Academic employment advantages?

[finalpsychyear]

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It will likely be less since the 401a limit is 345k this year (give or take)

So even if my academic salary were 500k. Say employer gives a 10% match with a 4% mandatory employee contribution.

The most the employer will match u is $34500.00 (10% of 345k). Not 10% of the 500k academic salary same goes for 4% employee contributions. ($13800) based on 345000 irs 401a limit.

Thanks. I gave up trying to figure out how much employee vs employer will contribute to the 401a for someone 30 years old.

If we are looking at the maximum employee/employer going into a 401a it is still 69k total for 2024, then the 457b and 403b are 23 each so that brings the tally to 115k plus throw in a 7k roth ira so 122k.

So 122k is roughly what someone making 450-500 in an academic state place could put away but of course not all of it will be tax deductible since employeer match on the 401a is 11% on the first 345k which is not deductible since it comes from employer.

The person has a spending problem so trying to help them lock away as much as possible before it ever touches there bank account.

 

[aneftp]

Thanks. I gave up trying to figure out how much employee vs employer will contribute to the 401a for someone 30 years old.

If we are looking at the maximum employee/employer going into a 401a it is still 69k total for 2024, then the 457b and 403b are 23 each so that brings the tally to 115k plus throw in a 7k roth ira so 122k.

So 122k is roughly what someone making 450-500 in an academic state place could put away but of course not all of it will be tax deductible since employeer match on the 401a is 11% on the first 345k which is not deductible since it comes from employer.

The person has a spending problem so trying to help them lock away as much as possible before it ever touches there bank account. They bought a 3600 dollar purse the other day for example..

Incorrect. There is irs limit of 345k or so for the 401a match. So let’s say 10% match means 34k employer match plus 3% employee contribution.

Even with a generous 10% match. You aren’t gonna to get to 110k

 

[cchoukal]

Let’s say a person had two w2 jobs with 401k plans. Would the gub’mint know if that person contributed to both? Let’s assume the intention is to exceed the federal maximum.

 

[aneftp]

Let’s say a person had two w2 jobs with 401k plans. Would the gub’mint know if that person contributed to both? Let’s assume the intention is to exceed the federal maximum.

The 401k employee contribution is always reported on box 12 (I think). The IRS knows the employee contributions

 

[aneftp]

Its a 14% mandatory employee contribution on top of an 11% employer match. Pretty sure that gets u to 69k? They also have excess 415m plans which r nonqualified which kick in once u and the employer meet the 69k total together which another attending told them you'll hit 7 months in.

So for what it’s worth they sent me their paystub for the month and the employee plus employer contributions for 1 full month was 9902 or almost 10k. They also put 4k toward 457/403 each for 8k total. In 6 wks there retirement portfolio is at 23 still in mm funds cause they didnt select investments yet..Am i missing something?

That’s interesting. I know of no state institutions that require 14% mandatory employee match. Usually it’s 2-5%.

There old plans fica exempt (sometimes had those high employee contributions mandatory) but that’s because they didn’t pay into social security

 

[aneftp]

Its still fica exempt and u get no ss credits for time there. Unless u know ur there 5 plus yrs then ud go for the pension that needs vesting years. Aint no body got time for that in gas these days.

That’s looks like a pension plan. So if they aren’t vested all the matching goes away.

I figured with those matching numbers it was fica exempt with state

 

[cchoukal]

The 401k employee contribution is always reported on box 12 (I think). The IRS knows the employee contributions

Thanks. Let’s say one of the W-2 employers makes the full annual contribution (out of collections), as an employer contribution. Does that change the calculus?

 

[aneftp]

Thanks. Let’s say one of the W-2 employers makes the full annual contribution (out of collections), as an employer contribution. Does that change the calculus?

Yes! You can bypass the 415c annual limit (69k) with two different 401k as long as the other 401k is controlled by the a different entity

Your main employer A (your primary w2 ) job
You put employee 23k. Your employer puts 46k employer contributions


Now your side gig is its own solo 401k(or sep ira). You can put 20/25% “employer only” contribution up to 69k. Since you maxed out on the employee 23k (from ur main source of income). You cannot contribute any employee contribution any more

White coat investor has a good article explaining this

Can You Have More Than One 401(k)? Yes, Here's How! | White Coat Investor

Guess what? You can have multiple 401(k) accounts, saving you thousands in additional taxes every year. But it gets pretty complicated. Here are the rules.

www.whitecoatinvestor.com

 

[aneftp]

Ok so another colleague of the person who came from a finance background and is in the 500k+ range on a phone call said basically once employee and employer hit the 69k combined limit the univ has a nonqualified executive 415m plan kicking in after the previous one maxes out which they keep matching you at the 11% and then your contributions are optional but up to 12% for employee contributions.

He said for 2023 he did everything max contribution but did not do the backdoor roth. Univ matched 50 ish k total between arp and then the 415m and he tax deducted roughly another 100 since he counted puting 22.5 for the 457 and 403 and then obviously his contributions to the arp/415m.

150k all together sounds too high to me but not sure why they would lie about this. This amount is higher than even a 1099 can do until they get to 40s plus when it makes most sense to do a 6 fig DB option which kinda sucks if you do it too young otherwise given the 4-5% returns.

It’s not a lie. It’s the 5 year vesting. If you don’t stay 5 years you lose 100-% of the match

Academics (in this day and age probability lags around 150k-200k a year behind private practice (most academics pay in the low 400s state places). Working overtime does not get you a bigger match but the employer match is based on your base salary (I know a lot about pensions state and federal)

So it’s a trade off. Take less money but more stability with gold pot at
The end.

So you give up around 1 million over income over 5 years to stay in academics but rewarded with better retirement (plus better workload in academic)

Overall not a bad package for certain people (those who want limited overnight calls, less vacation time, good benefits ). Those with families and young kids.

Ohio state seems to have excellent tax shelters for their employees. I’m impressed!

Except my buddy was rolling in 50k plus each week last year as locums in Dayton Ohio 1 hr away from Columbus Ohio. So there is tremendous money to be made in Ohio in the private sector as well

Win win for everyone.

 

[maxxor]

Ok so another colleague of the person who came from a finance background and is in the 500k+ range on a phone call said basically once employee and employer hit the 69k combined limit the univ has a nonqualified executive 415m plan kicking in after the previous one maxes out which they keep matching you at the 11% and then your contributions are optional but up to 12% for employee contributions.

He said for 2023 he did everything max contribution but did not do the backdoor roth. Univ matched 50 ish k total between arp and then the 415m and he tax deducted roughly another 100 since he counted puting 22.5 for the 457 and 403 and then obviously his contributions to the arp/415m.

150k all together sounds too high to me but not sure why they would lie about this. This amount is higher than even a 1099 can do until they get to 40s plus when it makes most sense to do a 6 fig DB option which kinda sucks if you do it too young otherwise given the 4-5% returns.

This sounds like Ohio state

 

[maxxor]

IMO getting an extra 50k (employer match) is not worth academic employment for someone that is ok working a bit more out of residency. It doens't make financial sense with the PP and locums market again if $ is the goal.

Agree 100%

However, I've been surprised at some state university benefits. They definitely keep to the spirit of being comparable to a pension in contributions unlike the paltry 401k contributions I see from "nonprofit" hospitals offering with W2 employment. Ohio state and U Arkansas (UAMS) have 2 of the best I've seen so far.

I've come around to the aneftp approach of chill W2 job and then chase lucrative side work under favorable tax. Now I need to find a chill W2 radiology equivalent that doesn't care if you work on the side. More and more places are bundling in no moonlighting clauses which is just ridiculous.

Executive Retirement Plans - Human Resources at Ohio State

The Ohio State University offers an additional retirement program called the Retirement Continuation Plan (RCP)/415(m) for some employees whose salary exceeds IRS and Ohio retirement system limits under OPERS, STRS, or ARP. Ohio law limits each plan on the amount that can be sent to the...

hr.osu.edu

 

[finalpsychyear]

Agree 100%

However, I've been surprised at some state university benefits. They definitely keep to the spirit of being comparable to a pension in contributions unlike the paltry 401k contributions I see from "nonprofit" hospitals offering with W2 employment. Ohio state and U Arkansas (UAMS) have 2 of the best I've seen so far.

I've come around to the aneftp approach of chill W2 job and then chase lucrative side work under favorable tax. Now I need to find a chill W2 radiology equivalent that doesn't care if you work on the side. More and more places are bundling in no moonlighting clauses which is just ridiculous.

Executive Retirement Plans - Human Resources at Ohio State

The Ohio State University offers an additional retirement program called the Retirement Continuation Plan (RCP)/415(m) for some employees whose salary exceeds IRS and Ohio retirement system limits under OPERS, STRS, or ARP. Ohio law limits each plan on the amount that can be sent to the...

hr.osu.edu

I dont get why they do that cause they are worried you'll leave them once your like hmm im getting 50% more per hour over here? I would think in fields like gas and rads you would have to negotiate that in your contract before you start a new position to have any chance. I guess you could do it anyways on the wknds with your own coverage. Are they really going to fire you in this market for those fields if they find out provided your still doing your w2 work without any issues?

 

[ucladoc2b]

It’s not a lie. It’s the 5 year vesting. If you don’t stay 5 years you lose 100-% of the match

Academics (in this day and age probability lags around 150k-200k a year behind private practice (most academics pay in the low 400s state places). Working overtime does not get you a bigger match but the employer match is based on your base salary (I know a lot about pensions state and federal)

So it’s a trade off. Take less money but more stability with gold pot at
The end.

So you give up around 1 million over income over 5 years to stay in academics but rewarded with better retirement (plus better workload in academic)

Overall not a bad package for certain people (those who want limited overnight calls, less vacation time, good benefits ). Those with families and young kids.

Ohio state seems to have excellent tax shelters for their employees. I’m impressed!

Except my buddy was rolling in 50k plus each week last year as locums in Dayton Ohio 1 hr away from Columbus Ohio. So there is tremendous money to be made in Ohio in the private sector as well

Win win for everyone.

At least in So Cal, this seems to have narrowed quite a bit.

 

[aneftp]

At least in So Cal, this seems to have narrowed quite a bit.

The pension system is less in California than with the older retiree’s these days.

My aunt basically retired with 100-% of her salary as her pension in California. She was internal medicine so didn’t make a lot. Around 115-120k but replacing 100% of ur salary plus healthcare is a pretty good deal under the old California state pension. Plan

I don’t know what’s it like these days

 

[ucladoc2b]

The pension system is less in California than with the older retiree’s these days.

My aunt basically retired with 100-% of her salary as her pension in California. She was internal medicine so didn’t make a lot. Around 115-120k but replacing 100% of ur salary plus healthcare is a pretty good deal under the old California state pension. Plan

I don’t know what’s it like these days

Even with pensions, the academic programs and county are paying close to several private practices (almost all of which require subsidies…including Hoag and others).