Hacker News Reader

Comment by kevinventullo | Hacker News Reader

The defined-contribution matching is not actually that significant. Google and Facebook e.g. match half of what one contributes up to 7%, so they’re paying at most 3.5%. More importantly, employees can only contribute up to the annual 401(k) max; that’s $22,500 in 2023. Thus, the matching is worth at most $11,250, even for execs with a seven-figure base salary.

View on HN

Thanks for sharing, I'm still learning how retirement works in the US and was unaware of that detail.

I also wasn't sure how to value benefits (at least health/dental + disability if that's included) and PTO (including sick days and mat/pat leave which are unpaid for this subset of physicians), do you have a ballpark on what that is worth for accounting purposes?

Overall I think the biggest hidden line item in any physician's income is still opportunity cost of 10 years +/- loans but my main point is there are hidden costs behind that 500k which are fairly significant.

I agree benefits are hard to measure. Honestly, as a tech employee I think I value the free and convenient meals quite a bit more than paid sick days. I suppose one could try to put a dollar amount on it, but it’s really just a nice quality-of-life perk. One less thing I have to think about.

Do Google and Facebook really only match half of 401(k) contributions up to 7%?

I thought employers competing on benefits were moving towards dollar for dollar or better matching. This is especially important for high income earners who'd be maxing out, because the 401(k) contribution limit for 2023 is $22,500 for employee contributions but $66,000 for combined employee and employer contributions.

Each is slightly different but it amounts to $10,250 worth of match if you max it out and then you can hit the $66,000 limit through the mega backdoor roth.

Right, and the mega backdoor you can fund yourself. So there’s not much point in cos juicing the match versus just paying people more, which big tech is not afraid to do.

Sort of. The employee + employer match can go into regular 401k or roth 401k whereas the mega backdoor roth is only roth.

Thus you can put ~33,000-66,000 into roth ones and only 0-33,000 into pre-tax ones whereas if the employer match got you up to the full 66,000, you could fully customize it to pre or post tax however you like.

Reply on news.ycombinator.com