Fun with Dick (Roth) and Jane (401k)

I was going to lament how much I miss the Trump stock market (bad news tweet = buying opportunity, good news tweet=back to normal), but last night I had a flash of brilliance. 

 I have more disposable income now than I have ever had in my life, but still not enough to retire. So I was looking to see other ways to increase income. My employer recently started matching 401k contributions, and last year they did an introductory 2:1 match for a year, which I participated in for a pre-tax account, but this year when it converted to 1:1 I stopped contributions altogether. Now I know many of you are saying "But it's free money! Why would you do something stupid like that!" Well, it *is* free money, but I make more money using my after tax money on dividend growth stocks (and in the long run) than I do from a managed pre-tax 401k (ETF-only no dividend) institution, that's why. Remember, I'm not the genetically healthiest person around, I don't plan to live forever like my 401k and social security accounts think I will. Then I started wondering - can I get my employer to match, then just take the money out? No I can't, unless I claim hardship, which I have nothing to back that claim up with if I'm making enough from dividends. Then I saw something interesting: My employer also matches Roth contributions:

Uhm, wow. Because, this:

See where I'm going here? But then you ask, "What happens to the money your employer matched (and any gains on both contributions) when you take that money out?"

So, to summarize: I give my 401k instituion 5% of my paycheck to deposit into a Roth 401k, my employer matches that 5%, then I remove that contribution whenever (say, 2 weeks later), invest in my dividend stocks, my 401k instution takes that matching amount (and any gains) and puts it into a traditional 401k account (since it is pre-tax) and I let it sit until I retire and take that matching amount out (sooner with penalties, later without). Simple, right? No, of course not, not when it comes to institutions. I have been struggling with the institution my employer uses since day 1. When I leave my employer, I can't wait to roll that money into my own IRA, or even better a ROBS . 

 So I called my institution, and of course I was sent up the chain with my "complicated" question. After stating this was recorded, and restating my name (ever feel like you are being set up for a court hearing?), I received an explanation which made no sense. "So let me get this straight, I allocate $5k to my Roth 401k, my employer matches $5k, and I can only take out $600, $100 of which will be taxed as though it was earned." What??? I laughed inside as this guy started to go into his pitch of getting me invested for much more, to which I reply I'll likely be dying before I'm 65, so what's the point? He never missed a beat, and kept going with his spiel without an ounce of empathy. 

 Finally, I did get him to show me where the plan information is, and all I could find out about what he was talking about was this: 

"You are always 100% vested in your contributions and any rollovers made to your 401(k) Savings Plan account. You are also 100% vested in any 401(k) match contributed by (Employer)." 

and 

"Excess contributions of Roth contributions are distributed tax-free, but earnings are taxable. If you made both Roth and pre-tax contributions to the 401(k) Savings Plan in excess of the IRS Annual Contribution Limit during the calendar year, excess contributions will be taken from the pre-tax source first followed by the Roth source. Please note: return of Roth and/or pre-tax contributions could result in the forfeiture of associated matching." 

Which makes sense if it only works with excess contributions (Roth limitations). So, after all this inconclusive information, I went ahead and decided to match 5% of my income into a Roth 401k. I really have nothing to lose, if I can't touch it until I'm 65, then I guess I'll be getting it then (or my kids will). Or I'll just take it out with a 10% penalty, but doubled money (the only reason I might stay in it).  

But, right after it goes in, I will see if I can remove my contribution and see what happens. If the employee match stays, then I'll keep adding and removing, magically making free money for when I'm 65 appear, and keeping my after-tax income. If the match doesn't stay, or they won't give me my money back, then I will simply turn off the feature, and continue as normal, waiting for this boring market to bubble and crash so I can add more dividends. There's a good chance this might happen in September, when the stay of execution for people not paying mortgages and rents will come due...

Dividend Increases & Special Payouts

• Qualcomm Incorporated (NASDAQ:QCOM) has approved a 5% increase in the Company's quarterly cash dividend.  The quarterly cash dividend will increase from $0.65 to $0.68 per share and will be effective for quarterly dividends payable after March 25, 2021.  This one has been really growing in value, too.  I picked a winner.
• Realty Income (NYSE:O) declares $0.235/share monthly dividend, 0.2% increase from prior dividend of $0.2345.  Just a hair, but I'll take whatever I can from REITs after the lockdowns.

March Purchases: