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FedEx Freight | Pension And 401

What I don't get, is how people don't understand the 401. If you put 6% of your annual salary in, then under the new plan, Fxf will put in 8% of your annual salary. That's 14% between you and the company...
 
Streaker69 said:
That was not your point. In fact, I haven't seen you make that claim once. You said my math was "fuzzy" and then you told ST it was still wrong and said some other nonsense that doesn't make sense.
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Okay this is what you said.

If you make 100k and invest 6% (6,000), FedEx will invest 4,800.

Then someone else said.

You do realize the 401 match is 8% of your annual salary? So if you make 100k, under the new plan the company match would be $8,000. Plus the $6,000 you put in that's $14,000 per year.
Then I said how did 4800 become 8000?
Once again fuzzy math.
 
JustBayIt said:
I'm a bit torn. Im a finance nerd and I've run all the sims for my circumstances and retirement date and the 401k with the 8% match is more beneficial. However I know the company can modify or even suspend its match at any time. They can do the same with the pension but that's more of a PR and employee outcry mess. Reducing or eliminating matches on 401ks indefinitely/temporarily has been standard for 20 years for corps during rough times.

For those that started younger and will hit the higher pension contributions earlier will have different results or those that choose to work in their later years.

I was pretty gung ho on the 401k last year so I'm a bit happy o have some extra time to decide.

If FXF isnt a long term play for you, the 401k with the 8% match is a no brainer.
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401K is always a no brainer. Max out your contribution pre tax. The company match is free money. All of it grows tax free. Best of all, it belongs to you. You choose what invest in. The best choice, my opinion, is an S&P 500 index fund.
 
silent trucker said:
What I don't get, is how people don't understand the 401. If you put 6% of your annual salary in, then under the new plan, Fxf will put in 8% of your annual salary. That's 14% between you and the company...
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Got ya... I understand what you're saying now. Amazing the clarity you get when you're home. I think you're right and it makes sense.
 
silent trucker said:
I make 100 k, and the company match is $3,500 on that. The new 401, the match would be $8,000. You guys are trying way too hard to find a way to think you're getting screwed. For newer, younger employee's the new 401 is a great plan. For us older folks, I'll keep the old 401 and the pension, because I get 6% of my annual salary in the pension, in addition to the 3.5% in the 401.
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I’m leaving mine the same too been here too long will make more that way
 
One thing I never hear anyone else talk about is the ROI difference between the 401k and pension plan. All I ever hear is people say the 401k is a 8% match and the pension is 3% plus the 3.5% match in the old 401k. This is assuming people are in the lower age plus service ranges so are just looking at the 1.5% gain but the gain is far more superior than that.

The pension funds are not invested in the stock market like your 401k. And the pension is only guaranteeing you a paltry 4% return per year (1% quarterly compound interest). A person making 100k a year would currently have 3k per year placed into the pension plan. At 4% ROI that would grow to 184k over a 30 year period. The same 3k If invested in the Snp 500 at an 8% average returned (nominal rate has been 11% over past 30 years) you are yielding 397k. So tell me again which one you'd rather have.

I broke down the math in excel and the 401k option is far superior for my age group but the bell curve starts to sway around age 42. I used age 21 as a starting point to compare apples to apples. Everyone's mileage will vary depending on how many years you have and how many years remain before those yearly pension payments start to go into the 6% range. Everyone also needs to pick their target return rate and take into account sequence risk but overall I'll take the 401k option all day over the pension.

The pension plan can be a good hedge against a market downturn so it serves a secondary investment vehicle, but I would not rely on any asset producing 4% yearly yield as a growth vehicle.

The major downsides I see are if and when they cut down on the 401k match as we know at some point they will.
 
JustBayIt said:
One thing I never hear anyone else talk about is the ROI difference between the 401k and pension plan. All I ever hear is people say the 401k is a 8% match and the pension is 3% plus the 3.5% match in the old 401k. This is assuming people are in the lower age plus service ranges so are just looking at the 1.5% gain but the gain is far more superior than that.

The pension funds are not invested in the stock market like your 401k. And the pension is only guaranteeing you a paltry 4% return per year (1% quarterly compound interest). A person making 100k a year would currently have 3k per year placed into the pension plan. At 4% ROI that would grow to 184k over a 30 year period. The same 3k If invested in the Snp 500 at an 8% average returned (nominal rate has been 11% over past 30 years) you are yielding 397k. So tell me again which one you'd rather have.

I broke down the math in excel and the 401k option is far superior for my age group but the bell curve starts to sway around age 42. I used age 21 as a starting point to compare apples to apples. Everyone's mileage will vary depending on how many years you have and how many years remain before those yearly pension payments start to go into the 6% range. Everyone also needs to pick their target return rate and take into account sequence risk but overall I'll take the 401k option all day over the pension.

The pension plan can be a good hedge against a market downturn so it serves a secondary investment vehicle, but I would not rely on any asset producing 4% yearly yield as a growth vehicle.

The major downsides I see are if and when they cut down on the 401k match as we know at some point they will.
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Just bay it —- that’s why I’m keeping mine the same too many years here!!
 
JustBayIt said:
One thing I never hear anyone else talk about is the ROI difference between the 401k and pension plan. All I ever hear is people say the 401k is a 8% match and the pension is 3% plus the 3.5% match in the old 401k. This is assuming people are in the lower age plus service ranges so are just looking at the 1.5% gain but the gain is far more superior than that.

The pension funds are not invested in the stock market like your 401k. And the pension is only guaranteeing you a paltry 4% return per year (1% quarterly compound interest). A person making 100k a year would currently have 3k per year placed into the pension plan. At 4% ROI that would grow to 184k over a 30 year period. The same 3k If invested in the Snp 500 at an 8% average returned (nominal rate has been 11% over past 30 years) you are yielding 397k. So tell me again which one you'd rather have.

I broke down the math in excel and the 401k option is far superior for my age group but the bell curve starts to sway around age 42. I used age 21 as a starting point to compare apples to apples. Everyone's mileage will vary depending on how many years you have and how many years remain before those yearly pension payments start to go into the 6% range. Everyone also needs to pick their target return rate and take into account sequence risk but overall I'll take the 401k option all day over the pension.

The pension plan can be a good hedge against a market downturn so it serves a secondary investment vehicle, but I would not rely on any asset producing 4% yearly yield as a growth vehicle.

The major downsides I see are if and when they cut down on the 401k match as we know at some point they will.
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the company can cut back the 401k match (and they will) a lot easier than messing with the pension.
 
SMOKESTACK said:
19% 401K deduction every check , lowering my taxable income .
Money I did not see was money we did not have , it paid off well.
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I did the same thing when I was younger. I took whatever the yearly salary increase was going to be and upped my contribution. In 2009 when they took away the match, I went to a financial advisor and opened 2 Roth IRA accounts, one for me and one for the CFO. If I’m not getting the match, I wanted money to go into an account that has no tax on the growth. I used some last year to pay off the new house and I’m using some this year to build a new barn, all tax free.
 
Razorblade said:
401K is always a no brainer. Max out your contribution pre tax. The company match is free money. All of it grows tax free. Best of all, it belongs to you. You choose what invest in. The best choice, my opinion, is an S&P 500 index fund.
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Actually, you are taxed on the gain when you start to draw on it at the capital gains rate, which is why that rate being low is so important. If you contributed to a Roth IRA, which is after tax money, there is no tax on the gain.
 
almost13ranch said:
Actually, you are taxed on the gain when you start to draw on it at the capital gains rate, which is why that rate being low is so important. If you contributed to a Roth IRA, which is after tax money, there is no tax on the gain.
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Wrong answer...Your 401(k) withdrawals are taxed as income. ... Any money you withdraw from your 401(k) is considered income and will be taxed as such, alongside other sources of taxable income you may receive. As with any taxable income, the rate you pay depends on the amount of total taxable income you receive that year.Jan 21, 2021
 
silent trucker said:
Wrong answer...Your 401(k) withdrawals are taxed as income. ... Any money you withdraw from your 401(k) is considered income and will be taxed as such, alongside other sources of taxable income you may receive. As with any taxable income, the rate you pay depends on the amount of total taxable income you receive that year.Jan 21, 2021
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Correct! IRA and 401(K) is a deferred tax retirement vehicle. The money goes in tax free and comes out as fully taxable income.
If you also have taxable security accounts like mutual funds, there is no tax on long term capital gains if your taxable income for the year is less than $80,000. Long term is a year and a day.
 
silent trucker said:
Wrong answer...Your 401(k) withdrawals are taxed as income. ... Any money you withdraw from your 401(k) is considered income and will be taxed as such, alongside other sources of taxable income you may receive. As with any taxable income, the rate you pay depends on the amount of total taxable income you receive that year.Jan 21, 2021
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Razorblade said:
Correct! IRA and 401(K) is a deferred tax retirement vehicle. The money goes in tax free and comes out as fully taxable income.
If you also have taxable security accounts like mutual funds, there is no tax on long term capital gains if your taxable income for the year is less than $80,000. Long term is a year and a day.
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Not entirely 100% correct. If any contributions to an IRA include after tax money you have to calculate your basis in those accounts via a Form 8606. Otherwise you'll end up being taxed twice on the same money.
 
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