Not maxing out 401k, even though high income

[Anonymous]

I don’t max out my 401k. I only contribute up to the employer match.
The tax advantage of 401ks is overrated. Most plans don’t let you invest in individual stocks. That’s a massive opportunity cost. My brokerage account has grown much faster than my 401k. I’m still coming way ahead after taxes.
I understand most people don’t have the same risk tolerance. I have been doing this for 15 years and feel very comfortable.

[Anonymous]

Anonymous wrote:DH is high income (over 500k) but not financially savvy. He said and I believe he thought he was maxing his 401k, but was only putting in 5000 for most of the last 20 years. I’m so disappointed. There’s no recourse for this, right? He wasn’t sharing his 401k balance with me, and I was surprised to hear how low it was.

Well aren't you an idiot for not paying attention to your family's finances?

[Anonymous]

Anonymous wrote:

Anonymous wrote:He should be putting in the IRS max, not limiting it to what his employer matches.

This is partially on you, OP. You need to understand and have access to all marital finances

I asked and he said yes, he was maxing. I can’t fill in his forms at work. I regret not forcing the issue, but it is very difficult in a relationship where there has been financial abuse.

No, you're stupid. You could have asked to look at the account.

[Anonymous]

Stop making up excuses. Financial abuse? Maybe you should have a job.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This would have been obvious if you were more involved in finances. Your planner didn’t give you financial statements? You never looked at a paystub or w2?

If my husband ever demanded my pay stubs to dictate how much I would be contributing to my workplace retirement plan, I think I might divorce him on general principle.

This whole situation seems bizarre. My wife and I periodically look at our retirement accounts together to update them. I couldn’t imagine not looking at it for 20 years.

Same. We have a joint "financial check in" spread sheet. We both have access to information about how all of our accounts are doing.

Seems like the lack of communication on this financial issue was a symptom of larger marital problems though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:He's allowed to over contribute to "catch up"

This doesn’t kick in until 50s. Is there an income cap?

No income cap for the 401K and the "catch up" contribution. Same for the Backdoor Roth IRA "catch up" - but that is only $1,000, so not a huge amount.

[Anonymous]

Anonymous wrote:I don’t max out my 401k. I only contribute up to the employer match.
The tax advantage of 401ks is overrated. Most plans don’t let you invest in individual stocks. That’s a massive opportunity cost. My brokerage account has grown much faster than my 401k. I’m still coming way ahead after taxes.
I understand most people don’t have the same risk tolerance. I have been doing this for 15 years and feel very comfortable.

Post a screenshot or STFU!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t max out my 401k. I only contribute up to the employer match.
The tax advantage of 401ks is overrated. Most plans don’t let you invest in individual stocks. That’s a massive opportunity cost. My brokerage account has grown much faster than my 401k. I’m still coming way ahead after taxes.
I understand most people don’t have the same risk tolerance. I have been doing this for 15 years and feel very comfortable.

Post a screenshot or STFU!

Ditto; if you can start ~42% in the hole and still out perform your 401k you would have 0 reason to work.

[Anonymous]

Anonymous wrote:I have log-in access to spouse’s 401k account and online pay stubs. I’ve caught when employer mistakenly failed to make the 401k contribution for one paycheck (it was a widespread error).

It’s all both of our money, and I monitor it as such. Spouse has no qualms about this. They have access to my stuff as well.

This seems odd and like an employer security concern. If my employer found out I shared my company password with my spouse I woukd be fired. I don't think you should brag about this.

[Anonymous]

Yeah I mean - retirement accounts are individual accounts, by design.

IRA = Individual Retirement Account. It's literally in the name.

Sure, when people get divorced, assets that are titled in their individual names are often divided up as common property -- but that only happens in divorce. During a marriage people are still individual human beings, with individual rights same as anyone else.

It was entirely within the husband's discretion how much he would contribute to his retirement account, just like it was in the wife's discretion how much she would contribute to hers. Maybe she contributed more to her retirement account; maybe he paid more of the daily living expenses. Who knows? What we do know is that the soon-to-be-ex wife is aggrieved and dismayed realizing that she won't be getting as much $ as she was hoping for. And she literally is asking what the "recourse" is as if someone has wrong her.

[Anonymous]

It just hit me today, why are people so excited about 401k if it is taxed as ordinary income? If you are a low wage earner and/or file as HH, you hardly pay any taxes anyway.
Capital gains in regular investment account are 0% up to $63k as HH for 2024.
With 401k, all I see are fees, rules, ordinary income versus long term capital gains tax, early withdrawal penalty, RMD, lousy investment choices, hidden fees, fund fees, bad customer service.
'Contribution follow a schedule'? You can't stop them if market is hot and about the crash? What is good about this account for low wage earners or anyone?
Didn't want to start a new thread, but what gives. Any tax professionals here?
401k does keep people from learning to invest on their own. I'd still be working if I had let someone else do it for me and trust them.
BIL has 4 accounts somewhere according to him. All he knows is that he was shown a graph how much he should have at 67 and it sounded good. Sil borrowed form her 401k to pay rent for one month, and now has fees, penalties or taxes if she can't pay back.
Seems like a horribly account to me. It's like the employer, government, and the servicers are working together to screw workers.

[Anonymous]

Then where’s the money going? The divorce doesn’t only split the 401k

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This would have been obvious if you were more involved in finances. Your planner didn’t give you financial statements? You never looked at a paystub or w2?

If my husband ever demanded my pay stubs to dictate how much I would be contributing to my workplace retirement plan, I think I might divorce him on general principle.

True, but isn't it part of the regular partnership conversation? How do we as a team plan for retirement and what do we need to do each year?

Exactly!! Discussing finances should be a key part of any relationship. We don't dictate things to each other, we discuss and come to agreements. Also, financial issues are one of the top reasons for divorce. If you are not on at least a similar page regarding finances, your relationship will likely struggle.
So I cannot imagine being married to someone who doesn't want to max out retirement savings and college savings, if the income allows it (ie you can still live comfortably and have a few "extras")

[Anonymous]

Anonymous wrote:I don’t max out my 401k. I only contribute up to the employer match.
The tax advantage of 401ks is overrated. Most plans don’t let you invest in individual stocks. That’s a massive opportunity cost. My brokerage account has grown much faster than my 401k. I’m still coming way ahead after taxes.
I understand most people don’t have the same risk tolerance. I have been doing this for 15 years and feel very comfortable.

Also most people don't have the time or interest in learning to pick stocks. Majority are better using good mutual funds than trying to beat them. Most smart financial advisors recommend mostly mutual funds because fact is most cannot consistently beat the market with individual picks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have log-in access to spouse’s 401k account and online pay stubs. I’ve caught when employer mistakenly failed to make the 401k contribution for one paycheck (it was a widespread error).

It’s all both of our money, and I monitor it as such. Spouse has no qualms about this. They have access to my stuff as well.

This seems odd and like an employer security concern. If my employer found out I shared my company password with my spouse I woukd be fired. I don't think you should brag about this.

Our 401K logins are totally separate from anything related to actual work accounts. Your company is not very smart if your login for everything at work is thru the same system. Because yes it's normal for spouses to have the logins for 401Ks, Healthcare, and really anything benefits related