Your company is the first one I’ve heard of that matches less than 50% of contributions up to a certain % of pay. I assume that’s deliberate on HRs part. 37.5% sounds like a lot more than 3% until you look at the actual numbers and what that means.
1 Like
6% of annual pay, including paid holidays and bonuses. If annual pay is $100,000, that’s a $6,000 match.
Most companies seem to limit employer contributions in proportion to the employee’s contributions. If you don’t put anything in, the company may not either.
It’s not expensive or complicated for a company to offer a 401k without any match. I don’t know why every company doesn’t have at least this.
If an employee over 50 contributes the maximum $27,000, a 37.5% match on the employees contribution comes to $10,125.
By investing in my traditional 401k I sane paying taxes at my current marginal tax rate, it grows tax free until I retire, then I pay taxes on what I withdraw at hopefully a lower marginal tax rate. For young people early in their career a Roth option is better since their marginal tax rate is still low. Also, you can mix between Roth and regular, or all regular in your 401k and then have a Roth IRA.
They didn’t increase the limit on either IRA for 2022.
The Roth 401k limit is already $20,500, though employer matches are not Roth so withdrawals on those at retirement incur a tax liability.
I certainly agree that IRA’s and 401k’s should be subject to the same max contribution rules.
It’s been my observation that most people at most companies do not put anywhere near the max contribution in their 401k’s.
A Roth IRA is great if you can get money into it, but most of us are well over the income limits to be able to contribute. Especially if you’re married and your spouse works.
I don’t don’t know what you mean here. That’s not what I said, though I will admit the comparisons of different 401k plans is difficult. Tugsailor explained it perfectly:
…which is the case where I work.
What I’m learning from this thread is that “employer matching” means widely different things according to the plan the company. It can either mean the company puts money into a 401k which you might not contribute to yourself, or it may mean they match whatever you put in at a certain % of your contribution.
1 Like
The splitting strategy is what a lot of guys do over here. With me, the wife has Roth (mostly), I have traditional. Like you said, my guess (only a guess) is that I will be in a lower tax bracket when I retire, or at least not greater one, so why take the taxes out now?
But I’m not a tax accountant
1 Like
6% dollar for dollar match for us. 80% vested after 4yrs, 100 after 5. Nothing special but money none the leas
2 Likes
I know this is not true. There’s at least one group of AMO crewed Crowley managed tankers that have 401k matching though I don’t know what the rates/terms are. I also know that 401k matching is starting to become included in more AMO contracts. There is pushback; It’s “free” money, but only if you contribute. I think there are enough non-contributors that it actually may work out better for the company vs rolling the money into the day rate. Ultimately, all of that money comes out of the same pot so I can see both side of the argument.
There can be downsides to the matching models. For example, one company I worked for would match half a percent up to an individual contribution of 8%. So if you put in 4% the company would put in 2%. If you put in 8% the company would put in 4%. If you put in 10% the company would put in 4% as that was the limit. The problem happens if you hit the contribution limit for the year before the end of the year. Say you’re putting in 12% and max out in October. You wouldn’t be able to contribute for November or December and you’d miss out on the 4% match that you would have gotten if you’d contributed at 8%. As a result, guys would be changing their contribution rates every time they signed on or they’d be leaving money on the table. Some would contribute the minimum to get the maximum match and then make it up out of savings at the end of the year.
What he means is that in the language of your plan every other company most of us have ever heard of matches 50%-200% of the employee contribution up to a certain percentage of the employees income. Yours is the first company he’s heard of matching as little as you do.
2 Likes
0% match on 401k but it’s a state job so we have a pension plan. It’s an automatic 6% deduction that the state matches, vested after 5 years.
I have a 401k, a Roth, and the pension. Hopefully if/when I retire I’ll be set.
1 Like
The last few jobs I worked matched 100% up to 8% of your pay with instant vesting which was competitive with the industry at the time. After I hit 59.5 years of age I regularly rolled over my 401k to my IRA simply because I had more investment options. I couldn’t participate in Roth due to income restriction. If financially feasible I advise everyone to max out their 401k contribution at least up to the employer max.
With MEBA contracted companies (at least the ones I worked for), there is a 401k plan that the only contributions are the ones you make, i.e., non-matching. But there is also a Money Purchase Benefit (MPB) Plan where the contributions are only made by contracted companies, again non-matching. In many ways it is similar to a 401k but the contribution limits are higher. They are separate accounts, but each can be self-directed with regards to investment options.
These are separate from the regular Pension Plan.
2 Likes
Hard to beat MEBA when it comes to total benefits. Never known a member to retire poor, assuming they didn’t marry often.
4 Likes
Stealing that phrase for the future
1 Like
When I was working in SE Asia my crew turnover rate went up a liitle. During a video conference with the office folks in the USA they asked why. I told them it was partly normal attrition and partly AIDS. They were shocked about the AIDS comment until I explained it was Asian Induced Divorce Syndrome.
1 Like
I’m just looking at this thread and I’m not seeing that. Here’s what I see on this thread:
a) …puts in 7% of your base pay plus a fixed amount depending on rank (for mates), something in the mid $20’s per day of work and vacation.
b) … dollar for dollar up to 3% and 50% up to 6%.
c) …our Match is 50% of 8%
d) …matches at a rate of 2 for 1 up to an employee contribution of 5% so if the employee puts in 5% of their pay Transocean puts in 10% of their pay.
e) …Matching 401k. 2% for the first year, 4% for the second year, and 6% for years three and beyond.
f) …Some tug companies are 0%, 3%, or 6%.
g) …6% dollar for dollar match for us.
h) …0% match on 401k
So, right away, your statement that
…every other company most of us have ever heard of matches 50%-200%
seems an exaggeration, since a quarter of the eight responses here mention that some companies contribute 0%.
Compare apples to apples. Let’s say a 50-year-old mariner making $100k/year puts in the federally allowed max of $27,000. Using the numbers provided in this thread, we get as a company contribution:
a) $7000 +
b) $4500
c) $4000
d) $10,000
e) $2000 first year, $4000 second year, $6000 third year.
f)$0, $3000, $6000
g) $6000
h) $0
Average of above: $4375
If my math is wrong here someone will correct it.
Where I work the maximum company contribution would be $10,125 (37.5% of the mariner’s contribution of $27,000). If that same mariner contributes only half of the allowable amount, the match would be $5,062. About the average of the numbers given above.
The confusion comes in because where I work is apparently unique among maritime companies, something I did not know. The other companies mentioned here match salary. Where I work they match employee contribution. A completely different basis, but ending up at about the same average.
2 Likes
There are tax advantages for the employer making contribution to an employee 401k scheme.
Every other company that matches employee contributions.
Well, for my example your number is way low.
I was putting in the max - 18,500, and getting like 25k contribution from the company. (Sailing as CM).