Over contributing to workplace pension or private pension
"Firstly (and this part is rather opinion-based) I would absolutely not think of making more pension contributions when you are currently totaling 6% of salary as ""over contributing"". There are some who argue that you should be putting a minimum of 20% away for retirement throughout your working life; you don't say how old you are / how close to retirement you are, but a common rule of thumb is to halve your age and put away that % of your salary into your pension. So I would certainly start with upping those contributions.  I actually don't think it makes much difference whether you go for just your workplace pension versus a separate private one - in general you end up paying management fees that are a % of the value, so whether it is in one place or split doesn't cost any less. The ""all eggs in one basket"" syndrome is a possible argument but equally if you change jobs a few times and end up with half a dozen pension pots it can be very hard to stay on top of them all. If you end up with everything in one pot and then transfer it when you change jobs, it's easier to manage. Other options:   ISA as you mentioned; on the plus side these are tax free. On the minus side, you can either go for a cash ISA which at the moment has very low rates of return, and/or a stocks and shares ISA which exposes you to risks in the stock market.   If you have debt, consider paying it off early / overpaying. Student loans may or may not be the exception to this depending on your personal situation. Certainly if you have a mortgage you can save a vast amount by overpaying early.   Other investments - stocks and shares, BTL housing, fine wines, Bitcoin, there are almost limitless possibilities. But it makes sense to max out the tax-efficient options before you look into these."
As a general rule of thumb, age and resiliency of your profession (in terms of high and stable wages) in most cases imply that you have the ABILITY to accept higher than average level of risk by investing in stocks (rather than bonds) in search for capital appreciation (rather than income), simply because you have more time to offset any losses, should you have any, and make capital gains. Dividend yield is mostly sough after by people at or near retirement who need to have some cash inflows but cannot accept high risk of equity investments (hence low risk dividend stocks and greater allocation to bonds). Since you accept passive investment approach, you could consider investing in Target Date Funds (TDFs), which re-allocate assets (roughly, from higher- to lower-risk) gradually as the fund approaches it target, which for you could be your retirement age, or even beyond. Also, why are you so hesitant to consider taking professional advice from a financial adviser? "You are legally able to contribute more than 4% to your 401(k) (unless you've hit the actual limit).  There is no reason you need to pull out your ""extra"" contribution.  So basically they just want their $27.50 back. So offer (via email or writing) to send them a check.  You obviously don't work there any more, so if they insist it comes from your IRA or are not willing to accept a check, tell them to @%#&* off (OK, not really, that would be unprofessional, but that's the general idea).  They overpaid you by $27.50, and you are legally bound to return the extra pay, but not to put up with their BS.  Tell them you've offered to pay, and if they don't want to accept a check, they can sue you for it to try to get it in the form they prefer (which they won't do, and even if they did, at most the judge would just tell you to write a check - which you offered from the outset, so they'd probably owe your legal fees)." Cutting 25% from pensions is a big deal. This is why I'm going to get out of the company pension. If the money isn't mine, what is it? Are they giving me more return on my interest than normal to make up for the fact they can decide to back out of the agreement at any point? No. "You do not need to inform your employer of your additional activity, but it is your responsibility not to work for more than 48 hours per week as long as you are an employee. So if you are working 38 hours for your employer, you may not work for yourself for more than 10 hours. It is, however, not so easy in practice to draw the line between work and a hobby, as long as you are not being paid by the hour. The main reason to present your employer with an addition to your work contract is to make it legally very clear that he holds no intentions to claim copyright to your work. He may attempt to do something funky like claim your home computer is, in fact, a work computer because you used it once a month to work from home, and your work contract may contain a paragraph that all work performed on a work computer results in copyright ownership for your employer. I have no idea how likely this is in practice, but this is the reason I know is commonly given as legal advice to have a contract. So the normal contract you present your employer with says: In order to earn user contribution money from a website, you need to register as a sole proprietor (Gewerbeanmeldung) and pay trade tax (Gewerbesteuer) and sales tax (Umsatzsteuer, alternatively you claim small trade exception, Kleingewerbe), which also makes a tax return mandatory. I would guess, however, (and this is not legal advice in any way, just my guess), that a couple of contributions towards server cost in a strictly non-profit endeavor is not commercial (""gewerblich"") at all but private, in the same way that you may write an invoice to someone you sold your old bike to, or a kid may get paid to mow someone's lawn. Based on that guess, my non-legal-advice recommendation is to take the contributions and do nothing else, as long as the amount is nowhere near breaking even if you count your work input." There are two things to consider: taxes - beneficial treatment for long-term holding, and for ESPP's you can get lower taxes on higher earnings. Also, depending on local laws, some share schemes allow one to avoid some or all on the income tax. For example, in the UK £2000 in shares is treated differently to 2000 in cash vesting - restricted stocks or options can only be sold/exercised years after being granted, as long as the employee keeps his part of the contract (usually - staying at the same place of works through the vesting period). This means job retention for the employees, that's why they don't really care if you exercise the same day or not, they care that you actually keep working until the day when you can exercise arrives. By then you'll get more grants you'll want to wait to vest, and so on. This would keep you at the same place of work for a long time because by quitting you'd be forfeiting the grants. This is basically a math problem. It depends on the pension benefits, the lump sum, and the chance that the company doesn't honor its pension plan. If you're willing to share the first 2 and the company name, it's possible to roughly figure out the odds of the third if your company has bonds or CDS. Maybe some bored analyst would do it for you here, or you could probably hire a financial advisor for an hour or 2 to figure it out. My uncle seen the writing on the wall a year or two ago. He retired early and got his pension out of the company. Apparently the pensions are invested back into the company so they don't only loose their job when the company fails. "typically, your employer will automatically stop making contributions once you hit the 18k$ limit. it is worth noting that employer contributions (e.g. ""matching"") do not count towards the 18k$ employee pre-tax contribution limit. however, if you have 2 employers during the year their combined payroll deductions might exceed the limit if you do not inform your later employer of the contributions you made at your former employer (or they ignore the info). in which case, you must request a refund of ""excess contributions"" from one of the plans (your choice). you must report the refund as taxable income on your taxes. if you do not make this request by the time you file your taxes, the tax man will reject your filing and ""adjust"" your return with more taxes and penalties. sometimes requesting a refund of excess contributions might cause your employer to remove ""matching"" funds, but i am not clear on the rules behind that. there are some 401k plans that allow ""supplemental after-tax contributions"" up to the combined employee/employer limit (53k$ in 2015 and 2016). it is a rare feature, and if your company offers it, you probably already know.  however, generally it is governed by a separate contribution election that only take effect once you hit the employee pre-tax contribution limit (18k$ in 2015 and 2016). you could ask your hr department to be sure. 401k plans can be changed if there is enough employee demand for a rule change.  especially in a small company, simply asking for them to allow dollar based contributions instead of percent based contributions can cause them to change the plan to allow it. similarly, you could request they allow ""supplemental after-tax contributions"", but that might be a harder change to get." Hey, no worries at all. Like any business practice there are proper uses and abuses. First and foremost, companies should engage in allocation of capital that best serves their uses given prospects of 'returns' in a broad sense (this could very well include employee remuneration). After that, all excess funds should be distributed (through buybacks or dividends).   There is without a doubt overincentivizing going on (i.e. buybacks preceding prudent capex or other investments) to boost C-suite pay. In other cases it is actually used to hide declining performance altogether (declining earnings compensated by decreasing outstanding shares). This is simply poor management using these tools. They would have most likely used others were these not made available to them (e.g underpaying/understaffing).   It's an investors job to allocate capital that rewards good management practice. The problem is that this is an ideal made harder by obfuscation on the part of management, lack of governance and even the rise of passive management among others.   I'm in private equity myself (with a strong focus on prudence and longevity of companies), so these are considerations that go without saying. I'm sometimes quite astonished what public companies get away with, but you can't blame tools for being used poorly or being available. I would definitely recommend contributing to an IRA. You don't know for sure you'll get hired full-time and be eligible for the 401(k) with match, so you should save for retirement on your own. I would recommend Roth over Traditional IRA in your situation, because let's say you do get hired full-time. Since the company offers a retirement plan, your 2015 Traditional IRA contribution would no longer be deductible at your income level (assuming you're single), and non-deductible Traditional IRAs aren't a very good deal (see here and here). If there's a decent chance you would get hired, this factor would override the pre-tax versus post-tax debate for me. At your income level you could go either way on that anyway. A Solo 401(k) would be worth looking into if you wanted to increase your contribution limit beyond what IRAs offer, but given that it sounds like you're just starting out saving for retirement, and you may be eligible for a 401(k) soon, it's probably overkill at this point. "Calling this ""strange"" is an understatement. I'd call it illegal. You can't pay healthcare premiums with HSA funds while you are employed (unless you are on COBRA), and if you over contribute you pay a 6% tax on the overage unless you correct it. Furthermore, overage contributed by an employer must be treated as taxable wages, so they'd be better off just calling it a bonus and writing you a normal check. At least that way you wouldn't have to pay the 6% penalty on top of taxable wages." "There are two types of 401(k) contributions: ""elective contributions,"" which are the part put in by the employee and ""nonelective contributions,"" which are the part put in by the company.  Elective contributions are summed across all the plans she is contributing to.  So she can contribute $18,000 minus whatever she put in her 403(b). Additionally she can contribute 20% of the net profit of the company (before the elective contributions) as nonelective contributions (these contributions must be designated as such). You will notice that the IRS document says 25%, but that's what you can do if her business is incorporated.  For a sole proprietorship, nonelective contributions  ends up being limited at 20% of profit. Additionally, the sum of these two and her contribution to her 403(b) cannot exceed $53,000. Example: line 31 of her schedule C is $30,000 and she has contributed $10,000 to her 403(b). Maximum contribution to her solo 401(k) is ($18,000 - $10,000) + 0.2 * $30,000 = $14,000 Her total contributions for the year are $10,000 from her 403(b) plus $14,000 in her solo 401(k).  This is less than $53,000 so this limit does not bind.  If she made a ton of 1099 money, her contribution maximum would follow the above until it hit $53,000 and then it would stop there. The IRS describes this in detail in Publication 560, which also has a worksheet for figuring out your maximum explicitly.  It's unpleasant reading and the worksheets are painful, but if you do it right, it will end up being as I just described it.  Using the language of that publication, hers is a ""qualified plan"" of the ""defined contribution"" variety." "Firstly, you should familiarise yourself with your options for your pension fund. They changed as of 6th April 2015 so it's all quite new. The Government's guidance on it is here. If you haven't already taken a tax-free lump sum from your pension fund, you can take up to 25% totally tax free immediately. That makes getting a house for 40K very accessible. Beyond the 25%, you can take any of it out whenever you want (""flexi-access drawdown"" or ""lump sum payment"", depending on whether you take the 25% out up front or not). That'll be taxed, as if you earned it as income. So if you didn't have any other income, you can take another £10600 without tax this tax year, and then another £10600 or whatever the allowance goes up to next tax year, and so on. Above that you'd have to pay 20% tax until you reach the higher-rate tax threshold at about £40K/year. You say you do have other income so you'll have to take that into account as well when calculating what tax you'd have to pay. If you've reached state pension age that will add some more income, of course. Or, as you suggest, you can buy an annuity. You can do that with some or all of the money, and you can still take the 25% tax-free first. If you do buy an annuity the income from it will all be taxed, but again your personal allowance will apply. Essentially an annuity is the least risky option, particularly if you get one that is uprated with inflation. Uprating with inflation makes the initial income even lower but protects you against cost of living rises as you get older. In exchange for avoiding that risk, you probably lose out on average compared to some more risky options. You might choose to get an annuity large enough to cover your basic needs and take more chances with the rest." I wish I had started contributing to the pension fund offered by my employer sooner than it became compulsory. That is, I started working when I was 23 but did not contribute to the pension fund until I was 30 (the age at which it is compulsory to do so). I lost a lot of productive years in mid to late 90s, when the stocks were doing well. :-( My understanding is that to make the $18,000 elective deferral in this case, you need to pay yourself at least $18,000.  There will be some tax on that for social security and Medicare, so you'll actually need to pay yourself a bit more to cover that too. The employer contribution is limited to 25% of your total compensation.  The $18,000 above counts, but if you want to max out on the employer side, you'll need to pay yourself $140,000 salary since 25% of $140,000 is the $35,000 that you want to put into the 401k from the employer side. There are some examples from the IRS here that may help: https://www.irs.gov/retirement-plans/one-participant-401-k-plans I know that you're not a one-participant plan, but some of the examples may help anyway since they are not all specific to one-participant plans.