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Author: neace One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76111  
Subject: Re: Just Starting at 51 Date: 12/18/1999 2:41 PM
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Not knowing you particular situation...you want to be aware of maxing out you deferral percentage.

My company matches $0.50 on the dollar for the first 6% of my salary each pay period. If I max out the $10K that the federal regulations allow before year end, I can not contribute anymore for the year and I miss out on the "Free Money" that my company contributes for the rest of the year.

Example: If I maxed at $10K on September 30, then I cannot contribute anymore for October, November, and December therefore missing my company match ("Free Money").

With the stock market reaching new highs everyday, some would say get your money in early in the year and not be concerned with the company match because the gains will more than offset the loss of the company match lost at the end of the year. My take is the company match is a guarantee no matter if the market is up or down so why miss it?

If your income is over $66,666 (based on my company's 15% max, don't know if that is federal limit of company limit) per year but under $160,000 then I believe you should probably change your percentage periodically (depending on getting a raise, bonus, cash award, etc) in order to finish the year at the $10K that federal regulation allow and gaining the maximum company match ("Free Money"). If you are under $66,666 go for the maximum.

My understanding is the the federal regulations on the maximum contribution you can make is changing the next few years, but I don't have the exact numbers (something like $10.5K for 2000 going up to $15K over the next five years).


PS...My first Post. After I found this information on my company's HR Website I was shocked as to why this was not more advertised. I guess the company's position (as more and more are) is that your financial future is in your hands and besides, if you don't understand this then we don't have to match your contributions through out the year (money stays on the company bottom line, not yours).

Regards, Gordon



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