I started my current job recently and on Jan 1 will be eligible to participate in the company 401k. However, the situation is different from past employer's 401k offerings.
Firstly, there is no company match. Sounds bad, but it isn't. Instead, my company does automatic profit-sharing via 401k accounts on a yearly basis. They contribute profits (not guaranteed, of course, each year) regardless of employee participation in the plan. So I can do nothing and will automatically receive yearly profits into my account. I'm told this typically has been anywhere from 2-20% of salary for a given year, and that there has been profit sharing everyone of the past 10 years. That's good.
Secondly, the plan has a Roth 401k option. So first I have to decide if I want to contribute my own money each month. And then if I want to realize tax savings now, or go the Roth route and reap the benefits later. I know there's lots of advice for people to skip company 401ks that don't match. Or at least to fund IRAs to their maximum annual limit first. In my case, I already max out my IRA each year so I know I want to participate into the 401k plan. I just am not sure which version to use. Or I can split the difference and contribute money to both the regular and Roth versions. And I can switch it up 4 times a year if need, in case I don't like me immediate decision. I'll probably just start it with non-Roth for now to reap the tax savings.
Ultimately I need to create a 2012 game plan on how to distribute extra monthly money to 4 areas: retirement, kid's college funds, dream house down payment fund, and beer money. And then further refine the retirement amounts into the various IRA, Roth and 401k accounts.
How do you break down your extra money into these areas? Is it working for you? Do you need to re-address it for 2012?
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