Author Topic: 401k Investment Option  (Read 10421 times)

Offline dc9137

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401k Investment Option
« on: November 02, 2011, 06:19:13 PM »
My company uses Fidelity to manage our 401k.  I contribute 6% in order to get the 3% match from the company, no more.  My question is regarding a cash option...Would the Federated U.S. Treasury Cash Reserves Institutional Shares (FED UST CASH RSV IS) be my best choice right now?  They say "The fund invests only in a portfolio of short-term U.S.Treasury securities that pay interest exempt from state personal income tax." I'm not ready to pay all the penalties and withdraw but I'd like to get as close to cash as possible.  Anybody familiar with it? Thanks in advance!

Offline bigbear

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Re: 401k Investment Option
« Reply #1 on: November 02, 2011, 10:01:48 PM »
That's probably as close to cash as your company offers.  If you want to be in cash, then that's probably your only option in your 401k.

Offline slingblade

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Re: 401k Investment Option
« Reply #2 on: November 03, 2011, 10:29:02 AM »
Something to think about with your 401k is how long it takes to vest your 3%.  If it is 6yrs and you are not going to be there that long then Roth might be your friend.  Vesting is a part of the equation that a lot of people overlook.  If you risk your 6% for the CHANCE to get 3% in 6yrs = go re-think your options.

Offline dc9137

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Re: 401k Investment Option
« Reply #3 on: November 04, 2011, 05:10:01 AM »
Good point @slingblade.  I hadn't considered that.  My benefits website says "You are 100% vested in the Company's matching contributions and any earnings after three years of continuous employment."  I could interpret that 2 ways:
  • Once I work for the company for 3 years I am vested and any company contributions are mine, even on a forward basis
  • I have have to remain employed for 3 years from the time they make a given contribution to be vested in that contribution

Anybody have experience with this?  I'm going to call Fidelity later today to get their explanation.

Offline KellyAnn

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Re: 401k Investment Option
« Reply #4 on: November 04, 2011, 05:30:45 PM »
My husband's 401 is also with Fidelity.
The option you gave is the best option in his plan (can't say if you and he have all the same options, since you don't work for the same company).
It's not an ideal option, but it's the best available in the plan, and it's where I've suggested he put his money.

The only suggestion I can give is to talk to your Human Resources/Benefits people (whoever is the liaison to Fidelity in your company) and tell them you'd like to see a cash equivalent option in your 401k (my company actually offers an FDIC insured savings account within our 401k).
Then try talking to some of your coworkers, explain your concerns about losing your capital and suggest that they talk to HR/Benefits as well.  (I know several of my coworkers have moved into the "safer" options after having lost lots of money in the crash a few years ago.)

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Re: 401k Investment Option
« Reply #5 on: November 04, 2011, 05:51:33 PM »
My wife's 403b plan is with Fidelity.  We transferred all our assets into their Fidelity Cash Reserve Fund (FDRXX) early this year anticipating the market dropping and saved almost $8K.  Not sure if it is time to jump back in or not.

Offline Saint

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Re: 401k Investment Option
« Reply #6 on: November 04, 2011, 07:08:59 PM »
vesting normally means from date of hire. that said, my company vests in the pension after three years - BUT its not 3 years from day one - its 3 years from the majority of a year...huh? exactly. Basically, you need 6 months or more in a calendar year to start your year (still no clue bird pooping on your shoulder? mine either - so here's the example)
I got hired in Oct 04, so I thought I'd be vested in Oct 07 - not so fast Lee Corso...I wasn't "vested" until Jan 08...because I didn't have enough time in the company in 04 to count towards that year. If I'd been hired in June or prior of 04 I'd have been vested in Jan 07...so it works for you in one case, against you in another.
all that said, I just wanted to whine - go check with HR, I found out my HR folks are very helpful and just as frustrated and really want to help out.

Offline dc9137

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Re: 401k Investment Option
« Reply #7 on: November 04, 2011, 07:12:54 PM »
Thanks @Saint.  I've been there 6 1/2 years so I should be covered.

Offline slingblade

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Re: 401k Investment Option
« Reply #8 on: November 07, 2011, 02:26:39 PM »
Keep in mind that this is (usually) a rolling date.  For example, you have been there for 6.5 yrs so your first 3.5 yrs of match is vested.  It is like a constant carrot hanging 3 years in your future - aka golden handcuffs. 

endurance

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Re: 401k Investment Option
« Reply #9 on: November 07, 2011, 03:17:30 PM »
Keep in mind that this is (usually) a rolling date.  For example, you have been there for 6.5 yrs so your first 3.5 yrs of match is vested.  It is like a constant carrot hanging 3 years in your future - aka golden handcuffs.
I've actually never seen a rolling vesting.  Not saying it doesn't happen, but most of the programs I've seen you are vested after three years, period. 

Offline Saint

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Re: 401k Investment Option
« Reply #10 on: November 08, 2011, 05:19:38 AM »
ditto @ Endu - vested is vested....but Sling may have found a devious new tool

Offline KellyAnn

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Re: 401k Investment Option
« Reply #11 on: November 08, 2011, 04:16:10 PM »
Our company has a sort of rolling vesting, but it's 20% vested at one year, 40% at two years and so on.  Full 100% vested (in the company match) at five years.

Offline bigbear

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Re: 401k Investment Option
« Reply #12 on: November 08, 2011, 04:32:54 PM »
The DOL and IRS have rules for how long vesting can take.  I believe it's up to 6 years, but most plans vest faster.  DOL/IRS also have rules on how long a plan can take to give you your company match.  I don't recall the exact timeframe, but it's within a year.  But many plans will give you your match on a per pay period basis.  Some will do it on an annual basis, either within the same year or shortly after the plan year is over.

DC: Based on the wording you posted, all company match is fully vested after 3 years of employment. 

Saint: Vesting is typically based on elapsed time (ie from the date of hire).  But some plans calculate vesting based on hours of service (usually 1000+ hours).  So if you don't accrue 1000 hours in one year, then you won't accrue vesting for that year.

Slingblade:  Good point regarding the vesting schedule.  Roth takes 5 years before you can withdraw it.  And no match (unless Roth is offered and matched within your 401k).

Offline Crexis

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Re: 401k Investment Option
« Reply #13 on: November 10, 2011, 07:46:10 PM »
The closest thing to cash in any 401k plan is a Money Market fund or 'Stable Value' fund. They try (and virtually of the time) succeed in not 'breaking the buck'. That means they maintain a stable Net Asset Value of $1 per share.

Offline Tyler Durden

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Re: 401k Investment Option
« Reply #14 on: December 04, 2015, 08:04:26 AM »
Just got a message from Fidelity, any money I had in the MM fund has been transferred to the new fund investing in government bonds.  Money Market no longer an option.  Great.

Offline callmesarah

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Re: 401k Investment Option
« Reply #15 on: February 11, 2016, 08:25:03 PM »
My husband has a traditional 401K  and we're trying to determine what the safe harbor is called....
I believe i figured it out --->JPMorgan Government Bond Fund..... 'oh joy"
We haven't moved the money yet, but it says there is a 30 day holding "to block frequent trading"

We're new to this and any advice or knowledge would be great.

Thanks :)

Offline DWSDVSE

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Re: 401k Investment Option
« Reply #16 on: February 12, 2016, 04:58:22 AM »
Your plan's website should give you a listing of funds you can invest in. If you can post those, it would help rat out anyone with a odd name

Offline chrisdfw

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Re: 401k Investment Option
« Reply #17 on: February 12, 2016, 01:00:26 PM »
Keep in mind that this is (usually) a rolling date.  For example, you have been there for 6.5 yrs so your first 3.5 yrs of match is vested.  It is like a constant carrot hanging 3 years in your future - aka golden handcuffs.

This is not really allowed in qualified plans

Offline 12th man

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Re: 401k Investment Option
« Reply #18 on: February 12, 2016, 01:25:39 PM »
thats alot better than i have available in my Fidelity plan. I moved most everything to the safest options i had a month or tow ago.

There is an actual CASH option most everybody can do. this depends on how you plan is set up, but in my case i can take a personal loan up to half my vested amount. you then pay yourself back at 6% interest. But you get to keep that interest. So if you took this option, and simply put it in a savings account. you would basically have a cash option which would slowly tickle back into the closest thing you have available on your plan as you pay it back. the downside is you would have to add cash to it to account for the interest, but you don't loose that.

If you can consolidate other debt buy using this method, it is even better.

This is of course only a good idea if you are expecting the market to perform poorly.

Offline DWSDVSE

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Re: 401k Investment Option
« Reply #19 on: February 12, 2016, 01:39:30 PM »
You also have to watch out that you don't lose your job, doing that too. Unless you have all the money and interest in an account somewhere. The loan is really tied to your wages. If you're not able to pay the amount due, you may get to take the loan as an early distribution as per our friends at the IRS.