Geezer

Short nap. Had to get up to yell at the kids on the lawn. My wife bought Pecan Sandies and skim milk-sheesh. (Spiced it up with Boost)

Here's how a non-taxable Employer contribution of 10% would look with a gross earning of $300,000 per year with a 5 year duration.

10% of 300,000 is 30,000

If you achieved an 8% return on 30,000 re-invested annually over a 5 year time frame you would have, assuming $0 at the beginning and a 30,000 contribution on the last day of the 5th year:

$175,998.03

This gets even better:

Lets assume you work here for exactly that amount of time. Your big plans to buy a Jimmy John's and a Jiffy Lube by the time you are 40 come true. Jackpot! You contribute $0 for 30 1/2 years at 8% (you have to mandatory withdrawals beginning at age 70 1/2). How much was your Employer contribution worth?

$1,771,007.79

With a time horizon of only 5 years you're nearly a multi-millionaire.

https://www.investor.gov/additional-...est-calculator

Geezer

Very persuasive reply.
Please don't participate in the next contract survey.

Locke

And you clearly were an accountant since I fell asleep half way through your very verbose description of net vs gross pay.

nitefr8dog

Skim milk...my son in law calls it chalk water....
As some of us found out in the short staffing debacle in 2016/17...max IRS contribution is 19.5k pr yr. Whether you make 300k, 400k, or 600k....19.5k per year.

No Land 3

There's also no replacement for getting an early start because of compounding interest. Some of the pilots I have a lot of respect for at K4 own rental properties. You can earn a good enough income with that and as you get older or lack the ability to take care of them, hire a decent property manager to run it for you, or simply cash out...

jhugz

You're mixing up employee contribution max and employer or total contribution max. I believe total contribution for 2018 was like 55k for the 401k.

So if the company contributes 15% with no match required, and you put none of your own money into the 401k, you will not cap that until you make 365,000ish a year.

You need to make 250,000ish at 15% a year plus contribute your yearly max to hit that 55k.

Geezer

I kept it simple. If you get the 30,000 per year by contributing 2,500 per month the total is greater. If you add the max 401K for your age bracket to the mix added monthly the numbers at 70 1/2 are huge. If you use the 50 year S&P 500 historical average return then the numbers almost become astronomically high. The maximum total combined contribution for 2018 is 57,000 or so. I understand your numbers and with a big enough Contribution there's no need for a 401K match at all since the tax bracket creep lets the Employer contribute less.

Geezer

You are absolutely correct. I was keeping it as simple as I could and trying to use a realistic K4 scenario. The interesting thing about the Employer contribution aspect is that it incentives employees to make more and that should reduce total staffing requirements which should lower total employee costs. In the future I hope that these per employee cost decreases can be presented in negotiations as a means to achieve a higher Employer contribution. Just to be clear, I am not criticizing any employee that was involved in past negotiations.

Geezer

In a perfect scenario we should all be dealing with this:

https://thecollegeinvestor.com/17561...door-roth-ira/

nitefr8dog

And you have seen that? Max IRS allowable employer contribution according to our crack payroll is 19.5k.