pillman78

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I know that new pharmacists can contribute to a 401(k) three months after they start, and they are fully vested from the beginning. However, CVS doesn't begin to match until after the first year. My question is do they match your contributions for that first year or do they only start matching from that point (year 1) forward?
 

Apotheker2015

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I know that new pharmacists can contribute to a 401(k) three months after they start, and they are fully vested from the beginning. However, CVS doesn't begin to match until after the first year. My question is do they match your contributions for that first year or do they only start matching from that point (year 1) forward?
It's not retroactive if that's what you're asking. At most companies, your % match on eligible pay starts on day on day 366 of employment and must have at least 1000 hours to show for that year. As soon as you're able to get your match, contribute as much as you can in order to reach $18K earlier in the year. That way you get your match and you let that compound interest do its magic the rest of the year.
 

IndyPrePharm

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It's not retroactive if that's what you're asking. At most companies, your % match on eligible pay starts on day on day 366 of employment and must have at least 1000 hours to show for that year. As soon as you're able to get your match, contribute as much as you can in order to reach $18K earlier in the year. That way you get your match and you let that compound interest do its magic the rest of the year.
Like Apotheker2015 said, it's not retroactive matching.

However, I've never heard of a 401k match that continued after your contributions have stopped (because you maxed out early in the year..once you stop putting in, they usually stop putting in too, even if you murdered it in the first quarter of the year). I contribute $692.30 per paycheck to arrive at the $18k IRS maxout each year but to also ensure that I get an employer match with every single paycheck.

Apotheker, have you ever checked your 401k account AFTER you have maxed out in a given year, and seen whether CVS still continues to put a match in there for you? I'd be interested...and jealous to see that because that's not what my employer does if I maxout early in the year.
 
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Apotheker2015

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Like Apotheker2015 said, it's not retroactive matching.

However, I've never heard of a 401k match that continued after your contributions have stopped (because you maxed out early in the year..once you stop putting in, they usually stop putting in too, even if you murdered it in the first quarter of the year). I contribute $692.30 per paycheck to arrive at the $18k IRS maxout each year but to also ensure that I get an employer match with every single paycheck.

Apotheker, have you ever checked your 401k account AFTER you have maxed out in a given year, and seen whether CVS still continues to put a match in there for you? I'd be interested...and jealous to see that because that's not what my employer does if I maxout early in the year.
I'd say you should call HR and talk to one of the representatives. I do see what you are saying. You hit 18K early. Say you get 100% match ($1 for $1) up to 5% of your eligible. Then you end up working a lot of extra hours and your eligible pay increases. I would think or expect that the company would throw in the extra bucks to bring your match up to the new %5 of eligible pay.
Ok, so you make 125,000; 5% = 6,250
extra hours 15,000;
new total pay 140,000; 5% = 7,000
Difference $750
I would think you would get a catch up match at the end of the year(?) unless the fine print states otherwise, which makes you miss out on compounding interest.
It's worth asking and walk them through a simple numeric example. I can see a representative getting lost there or giving you whatever answer to get you off the phone. The fine print should be on the paperwork you signed. As you know, I haven't been around that long. So hopefully, one of our more senior and wiser pharmacists can shed more light on that.
 
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Not a pharmacist, but I administer 401k plans. You do not want to front load all of your contributions unless they calculate match annually, which is pretty rare....most calculate per pay period. If they match at 5%, you want to be putting that 5% in each pay period and just front load the excess.
 

wucool33

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CVS clearly states that they will do catch-up matching at the end of the year if you maxed out early... go read a book (or the manual)
 

Whereismynorco

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So I guess they are changing this contribution starting next year, They will match per pay check and doesn't say anything about catch up contribution
 

Momus

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Like Apotheker2015 said, it's not retroactive matching.

However, I've never heard of a 401k match that continued after your contributions have stopped (because you maxed out early in the year..once you stop putting in, they usually stop putting in too, even if you murdered it in the first quarter of the year). I contribute $692.30 per paycheck to arrive at the $18k IRS maxout each year but to also ensure that I get an employer match with every single paycheck.

Apotheker, have you ever checked your 401k account AFTER you have maxed out in a given year, and seen whether CVS still continues to put a match in there for you? I'd be interested...and jealous to see that because that's not what my employer does if I maxout early in the year.
CVS has true up match. If you front load $18k in 2 months, you will get the remaining match owed to you at yr end. About 50% companies have true up feature on their 401k. You have to know what your 401k plan is.

Now the question becomes... frontloading means you don't get the match until later but your contribution is invested all 18k in the beginning of the year. Which one will give you a better total absolute return, dca contribution + dca match vs. front load contribution + year end match?

If you plan to leave the company, it's better to max out early immediately especially if they have true up feature, then quit. Your next company might make you wait 1 yr before you can contribute. I also feel this is why some people quit in the beginning of the yr. So, they can contribute 401k at the beginning of the next yr @ new company.
 
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mentos

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CVS has true up match. If you front load $18k in 2 months, you will get the remaining match owed to you at yr end. About 50% companies have true up feature on their 401k. You have to know what your 401k plan is.

Now the question becomes... frontloading means you don't get the match until later but your contribution is invested all 18k in the beginning of the year. Which one will give you a better total absolute return, dca contribution + dca match vs. front load contribution + year end match?

If you plan to leave the company, it's better to max out early immediately especially if they have true up feature, then quit. Your next company might make you wait 1 yr before you can contribute. I also feel this is why some people quit in the beginning of the yr. So, they can contribute 401k at the beginning of the next yr @ new company.
Does that apply for next year? Got a flyer in the mail that the match will be per paycheck now.
 

ranger99rx

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Not a pharmacist, but I administer 401k plans. You do not want to front load all of your contributions unless they calculate match annually, which is pretty rare....most calculate per pay period. If they match at 5%, you want to be putting that 5% in each pay period and just front load the excess.
Yes, monitor your max closely and spread out your contributions. I change my contribution rate a few times a year if I pick up extra shifts or bonus check.
 
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Dr Wario

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No true up contribution for year 2018 guys. Make sure to change the contribution percentage
Wow they are really trying to nickle and dime people. They are also phasing out flat dollar amount contributions and will only allow percentage of pay, this will make it a real pita to hit the max IRS contribution and company match.
 
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It's not retroactive if that's what you're asking. At most companies, your % match on eligible pay starts on day on day 366 of employment and must have at least 1000 hours to show for that year. As soon as you're able to get your match, contribute as much as you can in order to reach $18K earlier in the year. That way you get your match and you let that compound interest do its magic the rest of the year.
Terrible advice. They only match a percent of your paycheck, not a percent of your yearly salary. You'll front-load your 401k quicker, but you'll miss out on free match dollars.
 

Dr Wario

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Terrible advice. They only match a percent of your paycheck, not a percent of your yearly salary. You'll front-load your 401k quicker, but you'll miss out on free match dollars.
It depends on the company, CVS up through 2017 did a true up contribution so that it was ok if you did front loaded the 401k, but starting in 2018 the match will only apply to your current paycheck.
 

mentos

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Wow they are really trying to nickle and dime people. They are also phasing out flat dollar amount contributions and will only allow percentage of pay, this will make it a real pita to hit the max IRS contribution and company match.
Am I doing this right? Say you make 120k. The max company match is $6000/year ($230.77/paycheck).

16% contribution = $19,200/year ($738.46/paycheck), your last paycheck contribution will get cutoff at $18,500 and you don't get the full 5% company match for the year. You'll only get $39.5 match for your last paycheck.

15% contribution = $18,000/year ($692.31/paycheck), you get the maximum 5% match but you don't hit the $18,500 IRS limit.

So you either have to choose between max match or max IRS limit? This will be harder to calculate if we get any bonus, work extra hours, cash out vacation hours, take a leave, etc.
 

Unsure90

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Am I doing this right? Say you make 120k. The max company match is $6000/year ($230.77/paycheck).

16% contribution = $19,200/year ($738.46/paycheck), your last paycheck contribution will get cutoff at $18,500 and you don't get the full 5% company match for the year. You'll only get $39.5 match for your last paycheck.

15% contribution = $18,000/year ($692.31/paycheck), you get the maximum 5% match but you don't hit the $18,500 IRS limit.

So you either have to choose between max match or max IRS limit? This will be harder to calculate if we get any bonus, work extra hours, cash out vacation hours, take a leave, etc.
Maybe you can change your contribution rate mid-year to maximize your gains and minimize your loss? So in your scenario the best option would be to utilize a 16% contribution rate for 10 paychecks ($738.46 * 10 paychecks = $7,384.60) and then switch to a 15% contribution rate for the remaining 16 paychecks in the year ($692.31 * 16 paychecks = $11,076.96). Your total 401k contribution would be $18,461.56 for the year.

with holiday, bonus, extra hours, etc you would just have to do a lot of monitoring and rate changing i guess..
 
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mentos

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Maybe you can change your contribution rate mid-year to maximize your gains and minimize your loss? So in your scenario the best option would be to utilize a 16% contribution rate for 10 paychecks ($738.46 * 10 paychecks = $7,384.60) and then switch to a 15% contribution rate for the remaining 16 paychecks in the year ($692.31 * 16 paychecks = $11,076.96). Your total 401k contribution would be $18,461.56 for the year.

with holiday, bonus, extra hours, etc you would just have to do a lot of monitoring and rate changing i guess..
I guess choosing the max match (free money) is better than hitting the 18.5k limit. What a pain.
 

ldiot

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Previously you could contribute a flt dollar amount, and if you front-loaded your contribution they would deposit the match either at the end of each quarter or at the end of the year (can't remember which).

Apparently now you must contribute a percentage (not a flat dollar amount) and they will not adjust the match later if you hit the IRS limit early? Really dumb. The percentage thing would be a pain in the butt for people who pick up extra shifts
 

mentos

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Previously you could contribute a flt dollar amount, and if you front-loaded your contribution they would deposit the match either at the end of each quarter or at the end of the year (can't remember which).

Apparently now you must contribute a percentage (not a flat dollar amount) and they will not adjust the match later if you hit the IRS limit early? Really dumb. The percentage thing would be a pain in the butt for people who pick up extra shifts
Yes that is correct, nothing surprises me with this company anymore. This is a sneaky way for them to give out less of a match. If they straight up lowered the match from 5% to 4%, then everyone would cry foul. This way, only few of us will notice.

Though this should have been expected, since they changed the HSA company contribution from lump sum every 6 months to a little bit every 2 weeks.

There were probably some Rphs who front loaded the 18k in the beginning of the year, qualified for the full match, took the lump sum HSA company contribution, and quit after a couple months.

The things this company does to save money... They switched from normal rx bags to thin flimsy ass bags that rip apart as soon as they're placed in the waiting bin. Half of the labels don't stay stapled to the bags cause they're so flimsy. It's only a matter of time before a tech sees a label on the floor and staples it to someone else's labelless bag.
 
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WVUPharm2007

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So can anyone eli5? I used my annual salary to calculate my % contribution to get $18500. Now, how would you do so now?
That's what you do now. There's a little tool that calculates it for you. You can only do whole percentages, though. Long story short, they are probably going to get away with not matching the full 5% due to rounding and paid holidays and such.
 

FuturePharmD7

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Asking for somebody: my friend joined in October 2019 cvs and they won’t match until one year after so it would probably make sense to not front load everything in 401k after three months after starting and leave 5-6k out of the max limit Of 18,500 until its October 2020 so I can gain advantage of cvs match 5-6k for the year assuming I put in 100 percent of my pay check to 401k?

Am I understanding this correctly?
 

mentos

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Asking for somebody: my friend joined in October 2019 cvs and they won’t match until one year after so it would probably make sense to not front load everything in 401k after three months after starting and leave 5-6k out of the max limit Of 18,500 until its October 2020 so I can gain advantage of cvs match 5-6k for the year assuming I put in 100 percent of my pay check to 401k?

Am I understanding this correctly?
The limit for 2020 is $19,500. Don't ever front load, that doesn't work anymore. Your idea should work in theory but would be hard to execute. When you request a change in contribution amount they say it may take 1-2 billing cycles to take effect so you kinda have to guess which cycle it will change. I don't think you can contribute 100% to 401k - maybe as high as 90%? They still have to deduct taxes, health insurance etc.

Does your friend have the discipline to save enough money to live without a paycheck for the last 3 months of the year?
 
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mentos

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That's what you do now. There's a little tool that calculates it for you. You can only do whole percentages, though. Long story short, they are probably going to get away with not matching the full 5% due to rounding and paid holidays and such.
I also thought I would miss out on some match due to overtime and holidays inflating some paychecks but it was actually pretty easy. I put like 15% in the beginning of the year then monitored through September. I then dropped it to 14% to make sure I'd get the full match and I did.
 

FuturePharmD7

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The limit for 2020 is $19,500. Don't ever front load, that doesn't work anymore. Your idea should work in theory but would be hard to execute. When you request a change in contribution amount they say it may take 1-2 billing cycles to take effect so you kinda have to guess which cycle it will change. I don't think you can contribute 100% to 401k - maybe as high as 90%? They still have to deduct taxes, health insurance etc.

Does your friend have the discipline to save enough money to live without a paycheck for the last 3 months of the year?
It’s 75 percent. I think my friend just wants to get the 5-6k match before the end of the year ends. I think my friend is willing to do it if he can get that much “free” money. Is this the only realistic option in order to get that match that you can think of?

Also is Christmas the only time cvs offers double time if they work or are there any other holidays you are aware of?
 

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The limit for 2020 is $19,500. Don't ever front load, that doesn't work anymore. Your idea should work in theory but would be hard to execute. When you request a change in contribution amount they say it may take 1-2 billing cycles to take effect so you kinda have to guess which cycle it will change. I don't think you can contribute 100% to 401k - maybe as high as 90%? They still have to deduct taxes, health insurance etc.

Does your friend have the discipline to save enough money to live without a paycheck for the last 3 months of the year?
Why wouldn’t front loading work? Front load and put 5% for the rest of the year.
 

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It’s 75 percent. I think my friend just wants to get the 5-6k match before the end of the year ends. I think my friend is willing to do it if he can get that much “free” money. Is this the only realistic option in order to get that match that you can think of?

Also is Christmas the only time cvs offers double time if they work or are there any other holidays you are aware of?
Cvs probably require you to put at least 5% per paycheck in order to get the match. Let’s say they start matching October 2020 then he would only get match in Oct, Nov and Dec assuming he puts at least 5%. So no, he won’t get 5-6k match. He would “save” 20-30% in taxes depending on his fed tax bracket and if he has state tax.
 

FuturePharmD7

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Cvs probably require you to put at least 5% per paycheck in order to get the match. Let’s say they start matching October 2020 then he would only get match in Oct, Nov and Dec assuming he puts at least 5%. So no, he won’t get 5-6k match. He would “save” 20-30% in taxes depending on his fed tax bracket and if he has state tax.
I’m under the impression he’s putting in his whole pay check nearly (max 75 percent) per pay period from October, November, and December will he not get the 5-6k match then?
 

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I’m under the impression he’s putting in his whole pay check nearly (max 75 percent) per pay period from October, November, and December will he not get the 5-6k match then?
No, I think cvs would now only do 5% match per paycheck so doesn’t matter if he put 75%. I remember hearing they don’t do a tune up anymore.
 
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FuturePharmD7

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No, I think cvs would now only do 5% match per paycheck so doesn’t matter if he put 75%. I remember hearing they don’t do a tune up anymore.
Oh really. I was under the impression that they match dollar to dollar for up to five percent of your annual salary, not per paycheck.
 

Sine Cura

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CVS doesn't "true up" anymore so you need to collect on the 401(k) match every paycheck or lose out.

You can change your contribution rate throughout the year to account for lolbonus and extra wages.
 

FuturePharmD7

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What is there to clarify? They only match 5% max per PAYCHECK, not your whole annual contribution.
You didn’t seem too sure in your original post so I wanted somebody else who may know for certain to give their insight. Obviously I’m going to have him follow up with HR as well but in the meantime I figure I would ask here.
 

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As a public service announcement, if you are one of the people looking to max your 401(k) contribution plus take full advantage of the match, make sure you include the 401k contribution made via your bonus because cvs actually separates this out as a line item on your paycheck. I actually lost about $300 in matching last year due to not accounting for this which caused me to max my 401k before my final pay.

Also I really hate that you can no longer put a dollar amount contribution and instead can only do a percentage, makes calculations and planning a real pain.
 

mentos

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Why wouldn’t front loading work? Front load and put 5% for the rest of the year.
You will probably hit the contribution limit if you front load and lose the match the rest of the year. Hard to predict how much overtime, bonuses, holidays etc.
 

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You will probably hit the contribution limit if you front load and lose the match the rest of the year. Hard to predict how much overtime, bonuses, holidays etc.
Same thing with putting 10% or 15% per paycheck. You still have to make some calculation later in the year. That doesn’t mean you shouldn’t front load. It is not that difficult to make some adjustment anyways. For example, if your approximate salary and bonus is $130 k a year, then front load 10 k in Jan and afterward put 5% until November and then take out a calculator and see how much you need to put in Nov and Dec.
 

mentos

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Same thing with putting 10% or 15% per paycheck. You still have to make some calculation later in the year. That doesn’t mean you shouldn’t front load. It is not that difficult to make some adjustment anyways. For example, if your approximate salary and bonus is $130 k a year, then front load 10 k in Jan and afterward put 5% until November and then take out a calculator and see how much you need to put in Nov and Dec.
What advantage does front loading give? Isn't it better to DCA throughout the year?

I put in 15% and didn't bother checking my 401k until September. That's when I found out I had to lower to 14% to get the full match for the rest of the year. Had I front loaded, I would have hit the limit much earlier.
 

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Front loading would give more money more time in the market. The longer its in the market, the more growth, on average.

My place trues my contributions. . . . but I still wish I could place a dollar amount rather than percentage.
 

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What advantage does front loading give? Isn't it better to DCA throughout the year?

I put in 15% and didn't bother checking my 401k until September. That's when I found out I had to lower to 14% to get the full match for the rest of the year. Had I front loaded, I would have hit the limit much earlier.
If you had front loaded in Jan 2019, you would have made 29% return by December. Obviously some years, there would be a decline...can’t really predict but the market goes up more often than down. You are just playing the odds.
 
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If you had front loaded in Jan 2019, you would have made 29% return by December. Obviously some years, there would be a decline...can’t really predict but the market goes up more often than down. You are just playing the odds.
So in my friends case it would be smart for him to frontload since he can’t take advantage of the match anyway until October? So front load 15kish and then Wait till October to get some of the match and reach the limit of 401k then?
 

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So in my friends case it would be smart for him to frontload since he can’t take advantage of the match anyway until October? So front load 15kish and then Wait till October to get some of the match and reach the limit of 401k then?
I can’t predict the stock market but over a period of time and if he does it every year, yes this would be better. I suggest front loading 12 k and then adjust to 5% and revisit in Sept.

Remember, if he front load, he is not going to have any income for 1-2 months. If he also buys ESPP, it might be affected (have less money to buy). I also do it every year because I don’t have to pay any tax in Jan (will pay tax later tho).
 

BMBiology

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Keep in mind that I am not predicting the stock market to be higher in Dec vs Jan for 2020. All I am saying is over a long period of time like 10 years, the stock market tend to go up so it is better to put your money into the stock market sooner than later.
 
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BMBiology

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Another good thing about front loading is...if you get fired in Feb then you don’t have to worry about maxing out your 401 k haha
 
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Pharm.C.

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I maxed out my 401k last year. I front loaded it a bit (but not a lot). By the time we got to the end of 2019 I contributed about 10% of my paycheck to get to the max. You can't go over. If you have 10%, but 5% gets you to your annual max they'll only contribute the 5% and you get the rest on your paycheck. Foolproof. But yeah, My understanding is if you frontload it and max out early that means you can't contribute to your 401k for the rest of the year which means there are no funds for the company to match which means you can lose thousands of dollars in potential matching.

There definitely has been no "true up" for 2019. I maxed out my 401k on my last paycheck and there was only enough room to contribute about 4.xx%. I lost out on about $20 in matching. Haven't seen this $20 come back as a "true up." Not that it's a huge sum, but someone who has experienced this in the past when they did have a true up knows when/where it should happen I can check.
 
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