Okay, so I recently started a new job and I'm working on getting everything setup. I'm 25 years old, and have a little bit of money in a deferred comp plan from my previous employer and retirement as well that I plan on rolling all of it over into the 401k that I'm now enrolled in. My current plan that I'm just starting has my employer putting in $2 for every $1 that I contribute for up to 3% of my salary. I set the 401k up to be 10% of my pay. My company also offers employee stock purchase plan at a 15% discount. They're a biotech company that manufactures primarily MS medicine, and so far have been extremely successful and are growing rapidly. It's called Biogen Idec (BIIB). I must admit that I'm not very knowledgeable about things like this and would greatly appreciate some guidance, especially with the stock market. I currently have it set up for 3% of pay to be invested in the employee stock purchase plan. I don't know if that's too much or not enough... I have the ability to increase or decrease both the amounts for the 401k and employee stock purchase if I have been too aggressive and can't afford to contribute this much.
If you can afford it, honestly i suggest putting the max amount possible into your 401k. I believe that is 17.5k a per calender year. On top of your employer match which is about typical, it will add up pretty fast. I wish I would have gone this route sooner. My employer does the discounted stock, I just do $100 a check. It is all going to depend on your finances and what you can reasonably afford to stash away. At your age, I would definately get into an aggressive growth plan in your 401k.
Not rolling your prior $ into your current employer plan may give you more options (investments, acct types). As a ROT 4% in a particular stock helps mitigate risk by diversifying your portfolio, if you buy and hold your company stock its a consideration. Min for the 401k is the match or 6%, more if you can afford it but consider a roth too, as tax rates will likely climb over your life. As mentioned if you can put more in or increase your % as you get raises, it piles up. Whatever you do, though, DON'T take a loan from the 401k-a liability if you leave, you pay heavier tax and its lost opportunity income.
The thing is, is that the prior account I have is a state of IL governmental deferred comp plan, so there isn't any way for me to keep contributing because I get special tax breaks from it and since I'm no longer working in government it can't grow anymore other than the investing that Trowe Price does. It doesn't have very much money in it ($750) because I was only there for about 7 months. I do have retirement money with the state as well through their state employee retirement system, and to be honest I'm not so sure I trust IL with my money.
On the part about taking loans from 401k. You can actually withdraw up to half of what you have in your 401k as a loan and not pay taxes on it. I have done this in the past when the stock market was going down. I would withdraw the max into a loan and all you do is make payments (of your choice, like 5$and when stock market goes back up just pay off your loan.
