Last week the trustees of the Animation Guild 401(k) Plan met to review finances and assets of the Plan. Here's a thumbnail of where the TAG Plan is:
Total Plan Participants -- 2,225
Average Number of Investments (21 funds) -- 6.5
Total Assets (among 21 funds) -- $128,316,234 ...
A word about 401(k) Plans in general: Since the Great Meltdown of 2008, corporate 401(k) Plans have become far less generous with matching employees' contributions. According to the Associated Press, 15% of companies that had some kind of match eliminated it. (The AP says a majority will have restored their matches within the next six months. Praise be. We're not sure if that includes Nickelodeon Cartoon Studios, which charges its corporate participants a fee to come aboard.)
Since TAG's 401(k) Plan was set up in 1995, lots of artists and technicians have squirreled away anywhere from $100,000 to $300,000. Added to the Industry Account Plan -- paid for by the employers -- some inviduals are up well over four hundred grand.
Even so, I encounter animators who don't want to jump into the program shown above because there's no employer match with the TAG Plan. I think these folks are missing a major opportunity. If you have the cash, you're short-sighted if you don't tuck some of it away in a tax sheltered account. Not only will it provide a nice cushion of moolah when you careen into your seasoned years, you also reduce your current tax bite.
Ah well. Some people just refuse to be led to (or drink from) the clear-flowing mountain stream.
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5 comments:
I am an active contributor to the 401k plan, and I'm glad it's there for me to utilize. I can put money away for my retirement on top of the money I am going to get from the pension and IAP plans. (I don't even plan on Social Security, but if it's there when I retire, it will be just icing on the cake).
I'm in my late 30's and have been in the union for almost a decade. I'm not a director or a storyboard artist who earns several thousand dollars a week, my salary is on the lower end of the animation union spectrum. I have even missed contributing to the plan during months-long hiatuses. But I’m one of the people that Steve mentions that has been able to save over $150,000 in my 401k.
In fact, based on some calculations (8% interest compounded for 25 years), if I never add another penny to the plan, I should have over $1,000,000 when I retire. Not bad for not lifting a finger from this point on. Is this a guaranteed situation? No. But it’s still a possibility because I have put money into the plan and I have plenty of time in the future to put more money into my account.
Now, a million dollars will not be a lot of money in two and a half decades from now. That’s why I also put money in an IRA and other accounts. This money combined with the 401k, pension, and IAP should allow me to retire comfortably into my 90’s.
So, I’m grateful for all the retirement vehicles our union offers us. I hope more people in our industry take advantage of them.
"In fact, based on some calculations (8% interest compounded for 25 years), if I never add another penny to the plan, I should have over $1,000,000 when I retire."
Optimistic numbers! 10,000 bucks invested 10 years ago would be about the same now. Break even levels. Hopefully the future will be better.
Frankly, the union 401k plan is only of value if you can manage to save more than the traditional IRA limits. That is it. There are no matching funds like some companies offer, since the union is not your employer. Also I find it annoying that the plan is constantly changing the funds where your money is invested, or even changing host companies. You have far more control and choices of your investments with an IRA.
Oh, and if you ever leave the union and want to roll over your account into an IRA, it is a real pain if you are married. Your wife will be required to sign a notorized statement giving up her rights to her legally entitled half of the funds. Otherwise you can't get your funds out of the union's 401K plan.
The signing of documents that's a pain? Federal rules and regulations require that to happen. And the same regs apply to corporate 401(k) plans.
It's true that there is no match with the TAG 401(k) Plan, but the Individual Account Plan contributions total $4500 to $5300 over the course of a year.
Nothing, of course, is perfect. But the Plan has allowed a lot of people to tuck away a lot of money. And it's a way of sheltering wages from income taxes.
Last point: We change about one fund per year because it's under-performing its benchmark. We review funds quarterly, and have a few on a "watch list" now. If they haven't bettered their performances in a year, they will be switched out for ones that are performing.
There's a simple way to avoid having funds switched out from under you: invest in the index funds that the TAG 401(k) Plan offers. These include the Vanguard Target funds, the large cap mid cap and international indexes. They're also lower cost than the actively managed funds.
To Anon @ 9:23:00 AM:
"Optimistic numbers! 10,000 bucks invested 10 years ago would be about the same now. Break even levels. Hopefully the future will be better."
Ten years ago, I had about $14,000 in a non-union 401k. As soon as I got into a Union studio, I rolled that over and it's now it's it's valued over $150,000. So its possible. I'm not saying it's because of our particular 401k, but I think a 401k is still a good way to save money. Even if I did break even in 10 years, I still have over 25 years for it to recover. Statistically, money invested for 20 years or more is almost guaranteed to make money.
"Frankly, the union 401k plan is only of value if you can manage to save more than the traditional IRA limits. That is it. There are no matching funds like some companies offer, since the union is not your employer."
I agree with you here. That's why I maxed out contributions 5 out of the 10 years I was in the union so far. In the other 5 years, I put in more than what I put into my traditional IRA (which I also maxed out). Being in our union raised my salary enough that I can afford to make these contributions.
"Also I find it annoying that the plan is constantly changing the funds where your money is invested, or even changing host companies. You have far more control and choices of your investments with an IRA."
I think Steve Hulett covered this one in his response. Also, you can shelter more money in the 401k than you can in an IRA per year ($16,500 versus $5000 for some one under 50 for the year of 2010) I also have an IRA on top of the 401k. Both retirement vehicles are great.
"Oh, and if you ever leave the union and want to roll over your account into an IRA, it is a real pain if you are married. Your wife will be required to sign a notorized statement giving up her rights to her legally entitled half of the funds. Otherwise you can't get your funds out of the union's 401K plan."
Steve covered this one too.
I moved my money out of the Local 839 401K and into a Vanguard Rollover IRA when I was unemployed a few years back and don't recall being required to have my spouse sign a notarized statement of an kind.
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