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But... there's no way you could possible have 300k after 2 years of contributions to a 401k. If you were maxing it you'd have about 40. Unless you've made a ty

But... there's no way you could possible have 300k after 2 years of contributions to a 401k. If you were maxing it you'd have about 40. Unless you've made a typo and you mean 20 years? (in which case, now 300k is below maxing out, but slightly closer (although with returns it should be a good bit more))

mikestew 3y ago
But... there's no way you could possible have 300k after 2 years of contributions to a 401k. You’re right…but that’s not what was said. After 2 years, all they had was $13K. But if they’d been contributing for 20 years like they should have been doing (because they’re 40, not fresh out of college), they’d have $300K. IOW, $13K is nothing to brag about if you’re 35 and working software jobs your whole career. At least that’s how I read it.
suoduandao3 3y ago
I'm guessing the friend started late.
- bluGill 3y ago
  He was self employed for a while, and worked for small companies that didn't even offer a 401k before that. So yes he started late which was/is unfortunate for him. That he didn't really have good chances to get on track is understandable, but he is still way behind. He again is working for a small company without 401k options, so I suppose he will retire at 68 with $50k in the 401k and then be surprised there isn't enough money there to last a few months. At least he should get SS like many.
stouset 3y ago
> But... there's no way you could possible have 300k after 2 years of contributions to a 401k. If you were maxing it you'd have about 40. This is a bit of an aside, but… this isn't quite correct. Your (combined) individual contribution limit to a Traditional 401(k) and Roth 401(k) is $22,500 for this year. That doesn't include employer contributions. It also doesn't include after-tax contributions. The total combined limit for all contributions from all sources is $66,000 this year. So you could max out your Traditional 401(k), have your employer contribute $4,000, and then contribute an additional $39,500 to the after-tax portion. The after-tax portion has no advantageous tax treatment whatsoever. It's identical to putting that same amount into a brokerage account… except for one detail. If you employer has a plan which allows for in-service distributions, you can immediately roll over after-tax contributions into the Roth portion of your account. This enables individuals working for companies with very good benefits packages to save an incredible $66,000/yr into tax-advantaged retirement accounts. So assuming no growth, you can actually legally put $132,000 into a 401(k) in two years. It is thoroughly fucked up that the majority of Americans who don't work for giant companies with gold-plated benefits packages only have access to $6,500 in tax-advantaged savings through IRAs.
- sgerenser 3y ago
  Yeah, I have no idea why the government doesn't just completely scrap all IRA and 401k limits, and just combine them into one total "tax-advantaged account contribution cap" of X dollars (maybe $30K or so, indexed to wage inflation).
- earthling8118 3y ago
  OK. So let's say I put all that money in each year. When does it benefit me after I've become homeless and hungry? After rent, food, insurance, medical bills, student loans, and taxes there's nowhere near that kind of money left. Let alone if you're the kind of person that enjoys recreational activities.

mikestew 3y ago

But... there's no way you could possible have 300k after 2 years of contributions to a 401k. You’re right…but that’s not what was said. After 2 years, all they had was $13K. But if they’d been contributing for 20 years like they should have been doing (because they’re 40, not fresh out of college), they’d have $300K. IOW, $13K is nothing to brag about if you’re 35 and working software jobs your whole career. At least that’s how I read it.

suoduandao3 3y ago

I'm guessing the friend started late.

bluGill 3y ago
He was self employed for a while, and worked for small companies that didn't even offer a 401k before that. So yes he started late which was/is unfortunate for him. That he didn't really have good chances to get on track is understandable, but he is still way behind. He again is working for a small company without 401k options, so I suppose he will retire at 68 with $50k in the 401k and then be surprised there isn't enough money there to last a few months. At least he should get SS like many.

stouset 3y ago

> But... there's no way you could possible have 300k after 2 years of contributions to a 401k. If you were maxing it you'd have about 40. This is a bit of an aside, but… this isn't quite correct. Your (combined) individual contribution limit to a Traditional 401(k) and Roth 401(k) is $22,500 for this year. That doesn't include employer contributions. It also doesn't include after-tax contributions. The total combined limit for all contributions from all sources is $66,000 this year. So you could max out your Traditional 401(k), have your employer contribute $4,000, and then contribute an additional $39,500 to the after-tax portion. The after-tax portion has no advantageous tax treatment whatsoever. It's identical to putting that same amount into a brokerage account… except for one detail. If you employer has a plan which allows for in-service distributions, you can immediately roll over after-tax contributions into the Roth portion of your account. This enables individuals working for companies with very good benefits packages to save an incredible $66,000/yr into tax-advantaged retirement accounts. So assuming no growth, you can actually legally put $132,000 into a 401(k) in two years. It is thoroughly fucked up that the majority of Americans who don't work for giant companies with gold-plated benefits packages only have access to $6,500 in tax-advantaged savings through IRAs.

sgerenser 3y ago
Yeah, I have no idea why the government doesn't just completely scrap all IRA and 401k limits, and just combine them into one total "tax-advantaged account contribution cap" of X dollars (maybe $30K or so, indexed to wage inflation).
earthling8118 3y ago
OK. So let's say I put all that money in each year. When does it benefit me after I've become homeless and hungry? After rent, food, insurance, medical bills, student loans, and taxes there's nowhere near that kind of money left. Let alone if you're the kind of person that enjoys recreational activities.