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Started By
Message
Need help breaking down a job offer....
Posted on 12/21/15 at 8:54 pm
Posted on 12/21/15 at 8:54 pm
I've been unemployed since graduating in May (Bachelors in EE), so I accepted a job that I really couldn't negotiate for. The pay is only 20% more than what I was making 4 years ago, pre-degree. I'm making 20% LESS than my fellow graduates that were hired by Entergy/Shell. I'm really hoping that the benefits are better than average, but I have no idea:
The thing that stood out was "Simplified Employee Pension" plan. There is no 401k situation where you have to invest to get money. After 3 years, the company simply invests 20% of what you're making at the time into an IRA or something that I don't even know about. He also said that there are no penalties for taking money out. This seems like a pretty good deal, but I'm also kind of retarded. Would a typical 401k have been better?
The other big thing is health insurance. I have no idea what is the norm. Before costs started exploding, I was getting it all paid for by the employer. The company is paying 90% of a "Section 125 (Cafeteria) plan." Is that any good? Cafeteria sounds pretty shitty.
Thanks.
The thing that stood out was "Simplified Employee Pension" plan. There is no 401k situation where you have to invest to get money. After 3 years, the company simply invests 20% of what you're making at the time into an IRA or something that I don't even know about. He also said that there are no penalties for taking money out. This seems like a pretty good deal, but I'm also kind of retarded. Would a typical 401k have been better?
The other big thing is health insurance. I have no idea what is the norm. Before costs started exploding, I was getting it all paid for by the employer. The company is paying 90% of a "Section 125 (Cafeteria) plan." Is that any good? Cafeteria sounds pretty shitty.
Thanks.
6
Posted on 12/21/15 at 9:07 pm to THRILLHO
quote:
Simplified Employee Pension
This is something a very small company would offer IMO. They will likely change the plan by the time you are eligible FWIW. So, that's my cynical view as a small business owner. It's a way for the owners to sock away tax free money without maintaining a 401k and the rules that go along with it.
So, is this a small company, and are there any employees that have been there for three years and are eligible? If so, that's a good sign. Still, you are at a disadvantage as it doesn't sound like you have any method besides an IRA to save for retirement.
Posted on 12/21/15 at 9:07 pm to THRILLHO
What is the company's turnover rate? Why is your position that you are applying for vacant? What is the turnover rate for the position you are seeking?
Posted on 12/21/15 at 9:16 pm to TigerDeBaiter
quote:
So, is this a small company
Smallish, but well established and respected. I knew about them from a job I had in 2010/11, and assumed they were a lot bigger than they actually are (~20 employees). They do a lot of work for their size.
quote:
and are there any employees that have been there for three years and are eligible?
Almost everyone at the company has been there fairly long term.
Posted on 12/21/15 at 9:19 pm to Will Cover
quote:
What is the company's turnover rate? Why is your position that you are applying for vacant? What is the turnover rate for the position you are seeking?
Low. Don't know. I'd imagine low.
Another poster here used to work for the company and told me that he loved the company and that it's a great place to work for. If this simplified pension thing can be used by companies to simply dump them before they reach eligibility and avoid extra taxes, that's definitely not what this company is doing.
Posted on 12/21/15 at 9:32 pm to THRILLHO
quote:
Almost everyone at the company has been there fairly long term.
Well, then it sounds like a solid employee longevity program then. Like I said, I was going immediately to the possible negatives. Good luck.
And make sure you max out your Roth IRA and HSA if you have a HDHP to make up for the lack of 401K.
This post was edited on 12/21/15 at 9:33 pm
Posted on 12/21/15 at 9:34 pm to THRILLHO
SEPs are wonderful retirement plans for smaller employers.
They are actually IRAs funded by the employer. As such, withdrawals before 59 1/2 years of age and not rolled over are subject to the 10% penalty tax in addition to regular income taxes. There is no vesting schedule and employees cannot borrow from their balance in the plan.
I had a SEP for my business and it was a terrific method to accumulte tax deferred savings.
They are actually IRAs funded by the employer. As such, withdrawals before 59 1/2 years of age and not rolled over are subject to the 10% penalty tax in addition to regular income taxes. There is no vesting schedule and employees cannot borrow from their balance in the plan.
I had a SEP for my business and it was a terrific method to accumulte tax deferred savings.
This post was edited on 12/21/15 at 9:35 pm
Posted on 12/21/15 at 9:46 pm to TigerDeBaiter
quote:
And make sure you max out your Roth IRA and HSA if you have a HDHP to make up for the lack of 401K.
I don't know what any of that means.
Let's say that I still have $15k in student loans (currently paying ~10% interest on) at that point where I'm eligible to get the SEP. Will I be able to take the money that the employer is contributing and pay off the loans? Would it make sense financially with the penalties considered (again, I got the impression that there are no penalties).
Posted on 12/21/15 at 9:49 pm to LSURussian
quote:
There is no vesting schedule and employees cannot borrow from their balance in the plan.
OK, so I can't really touch that money until I'm 60?
So should I treat the whole SEP situation as if I were making a 10% higher salary than I would with a 401k plan? My (admittedly ignorant) reasoning is that the employee contributing 20% of my salary is the same as a 401k where I contribute 10% of my salary and they match it.
Posted on 12/21/15 at 10:00 pm to THRILLHO
quote:
I don't know what any of that means.
Roth IRA
HSA
quote:
Let's say that I still have $15k in student loans (currently paying ~10% interest on) at that point where I'm eligible to get the SEP. Will I be able to take the money that the employer is contributing and pay off the loans? Would it make sense financially with the penalties considered (again, I got the impression that there are no penalties).
Damn, that rate is steep
But the amount is very manageable, so its overall good. You should never rob your retirement for such a (relatively) small amount of student debt - even if you could. Just buckle down and knock out that 15k in a couple of years - before you are even qualified for the SEP. Make it a goal, since you wont be contributing to a 401K.
Posted on 12/21/15 at 10:02 pm to THRILLHO
quote:
OK, so I can't really touch that money until I'm 60?
You can, it's just going to be ridiculously wasteful in taxes and fees. Just don't even consider it an option. Please.
Posted on 12/21/15 at 10:03 pm to THRILLHO
quote:
I've been unemployed since graduating in May (Bachelors in EE),
Oh God... Are you a millenial
Posted on 12/21/15 at 10:07 pm to THRILLHO
Most 401(k) plans don't match dollar for dollar up to 10% of the employee's salary. Plus the company's match in a 401(k) is almost always subject to a vesting schedule so the matching amount is not 100% yours until years pass and you're fully vested. If you leave the company before you're fully vested, you forfeit the unvested amount.
IMO, SEPs are better for the employees while 401(k) plans provide more advantages for the owners of the business.
IMO, SEPs are better for the employees while 401(k) plans provide more advantages for the owners of the business.
Posted on 12/21/15 at 10:13 pm to Porker Face
quote:
Oh God... Are you a millenial
I turn 33 in a few days, so barely. I'm unfortunately living a full blown Millennial's early career.
Posted on 12/21/15 at 10:25 pm to LSURussian
quote:
IMO, SEPs are better for the employees while 401(k) plans provide more advantages for the owners of the business.
Good to know. I was really just looking for any good news I could get. I'm mostly just pissed off that, considering the student loans that I'm paying off, it's going to be ~2 or 3 years before I'm really making more money than I was before I went to school. Which is sad considering that I have what is supposed to be one of the best bachelors degrees you can get.
Posted on 12/22/15 at 6:34 am to Porker Face
Really? No one remembers that thread from a week ago?
Posted on 12/22/15 at 7:45 am to THRILLHO
I find that hard to believe an employer with ~20 employees is running a SEP. these are typically used for small business with 0-1 employees. You sure it's not a Simple IRA? That would be more plausible with the size of this company.
Posted on 12/22/15 at 6:48 pm to THRILLHO
quote:
Entergy/Shell
I just want to put your salary into perspective. I'm an EE with about 17 years experience and worked for Entergy and currently work for Shell.
You do realize that the 20% higher salary you are complaining about isn't the norm?
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