get you.

Please do some more reading into this. You can roll the 401k over into an IRA, where you can then withdraw it penalty free through a special withdraw.

>>1434615
Yeah, I literally wrote "opportunity cost" in the post... this is my biggest concern

>>1434625
Thanks for the heads up, but I already looked into these special withdrawal conditions (there's like 15+) and none of them would apply to my situation.

>>1434778
Look up 72t distributions.

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>>1434392
You can take it with you. Most credit unions will allow you to roll over your old 401k if you quit your job.

Where did this meme that 401k plans have awful investment options come from? My 401k offers VIIIX, good luck getting that in a standalone brokerage account. 401ks are also extremely tax advantaged, anyone who makes over 40k a year and doesn't max it out regardless of company match is fucking retarded.