Wifes new employer, Max out 401 or Employee Stock purchase
Moderator: Aitrus
Wifes new employer, Max out 401 or Employee Stock purchase
So my wife is waiting on a job offer with a company (KForce NAS KFRCE).
I of course have dug deep into their retirement benefits to get all the information I could. So here are the offerings
401K offered, Company match is not defined and instead determined by the Board of directors at year end. Talking to some of my old college friends who work there they say it has averaged around 3%. Vesting schedule is a bit crummy (but makes sense from a business standpoint) you are not 100% vested until 5 years in.
Employee Stock Purchase plan - So in a rolling 3 month period the employee can purchase shares of stock commission free and at a 5% discount on the closing price on that 3 months rolling period.
So what do you think is the best path forward here, Max the 401K (18K) or try to contribute evenly to both or what? Any questions I should be thinking of asking, I assume the ESPP option is done post tax money, and I would be interested in finding what happens when/if she leaves this employer.
Ill keep reading through on what the options are and what funds are available to her in the 401K plan.
I of course have dug deep into their retirement benefits to get all the information I could. So here are the offerings
401K offered, Company match is not defined and instead determined by the Board of directors at year end. Talking to some of my old college friends who work there they say it has averaged around 3%. Vesting schedule is a bit crummy (but makes sense from a business standpoint) you are not 100% vested until 5 years in.
Employee Stock Purchase plan - So in a rolling 3 month period the employee can purchase shares of stock commission free and at a 5% discount on the closing price on that 3 months rolling period.
So what do you think is the best path forward here, Max the 401K (18K) or try to contribute evenly to both or what? Any questions I should be thinking of asking, I assume the ESPP option is done post tax money, and I would be interested in finding what happens when/if she leaves this employer.
Ill keep reading through on what the options are and what funds are available to her in the 401K plan.
Re: Wifes new employer, Max out 401 or Employee Stock purch
I would focus of maximizing the 401K and then purchasing stock when you have extra money to invest and price is reasonable or down. I don't know much about the company but primary customer is federal government and earnings would be subject to contract/subcontract work they get. I think the advantage of the ESPP is similar to any stock in that if held for more than 1 year, you would be taxed at the capital gains rate and should not have the limitation/penalties of retirement accounts
Re: Wifes new employer, Max out 401 or Employee Stock purch
You have to decide what the greater advantage is, 5% immediate gains or TSP average gains over time (compared to the stock over time).
It will all depend on how much time you have until retirement and how well the company stock does compared to the market. There is no clear cut answer for this one.
However, as you get closer and closer to retirement, it becomes better and better to take the immediate 5% value.
It will all depend on how much time you have until retirement and how well the company stock does compared to the market. There is no clear cut answer for this one.
However, as you get closer and closer to retirement, it becomes better and better to take the immediate 5% value.
Re: Wifes new employer, Max out 401 or Employee Stock purch
Are you buying the company stock in the 401k? What are the investment options in the 401k? Can you pick your stocks and ETFs or are you forced to choose from a small offering?
Chances are if you're limited, those offerings are mutual funds with high fees.
Chances are if you're limited, those offerings are mutual funds with high fees.
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. - Pudd'nhead Wilson's Calendar
Re: Wifes new employer, Max out 401 or Employee Stock purch
Good questions Arries which I will run by my wife to ask the HR person (we will wait until the offer comes in ).
Regarding the fund options, that will be the first thing I will check once she gets access to the login. KForce has been around for over 50 years and is a fairly decent sized company so my hope is they have a "good" selection of funds, meaning I am ok with less to choose from if the costs are lower.
The issue I face right now is I have no idea how to fundamentally look at a stock beyond the whole P/E less than 20 and what not. Looking at the stock over the year it has traded between 16 & 24, 2.49% dividend. Been a long time since I have dug into a company fundamentals since I have been all index funds for the past few years. And to be honest I was never very good at it either
Regarding the fund options, that will be the first thing I will check once she gets access to the login. KForce has been around for over 50 years and is a fairly decent sized company so my hope is they have a "good" selection of funds, meaning I am ok with less to choose from if the costs are lower.
The issue I face right now is I have no idea how to fundamentally look at a stock beyond the whole P/E less than 20 and what not. Looking at the stock over the year it has traded between 16 & 24, 2.49% dividend. Been a long time since I have dug into a company fundamentals since I have been all index funds for the past few years. And to be honest I was never very good at it either
Re: Wifes new employer, Max out 401 or Employee Stock purch
Timber82 wrote:Good questions Arries which I will run by my wife to ask the HR person (we will wait until the offer comes in ).
Regarding the fund options, that will be the first thing I will check once she gets access to the login. KForce has been around for over 50 years and is a fairly decent sized company so my hope is they have a "good" selection of funds, meaning I am ok with less to choose from if the costs are lower.
The issue I face right now is I have no idea how to fundamentally look at a stock beyond the whole P/E less than 20 and what not. Looking at the stock over the year it has traded between 16 & 24, 2.49% dividend. Been a long time since I have dug into a company fundamentals since I have been all index funds for the past few years. And to be honest I was never very good at it either
My suggestion for what it's worth is to maximize tax advantage accounts.
First, contribute to every account up to the max match offered (if you can know what it will be).
Chances are her options (if she can't invest in ETFs such as Vanguards) are going to have higher fees than the TSP.
Because of that after you have both contributed enough for the match you maybe better off just upping your contribution to the TSP or opening an IRA and contributing to that. An IRA will give you the option of investing in lower cost ETFs.
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. - Pudd'nhead Wilson's Calendar
Re: Wifes new employer, Max out 401 or Employee Stock purch
With both of you working, will you be under the dollar threshold for doing outside Roth?
After doing employer match, many advise funding Roth, before adding more to 401(K). In some cases, the tax deferred contributions may help keep you under the threshold for tax purposes.
After doing employer match, many advise funding Roth, before adding more to 401(K). In some cases, the tax deferred contributions may help keep you under the threshold for tax purposes.
Re: Wifes new employer, Max out 401 or Employee Stock purch
Didn't know there was a threshold, but I doubt it combined wed be around 120K I am currently contributing on track to 18K in my TSP this year.
Sucks that it is unknown whether or not her employer will do a match or not.
She does have a traditional IRA with Vanguard that we opened up for her with her 401K rollover check from her last employer.
Sucks that it is unknown whether or not her employer will do a match or not.
She does have a traditional IRA with Vanguard that we opened up for her with her 401K rollover check from her last employer.
Re: Wifes new employer, Max out 401 or Employee Stock purch
You don't have to worry until your combined income gets up to $186K, when it starts to phaseout for MFJ ($118K for Single) http://www.rothira.com/2017-roth-ira-limits-announced
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