After writing this post where I was told by my new employer that there may be a 30, 60, or 90 day wait for my new 401k plan, I already got everything setup. I received an email yesterday that I could go ahead and set it up. I logged on and tried to set everything up but the process failed. I called the toll free number on the error page and they had me fix a few things and try on a different browser and presto!
I setup a 50% contribution rate with the goal to bank the 2025 and 2026 maximum as fast as possible. There won’t be any match so there is no need to pace these contributions over the year.
Maximums
- The maximum for 2025 is $23,500 for those under age 50 and $31,000 if you’re over 50.
- The maximum for 2026 is $24,500 for those under age 50 and $32,500 if you’re over 50.
If everything goes according to plan, I should be done with max $32,500 401k contributions for 2026 by end of Q1 2026. If I decide to retire early in 2026, I will have minimized my taxes as much as possible, if I stay the whole year, I’ll bank the back end pay.
Rule of 55
The premise of returning to work includes a gambit of using Rule of 55 to extract 401k funds without paying the penalty. Income taxes will still be due but avoiding the hefty 20% penalty is worth the hassle.
Rollovers
Now that my new account has been setup, I have already initiated a 401k rollover from my old employer. Unfortunately, they will be sending me a check which I will then need to mail to the new firm just like we were living in the 1800s! There was a recent story about a person losing $114,000 from his 401k when someone intercepted the check and cashed it. Now he is having a difficult time recovering those funds. You can read that story here.
Investments
The only downside to all over this so far are the horrible investment fund options inside the 401k offering. There needs to be some serious legislation that allows people to invest in whatever instruments they want inside a 401k instead of a list of horrible funds with bad fees, bad stocks and bad bonds.
Share The Wealth
Are you suffering from horrible 401k investment options? Let me know in the comments below.