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Financial Planning / Foolish 401(k)s

URL:  https://boards.fool.com/thank-you-all-for-your-replies-jdoyster-ideally-17971126.aspx

Subject:  Re: Emergency Savings vs. Maximizing 401K Contri Date:  10/10/2002  8:26 AM
Author:  jsuomi Number:  15395 of 26270

Thank you all for your replies!

JDOyster: Ideally, you should be able to economize elsewhere and build up an e-fund while still maxing out your 401k contribution...

This is one idea that crossed my mind, but it will take some time to build-up an e-fund. I would feel better if I could build it up in the next year. Presenlty, I only have about 1 months salary in savings. I've been paying down my debt and almost have it paid off!)

JDOyster: My gut reaction is that you don't want to cut back so that you lose matching funds. How much are you talking about cutting back on your 401k contribution and how much (if any) matching funds would you lose?

I was thinking about a cutback to 6% (from 16%). I won't lose any matching funds as my employer matches all contributions from 5-16%. This will be a temporary cut-back. Once I have enough money in savings, I would increase the contribution to 16% again.

JDOyster: That depends on the nature of the emergency---most plans do not permit in-service withdrawals...

I don't have a cash portion for my 401k. I'm able to take a loan against my 401k up to the equivalent of 4 months salary. It has an interest rate of 7.5%. I don't really want to depend on this due to the things I've read on this site such as having to repay the amount immediately if I were to lose my job.

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