Thursday, May 25, 2006

Today was the (little-announced and not-reminded) first day...

Doug, could you put up this paragraph and link? You can put my name
on it.

Mark Galassi
___________________________________

LANS has done little to inform us about the transfer from UC 4??(?) to
the LANS 401(k) -- there has been little info on rollovers, and the
prospectus from Fidelity could have more info.

Still, today was the (little-announced and not-reminded) first day in
which we could set up contributions on the Fidelity web site, and I'll
bet a lot of people are not set up to do so. Since the market is
correcting down, those people who like to invest as the market goes
down might want to start regular contributions as soon as possible, so
I urge everyone to set up their Fidelity web account so they have the
option to do so.

When I went in there I saw that they give you the option of
"after-tax" contributions. I've never seen this, and it did not
impress me much since it has none of the capital gains tax advantages
of the Roth, and even worse: investment income at retirement might be
your ordinary tax bracket instead of the capital gains rate.

I looked around a bit, and found that some guy in his blog did one
example calculation. I don't know how good his calculation is, or if
it applies to us, but maybe it would make for a useful thread on this
blog, as people try to customize it to the LANS 401(k) after-tax
approach.

http://2million.blogspot.com/2006/05/are-after-tax-401k-contributions-good.html

Comments:
LANS, LLC is too busy calculating how to maximize their own profit to provide the information that would allow remaining LANL staff to attempt to do the same. RIFs will help, of course.

LANS, LLC, that is.
 
For those in TCP2, the most important reason for setting up the 401(k) ASAP is that you risk leaving LANS's 6% matching contributions on the table, starting with the June 8 (admittedly small) paycheck. To get the maximum possible matching contribution from LANS, you need to contribute at least 6% of every single paycheck to the 401(k). There is no "makeup" possible for any missed paychecks.

BTW, it was quite easy and only took a couple of minutes to set up the 401(k) deductions on the Fidelity website, which actually opened a day early, on 5/24.
 
Thanks Mark!

FYI the place to enroll is

netbenefits.fidelity.com.


For those who have no clue which funds to
choose, here's a few points:

1) Just choose something so you get the 6%.
The stable value fund is supposed to not lose money. The inflation protected bond fund probably won't go down too dramatically either.

2) Conventional wisdom is to put most or all of
your money into the Freedom fund with the year
closest to when you expect to retire (2015, 2020, etc.)

3) Or just spread your money out over a bunch of funds.

4) If interest rates go up, bonds will go down.
 
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