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Is there any real difference between pre-tax and Roth 401k besides the taxes? When my company started offering Roth 401k, I kept the contributions up to my company match as pre-tax and the rest as Roth. So now I have both, but mostly pre-tax funds.
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Sep 29, 2021 18:44
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| # ¿ May 14, 2024 18:56 |
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GhostofJohnMuir posted:the one big difference that comes to mind is that roth 401k contributions (but not gains) can be withdrawn penalty free at any time without paying taxes or penalties since you've already paid taxes on it. any withdrawals are prorated between contributions and gains, so almost any withdrawal will have some portion hit with taxes and penalties, but the impact will normally less than a similar amount being withdrawn from a pre-tax 401k Thanks. That makes sense. It's probably pretty useless then since I already have a Roth IRA.
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Sep 30, 2021 03:38
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If you had a lump sum and where retiring somewhere between the next 5 years and now, what are the best options? Vanguard or Fidelity target 2020 or 2025?
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Nov 4, 2021 02:06
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OK thanks, I'm checking out the LifeStrategy funds. I guess it's just managing risk tolerance. The target 2020 is at about 45/45/10 stocks/bonds/TIPS now. Are you saying that's way too conservative for you, even in retirement? The target funds look great for getting to retirement, maybe not afterward.
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Nov 4, 2021 02:53
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By spreadsheet it out do you mean calculate all your math manually? Or are you using the functions? Because it seems easy to do what you want with a couple functions. Future value: FV(rate, number of periods, payment, present value) So for 8 years of contributions, 20 years after that to retirement FV(10%,8,16500,1000000) FV(10%,20,0,[previous FV])
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Jan 16, 2022 06:48
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Ah OK. I think I see what you mean A few things first that I did not explain in my previous post: - The way that financial functions work is that cash out is negative and cash in is positive. Opening a savings (or 401k) is cash "out" (you pay a bank this amount). Contributing to a savings (or 401k) is cash "out". The account balance is cash "in". A loan is cash "in" (a bank pays you for your collateral). A loan payment is cash "out". Opening a savings or 401k and contributing annually for 20 years: =FV(3.5%,20,-10800,0) result is positive because that is your account cash value Principle on a 30 year mortgage after 20 years: =FV(3.5%,20,-10800,200000) result is negative because that's what you still owe Balance on a savings account with a 200k starting balance after contributing annually for 20 years: =FV(3.5%,20,-10800,-200000) positive, cash in the account Balance on a 401k after taking annual distributions for 20 years =FV(3.5%,20,10800,-200000) positive, still have cash in the account - Compounding is done per period =FV(3.5%,20,10800,0) is compounded yearly =FV(3.5%/12,20*12,10800/12,0) is compounded monthly Sorry if it seems like I'm talking down to you or past you. The financial functions can be simple when you know how to use them but unintuitive and confusing if you don't. Back to what I think you want: Column B is your "present value" at year x from Column A Column C is "future value" at age 55 if no more contributions since year x Column D is "future value" at age 60 if no more contributions since year x So B2=FV(6%,A2,-[annual contributions],-[current balance/present value]) C2=FV(6%,55-[your age]-A2,-[annual contributions],-B2) D2=FV(6%,60-[your age]-A2,-[annual contributions],-B2)
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Jan 20, 2022 08:18
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Personally I don't like giant spreadsheets so I'll keep it simple to something like this A6=fv(B2,B4-B3, B5,B1) A7=fv(B2,55-B4, 0,-B6) A8=fv(B2,60-B4, 0,-B6) A9=fv(B2,65-B4, 0,-B6) Basic financial functions: PV=present value RATE=interest rate NPER=number of periods PMT=payment FV=future value
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Jan 20, 2022 08:26
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Where are good places to put taxable investments? I'm looking at a 3 fund with VTSAX VTIAX VBTLX The dividends seem manageable for taxes.
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Feb 9, 2022 16:38
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Got it! Thanks!quote:And if you've used up all your tax-advantaged space and still want to save more, read the Boglehead wiki page on tax-efficient fund placement!
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Feb 9, 2022 17:20
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That doesn't apply if you are acquiring the lump sum throughout the year and investing it all at once because you are losing the growth of those small individual investments. Investing money as you earn it isn't dollar cost averaging.
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May 11, 2022 19:14
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Yeah, that's what I meant to say. I interpreted The Puppy Bowl as saying "paying into your 2022 retirement progressively throughout the year 2022 instead of in a lump sum in January 2023".
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May 11, 2022 20:19
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Femtosecond posted:If I look at the differences between a 200k and 175k mortgage, the difference in payments over 30 years is $37,800. How do they come up with $12,800? You still have to pay the 25k. The difference between a 200k mortgage and a 175k mortgage + 25k down payment is $37,800 in payments - $25,000 down payment
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May 15, 2022 18:29
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I have a cash balance pension from my old job. Can I roll this into a Roth IRA, or does it need to be a trad IRA first? Is there a tax difference either way? I may use it for a down payment on a house, but if not I'd like to invest it.
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Aug 30, 2022 19:31
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I'm going to be rich. Just found an EE savings bond. I wish they still issued paper bonds because they look so cool.
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Nov 2, 2022 01:50
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Anyone use an FSA? I have an HSA, and the option of a limited purpose FSA as well. I declined the FSA again this year, but it's probably better to fund it for teeth cleanings and eye exams.
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Nov 8, 2022 20:00
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Strong Sauce posted:you can just keep ~610ish in there and let it rollover every year without spending it. if you need to spend it, buy some bandaids or something. That's fair. It's limited purpose FSA, so dental and vision only. I'd be buying some contact lense solution.
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Nov 8, 2022 22:57
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CmdrRiker posted:I thought MM funds were similar to HYSAs (though higher risk, but small interest and still liquid) used as tools to store funds to earn a little interest before you invest it in something. Something to note is that a money market account is a deposit account similar to a HYSA. It's not a money market fund and has nothing to do with mutual funds.
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Nov 16, 2022 22:08
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You shouldn't need to decide between one or the other. You can contribute to both and switch it up any time (if your plan allows it, check your plan). When I had access to a Roth 401k, I used the trad 401k to get where I wanted tax-wise, then the rest in Roth 401k. Another thing to consider is that if you change jobs and need to rollover your 401k into an IRA, your Roth 401k money can go to a Rollover Roth IRA without conversion. Minimizing your trad IRA will make backdooring easier if you think that's an option for you in the future.
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Nov 17, 2022 05:43
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The thread title might be a bit juvenile, but we've been buying ibonds since before it was cool so we're pretty sophisticated
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Nov 18, 2022 02:29
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Ubiquitus posted:Thanks for the feedback! Yes. That's what the OP recommends: "[panic posted:" post="345722713"] Remember to continue to step 3 when possible. A bad 401k is better than no 401k, and when you leave that company you can roll it over to something better. Do you have any funds available besides what you posted? There weren't any equity funds. The target date funds at this point are mostly equity, so it's not much more risky to put everything into a SP500 or total US fund for a few years at your age.
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Dec 18, 2022 20:46
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Does the 5 year rule apply to rollovers that are from another Roth account? Such as: 1) I rollover a Roth IRA from one institution to another 2) I rollover a Roth 401k into a Roth IRA
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Feb 16, 2023 21:07
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BRAKE FOR MOOSE posted:I think they're talking about less of a normal emergency fund (e.g. 3 months expenses) and more about how to put aside the remainder that probably won't be touched. It's optimal to leave it alone, but it's better to need to touch the principal in the case of catastrophe than to never invest in it. When I was younger I used to put everything I could into a Roth IRA right before the deadline, even if it meant taking savings to 0. But until that point, everything was kept as cash in checking or savings. I figured it was better to lose a portion of my Roth IRA in an emergency vs underfunding my Roth IRA and never having an emergency. It took discipline to constantly build an emergency fund but also not constantly stress over it. My Roth IRA was with my credit union. They offered about double the savings rate of a money market account and no investment options. Not much growth but no risk of losing value and easy to convert to cash in a money market account. Once I got on my feet more, it was a nice balance to roll over to an investment account. Obviously I think this is a valid strategy since it worked out for me. I wouldn't recommend it for everyone.
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Feb 22, 2023 16:30
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Atahualpa posted:(I.e. If the $75 for December isn't paid until January, does it count towards the 2024 limit instead?) Yes
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Mar 6, 2023 20:46
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Is your old employer forcing you to take a distribution or rollover on your old 401k? Because if not, you can keep it there and manage it as usual (which would be not managing it if it's all in a target date fund). You just won't be able make contributions.
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Mar 7, 2023 17:27
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That seems normal for Vanguard. Target 2040 is 80/20 right now. I've moved away from target funds because they are heavier in bonds than I'd like.
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Jul 15, 2023 22:17
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Magic City Monday posted:Or does it only work if you have actual self-employed income? This. You can only fund a Solo 401k with self employed money.
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Aug 31, 2023 14:24
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Democratic Pirate posted:Can you transfer roth 401k funds into a Roth IRA and ignore the $6k contribution limit? My wife’s old employer sent notice they are winding down their 401k plans and we’d like to get the funds into our Fidelity account for consolidation purposes. Yes that's a rollover and not a contribution
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Sep 15, 2023 05:35
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Some mutual funds have excessive trading rules and restrict buying shares again after you've sold, so you definitely want to rebalance out of those all at once.
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Nov 1, 2023 21:42
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Agronox posted:I think I have this correct, but please let me know if I don't. You can still withdraw for qualified medical expenses. You don't lose your HSA, it's still an HSA, you just can't contribute.
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Nov 4, 2023 16:04
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Subvisual Haze posted:Still not sure I like the theory of HDHPs and how they seem to incentivize not seeking out potentially preventative healthcare. But even so, HSAs are so powerful in tax advantages that HDHPs seem worth enrolling in just to get HSA contribution access. I picked the best HDHP that my employer offers and it's not much worse than the non-HDHP.
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Nov 5, 2023 00:12
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pseudorandom posted:My company has just started offering 401k benefits. I'm not sure if there's employer matching on the contributions right now. The problem is I'm fairly frustrated with management and I'm now (slowly) looking for new jobs. The second best time is now to save for retirement. Worst case I think is if you leave your job with less than $5000 in your 401k. Then your employer can close your account and send you a check, and you have 60 days to rollover. Above $5000, you can keep it in your old 401k until you are ready to rollover into your new employer's 401k or an IRA.
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Nov 16, 2023 22:08
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Muir posted:They also don't have to pay out any unused days when you leave. That's not a legal requirement. Wasn't there a recent court decision that determined PTO was not salary and could just be taken away?
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Dec 7, 2023 03:30
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smackfu posted:While I was just whining about how Principal doesn’t separate pre-tax and post-tax 401k money, they do make a mega back door Roth very simple. That's nice. I just need my company to add mega backdoor then. We got Roth this year, so maybe backdoor next year.
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Mar 27, 2024 00:11
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| # ¿ May 14, 2024 18:56 |
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The advantages of a Roth IRA over a Roth 401k are that you can withdraw contributions penalty-free at any time even before 59 1/2, don't have to take required minimum distributions at 72, and aren't beholden to your plan's administrator. It's just more flexible. If you leave your job, will you be able to rollover your mixed Roth/Trad 401k? I have a Roth/Trad 401k with my old employer. My new employer just recently started offering Roth 401k but still doesn't accept a Roth 401k rollover. I would have to juggle the checks myself to get the Trad money in my current 401k and Roth money in an IRA. Too messy for me, so I don't. (Fees and funds are fine so I'm not in a rush)
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May 2, 2024 18:06
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