Microsoft 401K plan. How do Microsofties use it? Why? I know everyones' personal needs are different but still asking.
Microsoft 401K plan as of 2018, matches 50% until $9250 per year of what you contribute. To get maximum match from MSFT and not contribute anything that is not matched, you need to contribute exactly $18500 per year (and you get $9250 from MSFT) Do people contribute $18500 to get full match of $9250 or do your contribute less?
With a match like that, it's a no brainer to max
@JonDoe1 it is not a no brainer to max. There could be people with huge family who must to contribute less for retirement in order to get more in hand for their huge expenses in the present. Look from everyone's perspective.
If someone has a lot of expenses they would be even sillier to avoid free money.
yes. free money, why the hell not? I don’t want to work into my 80’s.
MS contributes 9.25k? That’s nice. To answer your question, yeah I max out to 18.5k and NVDA matches 50% upto 6k
I think MSFT is really an employee friendly company. You can enjoy life if you are working here. Very few at MSFT teams have poor work life balance but they still get the same perks, which is great!
Not contributing the max is stupid IMHO because you’re leaving on the table money which is completely free. Essentially, you’re reducing your TC. I contribute exactly $18,500 to get the max match. For 2018, I should reach the max next month. Note that on fidelity you don’t need to do precise math to calculate 18,500 out of your total salary. You can (and maybe should) contribute the highest % you can afford across pre-tax and Roth every month. Then, once you reach 18,500, contributions will stop automatically.
Also don’t forget the ESPP. Everyone should just contribute the maximum possible (15% or 25k)
The match is quite generous, and even better, it vests immediately. You could quit tomorrow, and keep the entire matched amount. You're probably going to be investing for retirement anyways, so why not take the free money? I personally contribute 10% per paycheck, and HR works out when I've hit the IRS limit for the year. Once I do, the deduction automatically stops until next January. The rest of the year, I treat that 10% as "fun time" investment funds.
Maxing it is a no brainer. Unless you’re in a tough financial situation you should be maxing; it’s free money. The real question to me is how much of the backdoor-roth are you contributing (up to another $22,250 I believe) and how much ESPP do you do.
Roth depends more on your tax level if early career it is probably more beneficial
max the after tax 401k and immediately roll it into roth
But how do you save for downpayment when you max 401k?? Im planning to buy a >=1.5M house in 1-2 yrs and i really need to save for those downpayments (currently have 300k but shooting for 400k so that monthly payments become more manageable) I still contribute quite a bit to 401k but not maxed because of this..
You can take out a loan from your 401k to pay for your house down payment without penalty.
Or you don't but a 1.5M house. That's crazy if it means you can't afford a 401k.
Is there a way to contribute to IRA pre tax? Don’t see how
Why don’t you max 401k and then take penalty if you need to take funds for any reason. This way you still get match, but lose ~40% of match or even 50% if your current TC is high. It’s still at least 5k extra income that you didn’t really have to lose anything for (apart from ~750$ per paycheck *26). The only case you shouldn’t max is if you really need that extra money every 2 weeks.
Fidelity acts funny! They have percentages of paycheck. So I contribute a couple hundred dollars more to make sure I get 9250 from MSFT.
You can't contribute more (legally), but that's OK because if you go over Fidelity will automatically cap it at the max (assuming you haven't contributed to another 401k this year). I usually aim to max out well before the end of the year, then I have extra cash flow around the holidays.