zlacker

>>toomuc+(OP)
Read somewhere that they get 12% match on 401k. No pensions, but there’s almost none of that in today’s world.

>>pixela+y3
Pensions seem nice to have, but IMHO, it's generally better for employer and employee when compensation is paid immediately. The accounting is simpler, accountability is easier, and there's no long term entanglements.

>>toast0+F5
What i don't understand about 401k is why is there such a strict limit on personal contributions, but employer can contribute significantly more? It's all compensation one way or another, why shouldn't I be able to allocate my compensation how I please?

>>hamand+zd
Income contributed to a 401k is not taxed at the time of earning. Not putting a limit on contributions would mean you could pay very little income tax. A wealthy person making 200k a year could contribute 100k to their 401k and more than halve their total income tax paid.

>>Manuel+si
But OP's point is that the 200k a year person could instead negotiate a 100k salary with an additional 100k into the 401k (by the employer) and that would be allowed.

Edit: Although it does appear there is a cap to the employer's contribution ($69,000 for 2024 [1]). But I think the general point still stands, why bother to have employer and employee limits.

[1]: https://www.irs.gov/retirement-plans/plan-participant-employ...

>>lesuor+Fj
Well… they could negotiate $70k/yr from the employer, and that would be allowed (in 2025) without further employee contributions (as that hits the total max contribution limit).

A $200k/yr employee with no employer contribution would be limited to $23,500 contribution (in 2025 limits).

[edit] actually that’s not quite true, though, because IIRC contribution rules have to be uniform, to avoid horse-shit like maxing out upper management at $70k and contributing nothing for lower-level employees, limiting them to $23.5k tax-advantaged no matter how much hard try to save, I.e. to prevent the whole damn scheme from benefiting mostly the already well-off more than it’s probably going to regardless.