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I'm completely new to investing and looking for some advice on how to start. I'm 26 and recently married, and don't have any plans for any big purchases any time soon. I have a Roth IRA with about $11K that I've been maxing out contributions to for the past couple years, as well as an individual brokerage account with about $1k. Both these accounts are sitting at 100% cash reserves because I didn't know any better. My accounts are currently through Fidelity but I would like to transfer them over to Vanguard since it seems like they offer better services. Are there any good reasons not to do this? I also have an old 401k through a previous employer, and I was told by a financial adviser that I should probably roll that over into a normal IRA account. I just started contributing to my 401k with my current employer at 10% (I think they do contribution matching up to 3%). The rest of my money has been sitting in savings accounts and CDs through my bank. I've also been looking at opening up a taxable investment account, but I'm not sure what funds I should be investing in to make sure I don't screw myself over on taxes later. I know I need to do my research (just started reading The Four Pillars), but I also don't want to drag my feet on this any longer than I already have.
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Feb 4, 2014 08:14
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MrSamurai posted:I'm completely new to investing and looking for some advice on how to start. I'm 26 and recently married, and don't have any plans for any big purchases any time soon. I have a Roth IRA with about $11K that I've been maxing out contributions to for the past couple years, as well as an individual brokerage account with about $1k. Both these accounts are sitting at 100% cash reserves because I didn't know any better. My accounts are currently through Fidelity but I would like to transfer them over to Vanguard since it seems like they offer better services. Are there any good reasons not to do this? I also have an old 401k through a previous employer, and I was told by a financial adviser that I should probably roll that over into a normal IRA account. I just started contributing to my 401k with my current employer at 10% (I think they do contribution matching up to 3%). The rest of my money has been sitting in savings accounts and CDs through my bank. I've also been looking at opening up a taxable investment account, but I'm not sure what funds I should be investing in to make sure I don't screw myself over on taxes later. Once you finish transferring the IRA to Vanguard, put the assets in the Target Retirement fund for your year and do not touch it until you finish studying. Do not use Fidelity's Target Retirement fund. Wait on the brokerage for now, as there are tax implications for transferring between different funds. Roll over old 401k to Vanguard, and then also put that into the Target Retirement fund for your year.
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Feb 4, 2014 08:30
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If you're saving long-term, stocks don't drop in value. They go on sale.
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Feb 4, 2014 14:15
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Having rode the market from 1560 to 666 all-in, these scale pullbacks feel pretty inconsequential. During 2007-2008 the volatility was insane, it felt like it was going up and down 2-3% per day, almost every day. Nowadays I just don't even pay attention.
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Feb 4, 2014 15:20
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ntan1 posted:Once you finish transferring the IRA to Vanguard, put the assets in the Target Retirement fund for your year and do not touch it until you finish studying. Do not use Fidelity's Target Retirement fund. Wait on the brokerage for now, as there are tax implications for transferring between different funds. What's wrong with Fidelity's target date funds?
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Feb 4, 2014 15:33
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Jows posted:What's wrong with Fidelity's target date funds? They're pretty expensive. Like 1.2% or somesuch where you might be able to swing a few index funds instead with lower expense ratios.
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Feb 4, 2014 15:35
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Mouse Cadet posted:So are you guys riding this out, switching to bonds? SELL SELL SELL No, I made some recent changes to my portfolio but none of them had anything to do with the recent market downswing.
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Feb 4, 2014 15:50
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ranbo das posted:If you're saving long-term, stocks don't drop in value. They go on sale. I never quite understood this sentiment. If you deconstruct this attitude, aren't you basically saying that a dollar invested today has a higher expected return than one invested last friday when the market was higher? It's really just veiled market timing. The same goes for the idea that rebalancing produces excess returns after market swings. I prefer to think of market movements as totally random, and my expected return on each dollar doesnt change from day to day (at least not in a way that I can actually predict better than chance). If stocks recently have gone down a lot or up a lot it doesnt affect my returns long term. Stocks don't go on sale, they fluctuate.
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Feb 4, 2014 17:23
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Eyes Only posted:I never quite understood this sentiment. If you deconstruct this attitude, aren't you basically saying that a dollar invested today has a higher expected return than one invested last friday when the market was higher? It's really just veiled market timing. The same goes for the idea that rebalancing produces excess returns after market swings. In the long run though, it's true that the lower the value the greater the expected returns, so long as you assume that in the end the market will be higher decades in the future. This will necessarily be true as long as the fundamentals of interest don't change. It's not really "timing the market" so much as it's just recognizing that when there's been a drop, that's actually favorable to the longterm outlook. In Four Pillars Bernstein talks several times about how you should hope for bear markets early in your investing career for this very reason. He also advocates value averaging for this same reason and points out that it outperforms dollar cost averaging because you're always adding money, but the lower the market goes, the more (future) value you add(assuming you have the money to do it).
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Feb 4, 2014 17:51
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They are on sale, but you just don't know if there will be a better sale tomorrow. So don't buy more because of it, but you can still feel good about your normally scheduled contributions happening today. A better way to put it is that you shouldn't stop buying when the market is tanking, because once it's over, you can look back and see that you got a great deal on purchases during that time. You can't know if you're at the bottom at any given time, but if you stop buying when prices fall, you CAN guarantee that you won't be buying low.
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Feb 4, 2014 17:55
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Bearnt! posted:Can someone explain the differences between the VTSMX Index Fund and VTI ETF? I was going to toss some dough in the VTSMX but noticed the minimum investment is $3,000 where as the ETF has no minimum but is twice the price. While we're at it what about the admiral shares as well (VTSAX)? From what I can see those have the same expense ratio as the ETF which is lower than the index fund but the same price as the index fund with a 10k minimum required investment. An ETF is like a stock, you can buy or sell it whenever you want. A mutual fund transaction only goes through at the end of the day, and Vanguard gets to set minimums and such. This is not really a major difference from the point of view of a long-term investor; in basically all important ways, the ETF and mutual fund are exactly the same. The major difference from your perspective is that you can buy whatever amount of the ETF you want, so go for it.
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Feb 4, 2014 18:55
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Don't time the market.
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Feb 4, 2014 20:26
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I have a new job with a state agency that I'm required to pay in to. I don't have any other retirement stuff setup and I'm 33. I have two options for my retirement. A full pension that I pay 5% of my income in to and I'm eligible to use after 5 years of service . The benefit is 2% x years of service x average final compensation. My other option is a hybrid where I elect my contribution amount and in addition to whatever that is I also get when I retire 1% x years of service x average final compensation. My elected contribution is anywhere from 5% - 15%. None of this is matched. When I leave I can take this money with me for both or I can leave it and if I have enough years of service I can use the defined benefits when I retire. Once I pick a plan and, if applicable, a rate I'm locked into my choice for my lifetime. Any suggestions on what I should do? Any other info that would be useful for deciding? In addition to either of those I can participate in a 403b.
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Feb 4, 2014 20:29
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ETFs are also nice in taxable accounts because you can sell select shares to harvest losses. Doesn't really matter in 401k or IRA accounts though.
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Feb 4, 2014 20:40
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Minty Swagger posted:ETFs are also nice in taxable accounts because you can sell select shares to harvest losses. Doesn't really matter in 401k or IRA accounts though. It appears to me that you can do this just fine with Vanguard mutual funds as well.
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Feb 4, 2014 21:12
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Today was payday so I guess the market is timing itself for me. 
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Feb 5, 2014 00:02
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I'm wary when it comes to ETFs. They seem like the better choice for several reasons (that is, a vanguard index etf compared to it's admiral shares equivalent index fund) but wtf I feel like an individual stock trader when I hold them. Limit order, open order, wtf? I just need a crash course when it comes to buying, holding and selling ETFs I guess. Because I want to have a diversified portfolio but the only way I can do that atm is to use ETFs until I can afford for everything to be in an admiral share fund.  Nail Rat posted:It's not really "timing the market" so much as it's just recognizing that when there's been a drop, that's actually favorable to the longterm outlook. In Four Pillars Bernstein talks several times about how you should hope for bear markets early in your investing career for this very reason. He also advocates value averaging for this same reason and points out that it outperforms dollar cost averaging because you're always adding money, but the lower the market goes, the more (future) value you add(assuming you have the money to do it). Yeah, "timing the market" is a short term thing. Like my co-worker (he was basically what Bernstein would call a Chartist) was timing the market when he tossed $40,000 of inheritance (all of it) into a tech stock that went bust a week later because "It was going up and down and I bought it when it was down! It made sense at the time!". What long term investors do is realize it's 2008 and that it's a good time to buy because in the long term things should be a lot better, because if they're not we're going to have a lot more to worry about than our retirement funds. Sephiroth_IRA fucked around with this message at 01:05 on Feb 5, 2014 |
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Feb 5, 2014 00:57
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dbl post my bad.
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Feb 5, 2014 01:04
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Orange_Lazarus posted:I just need a crash course when it comes to buying, holding and selling ETFs I guess. Because I want to have a diversified portfolio but the only way I can do that atm is to use ETFs until I can afford for everything to be in an admiral share fund. You can have a very nice well-diversified portfolio in a single mutual fund for cheap once you have $1000. At $3000, you have even more options. At $10s of K you start using the admiral funds. If you want to go with ETFs that's great (if you are using the free trades at Vanguard) but there's no reason you can't use mutual funds right away.
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Feb 5, 2014 01:15
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Echo 3 posted:An ETF is like a stock, you can buy or sell it whenever you want. A mutual fund transaction only goes through at the end of the day, and Vanguard gets to set minimums and such. This is not really a major difference from the point of view of a long-term investor; in basically all important ways, the ETF and mutual fund are exactly the same. The major difference from your perspective is that you can buy whatever amount of the ETF you want, so go for it. Thanks! Just what I was looking to find out. What are the benefits of the admiral funds once I get to that level besides the slightly lower expense ratios?
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Feb 5, 2014 01:27
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Bearnt! posted:the slightly lower expense ratios. It can be a factor of 4, which is nice. Although it's 1/4 of what was already a pretty small expense.
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Feb 5, 2014 01:29
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silvergoose posted:They're pretty expensive. Like 1.2% or somesuch where you might be able to swing a few index funds instead with lower expense ratios. Okay yeah I took a look earlier today. Fidelity's 2050 target date fund is 0.82% while Vanguard's is 0.18%. I've been keeping my Roth IRA in that fund since 2008. I basically just set it to forget about it. Reading this thread and other sources has made me think about my overall portfolio more, especially in regards to expense ratios. Maybe I'll make a post and open myself for criticism and advice. Edit: Is there any overwhelmingly compelling reason to switch from Fidelity to Vanguard (aside from the target date funds, as we've covered)? Their index funds have similar expense ratios, especially in their admiral/advantage classes. Is it worth the trouble to switch? Jows fucked around with this message at 02:57 on Feb 5, 2014 |
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Feb 5, 2014 02:47
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Orange_Lazarus posted:I'm wary when it comes to ETFs. They seem like the better choice for several reasons (that is, a vanguard index etf compared to it's admiral shares equivalent index fund) but wtf I feel like an individual stock trader when I hold them. Limit order, open order, wtf? http://www.bogleheads.org/wiki/Orders It feels like trading stocks because it is exactly like trading stocks, you're going through the exchange to buy shares of the fund from a third party. This means that they won't necessarily trade at exactly the NAV. The "bid" is what the current highest offer to buy is, and the "ask" is the current lowest offer to sell. If you place a market order, you will automatically buy at whatever the current ask is. The risk is that the ask may change while you're putting in your order, or you buy more shares than are being offered at the ask price, and you'll buy at a higher price than expected. You get certainty that the trade occurs, but not certainty of the price. If you place a limit order, you essentially set your own bid, and when someone is willing to sell at that price, the order goes through. The risk is that nobody might want to sell at that price. You get certainty of the price, but not that the trade actually happens. Those are the two main kinds of orders. Generally, the safest plan is to place a limit order at the current ask. If the ask hasn't changed, it'll go through right away like a market order, otherwise it will hold off until the ask drops to meet it again. Jows posted:Okay yeah I took a look earlier today. Fidelity's 2050 target date fund is 0.82% while Vanguard's is 0.18%. I've been keeping my Roth IRA in that fund since 2008. I basically just set it to forget about it. Reading this thread and other sources has made me think about my overall portfolio more, especially in regards to expense ratios. Maybe I'll make a post and open myself for criticism and advice. Fidelity's the second-best place to have your money because of those Spartan index funds and also the free commissions on iShares ETFs. Unless you want something Vanguard offers and Fidelity doesn't, it's not necessary to switch. One thing to note, though, is that the Spartan International Index isn't quite the equivalent of Vanguard's version, because it only includes developed markets. The Spartan Global ex-US Index is the better choice.
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Feb 5, 2014 03:46
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Raymn posted:I have a new job with a state agency that I'm required to pay in to. I don't have any other retirement stuff setup and I'm 33. I have two options for my retirement. A full pension that I pay 5% of my income in to and I'm eligible to use after 5 years of service . The benefit is 2% x years of service x average final compensation. My other option is a hybrid where I elect my contribution amount and in addition to whatever that is I also get when I retire 1% x years of service x average final compensation. My elected contribution is anywhere from 5% - 15%. None of this is matched. When I leave I can take this money with me for both or I can leave it and if I have enough years of service I can use the defined benefits when I retire. Once I pick a plan and, if applicable, a rate I'm locked into my choice for my lifetime. Any suggestions on what I should do? Any other info that would be useful for deciding? In addition to either of those I can participate in a 403b. This is going to take a spreadsheet and you're going to have to make some estimates about the future: what sort of pay increases are likely (around 3% is normal for public sector and large corporations), what sort of interest you can earn on what you put into the hybrid plan (look at the funds offered in your plan). Play with the numbers. Figure out what numbers are realistic for you, your agency's history, what you think the future will bring and your lifestyle. I don't think it is fair for them to expect you to be able to make an informed, rational decision about a decision you have to make now that you can't ever change over your working career. This is going to take some homework for you to be able to figure out. Assumptions: 1. You can withdraw 4% from your savings without depleting what you have saved. 2. Your retirement age will be 70 (some public sector workers may retire in their 50s, but that's going to become more rare as time goes by) 3. "Average final compensation" = average over working life. Some plans only cover average of the last 3 or 5 years. Some plans only cover average of the highest 3 or 5 years. The formula in the "average salary" column will need to be adjusted to what your plan actually says. 4. Interest is compounded once per year and contributions are made once per year. 5. Inflation is ignored. Arbitrary numbers to change: In the absence of other information, I picked $50k/year to start with 3% cost of living increases. Fiddle with those numbers as well as the 7% return for your savings. Check the result with pessimistic and optimistic numbers (can you afford to live with the pessimistic numbers?). There are 4 images here: 2 are what you can model from the straight pension (numbers in one image, formulas in the other). 2 are what you can model from the hybrid scheme (numbers in first image, formulas in second). To switch between formula view and number view in Excel, control plus ` (the back apostrophe that is above the tab key and to the left of number 1 on most keyboards). Most of the rows are hidden in order to make this reasonable.  Straight pension numbers  Straight pension formulas Columns: F is the required contribution for that year. G is the lifetime average salary. H is the amount of pension you'll get at 2%*YearsOfService*AverageSalary  Hybrid numbers  Hybrid formulas Columns: F is the percentage to contribute to retirement, this is the number you said had to be decided now and locked in forever (min:5%, max:15%). G is how much will get contributed to your retirement savings that year. H is how much you think the savings will earn, long term stock market gains are claimed to be around 8%, but check the mutual funds available to your plan because they might have much lower returns over the long term. I is the cumulative earnings assuming the returns in H. K is the lifetime average salary. L is the amount of pension you'll get at 1%*YearsOfService*AverageSalary M is the "safe withdrawal rate" (assumption #1) from the amount in your saving plan in column I. N is L + M. This is what you compare with column H in the straight pension worksheet. If this wall of text is too long, then a very simple rule of thumb is: if you can only afford to set aside 5% then take the straight pension. If you can afford to set aside 15% then take the hybrid. Somewhere in between is the cross-over where one is better than the other. Make the spreadsheet, play with the numbers. I don't think there is a major error in my model, but it is quite possible that others will question assumptions and formulas.
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Feb 5, 2014 08:43
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Oh yeah, and put whatever you can afford into the 403b. If all you did was put 10% into your 403b starting at age 33 and had no pension, you'd still be ahead of 3/4 of the American public when you retire.
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Feb 5, 2014 08:46
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Question; right now I set aside $230 every two weeks into a savings account where it waits and grows until January 1st when I use it to the sum to fund my Roth contribution for the year. I've been thinking about setting it aside in a brokerage account instead rather than letting it sit idle. Should the market tank on or around January 1st, I usually have enough liquid cash set aside to fully fund the contribution anyway. Any other risks I should be worried about? To clarify, the idea would be to make equal investments during the year into the mutual funds in my taxable account, then come January sell $5,500 worth that qualify as long-term capital gains to fund the Roth.
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Feb 5, 2014 18:19
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Huttan posted:lots of stuff Thanks so much for posting this! I will fudge around with what you posted and come back with more questions when I have them. I guess another side of the question is operating under the assumption that I will even complete the necessary years of service to qualify when I retire and if keeping the money there is worthwhile over removing it and putting it into something else if I do leave. I'm in IT and live in Seattle so I don't think I will have a shortage of options when I have more experience and would like to make more money. Supposedly the straight pension does generate interest but I don't know how much. If I were to make the decision based on the assumption I would either not work here long enough to qualify for benefits when I retire or that whatever my benefit amount would be when I do retire would be less than what I could get out of it were I to take the money when I leave and invest it. If that makes sense? I don't think that was a complete sentence but I think the gist gets through.
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Feb 5, 2014 18:46
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bam thwok posted:Question; right now I set aside $230 every two weeks into a savings account where it waits and grows until January 1st when I use it to the sum to fund my Roth contribution for the year. I've been thinking about setting it aside in a brokerage account instead rather than letting it sit idle. Should the market tank on or around January 1st, I usually have enough liquid cash set aside to fully fund the contribution anyway. Why would you buy a mutual fund throughout the year, sell it with tax consequences, and then make a lump IRA contribution into a mutual fund rather than just set up a recurring purchase into the mutual fund as an IRA account?
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Feb 5, 2014 20:33
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I'm guessing he's a year ahead on his contributions, i.e. on Jan 1 2014 he fully funded his IRA for 2014 tax year.
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Feb 5, 2014 20:59
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Nail Rat posted:I'm guessing he's a year ahead on his contributions, i.e. on Jan 1 2014 he fully funded his IRA for 2014 tax year. This. I set aside my contributions for the next year each month until it reaches $5500, then dump it into the IRA as soon as the contribution period is open. If I'm willing to tolerate the risk of it being worth less than $5500 when it comes time to contribute, why shouldn't I do this? Just trying to see if anyone else does this. I know not everyone is a year ahead on their contributions like I am. bam thwok fucked around with this message at 22:56 on Feb 5, 2014 |
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Feb 5, 2014 22:54
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Raymn posted:I guess another side of the question is operating under the assumption that I will even complete the necessary years of service to qualify when I retire and if keeping the money there is worthwhile over removing it and putting it into something else if I do leave. If you vest in a pension, then that means you have a guaranteed amount of money coming when you reach retirement age. So as long as you work for them for at least 5 years, you will have some money coming in 30-ish years. From a math perspective, when you vest, you "get" an annuity that will pay $X/month when you reach the retirement age in the plan. Some companies and municipalities are calculating the amount owed to separated workers [1] and purchasing annuities from insurance companies [2]. This moves the gain/loss risk from the pension to the insurance company. Every person that I personally know who had a public pension, and then cashed that pension plan in, has totally regretted the move years later. All of them thought they could do a better job, and all were wrong. A couple of them had emergencies where they pulled money out of the IRAs that they put the money into, so all that savings went poof. 2008 happened to the rest. I used to work for GM and have a vested pension with them. The money isn't great, but every other year they try to sucker me into cashing out my pension with a lump sum check. Checking annuities, they're offering 1/2-1/5 of the amount it would cost to purchase the same dollar annuity from an insurance company. Maybe this is the difference between wholesale and retail, or maybe they think I can't do math. I've got about $200k in 401k and IRAs, so the lump sum isn't going to move things more than a couple percent. And after my family's experience, I am more concerned about running out of money when I'm too old to work, so while other people are horrified at annuities, they reduce the risk I am most worried about. I'm currently a software developer who works in the pension reporting industry. Notes: 1 - "separated" means that you no longer work there, but have a vested interest in the pension. 2 - In the US, only insurance companies can sell annuities.
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Feb 5, 2014 23:12
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The biggest benefit of a lump sum payment in my eyes is that you know you're getting it. While pensions may be legally guaranteed to you, there is still a chance you won't end up getting what they promised you. I believe my company offers a lump sum which you can roll into an IRA without tax/penalty, when I get closer to retirement or leaving for another company I plan on considering this option seriously.
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Feb 6, 2014 01:38
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Looking for people's thoughts. I'm about to pay off all my federal grad school loans that are at 6.5%. I still have a significant amount ($100,000+) of variable-rate private school loans that are tied to LIBOR. These are long duration (16+ years at least). Two thirds of the total value of those is currently at roughly 2.6%, with a third at 3.6%. In recent years I have NOT been maxing out my 401(k) ROTH contributions to focus on paying off the 6.5% loan. However, I have been contributing anywhere between 3% and 8% a year to Roth eligible accounts, so I do have a decent Roth balance already. Now that I'm done with the 6.5% loans, I'm heavily leaning towards maxing out the 401k contributions and not pre-paying the remaining loans while the rates remain low. Even doing that, I would still have some "extra" each month to add to my already 4+ month plus reserves. Obviously, there is no an answer to this unless you can predict LIBOR and the stock market, but is there anything I'm missing or should consider? Is their a way to quantify the added value of money going into a "roth" account? If I understand correctly, I can withdraw original contributions from a 401(k) Roth for any reason after 5 years or is that only a Roth IRA? I'm 33, rent, have no other debt. Maybe I need to see an actual financial planner?
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Feb 6, 2014 01:59
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bam thwok posted:This. I set aside my contributions for the next year each month until it reaches $5500, then dump it into the IRA as soon as the contribution period is open. If I'm willing to tolerate the risk of it being worth less than $5500 when it comes time to contribute, why shouldn't I do this? Just trying to see if anyone else does this. I know not everyone is a year ahead on their contributions like I am. If your problem is that you just have too much money to shovel into a Roth IRA you should consider a couple of possibilities: 1. Contribute to a traditional IRA and immediately convert it to a Roth IRA to circumvent the Roth contribution limits (google "Roth IRA conversion"). This is a perfectly legal option that was originally designed to encourage conversion of pre-existing non-Roth retirement vehicles. (This only works if you have no existing traditional IRA; otherwise you must pay taxes on a pro-rata basis of pre-tax dollars in your traditional IRAs) 2. Contribute to a traditional IRA for the immediate tax write off and the ability to capture tax savings with a timely Roth conversion down the road in years where you have zero or almost zero taxable income due to loss capture in market downturns, other capital losses, went back to school, out of work, etc. etc. It is very possible to never pay tax on large chunks of income with strategic Roth conversions of traditional retirement assets. BEHOLD: MY CAPE fucked around with this message at 02:56 on Feb 6, 2014 |
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Feb 6, 2014 02:33
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MayakovskyMarmite posted:Looking for people's thoughts. I'm about to pay off all my federal grad school loans that are at 6.5%. I still have a significant amount ($100,000+) of variable-rate private school loans that are tied to LIBOR. These are long duration (16+ years at least). Two thirds of the total value of those is currently at roughly 2.6%, with a third at 3.6%. In recent years I have NOT been maxing out my 401(k) ROTH contributions to focus on paying off the 6.5% loan. However, I have been contributing anywhere between 3% and 8% a year to Roth eligible accounts, so I do have a decent Roth balance already. Now that I'm done with the 6.5% loans, I'm heavily leaning towards maxing out the 401k contributions and not pre-paying the remaining loans while the rates remain low. Even doing that, I would still have some "extra" each month to add to my already 4+ month plus reserves. You should pay the minimum on your student loans and maximize your tax-advantaged savings. Your loan balance and accruing interest of about $3000/year puts you in a pretty sweet spot in terms of capturing the $2500 student loan deduction, but if you're just renting you probably aren't itemizing tax deductions so it won't help you.
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Feb 6, 2014 02:46
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BEHOLD: MY CAPE posted:You should pay the minimum on your student loans and maximize your tax-advantaged savings. Your loan balance and accruing interest of about $3000/year puts you in a pretty sweet spot in terms of capturing the $2500 student loan deduction, but if you're just renting you probably aren't itemizing tax deductions so it won't help you. The student loan deduction cuts off at like 75K. I make too much to benefit from that deduction.
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Feb 6, 2014 02:58
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MayakovskyMarmite posted:The student loan deduction cuts off at like 75K. I make too much to benefit from that deduction. Depending on what you make, you could use traditional 401k contributions to bring yourself under the limit to qualify for the deduction. Also, for a Roth 401k you cannot withdraw contributions like you can a Roth IRA while you are still employed at the same place. If you change jobs or they somehow change to a different 401k provider, you would qualify to be able to roll over that money into a Roth IRA and then after 5 years you could withdraw your contributions. flowinprose fucked around with this message at 04:22 on Feb 6, 2014 |
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Feb 6, 2014 04:19
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Huttan posted:If you vest in a pension, then that means you have a guaranteed amount of money coming when you reach retirement age. So as long as you work for them for at least 5 years, you will have some money coming in 30-ish years. From a math perspective, when you vest, you "get" an annuity that will pay $X/month when you reach the retirement age in the plan. Some companies and municipalities are calculating the amount owed to separated workers [1] and purchasing annuities from insurance companies [2]. This moves the gain/loss risk from the pension to the insurance company. Ok, so I guess the only reason to pull that money out would be if it were somehow more than the total of the monthly benefit over like 20 years and that doesn't seem likely in any scenario. Great. Thanks!
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Feb 6, 2014 06:00
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I rolled my 401k and roth 401k into a roth IRA last year. I just got the 1099's for the conversion, and on the one for the roth there is a taxable amount listed that is the same as the difference between my contributions and the gross value. This doesn't seem right and H&R Block tax prep thinks its an illegal value. I'll be calling my old company tomorrow, but am I missing something here? There is no taxable amount listed from the traditional 401k.
Xenoborg fucked around with this message at 06:09 on Feb 6, 2014 |
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Feb 6, 2014 06:07
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BEHOLD: MY CAPE posted:If your problem is that you just have too much money to shovel into a Roth IRA you should consider a couple of possibilities: If he's already maxed his Roth IRA contributions for this year he can't put money in a traditional IRA either.
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Feb 6, 2014 08:21
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