Welcome to NESR! Most features of this site require registration, including replying to threads, sending private messages, starting new threads, and uploading files. Click here to register.

Page 48 of 48 FirstFirst ... 8283839404142434445464748
Results 1,176 to 1,189 of 1189

educate me 401-k

  1. #1176
    Member
    Join Date
    Aug 2014
    Location
    Southington, CT
    Posts
    164

    Re: educate me 401-k


    My previous employer used Merrill and my current uses Fidelity plus I have a brokerage account w/Vanguard. For Fidelity vs Vanguard I'm pretty indifferent as they both offer good low fee options. I can't speak to either's customer service but have read some negative accounts on forums about Vanguard's recently. I do think Fidelity's website and tools are better.

    Quote Originally Posted by nhbubba View Post
    There are two reasons why YOU may not want to roll your 401k into an IRA:

    2) Your new-found income is > the phaseout on ROTH IRA. If this is the case and you want to back-door, having ANY money in a traditional IRA incurs taxes and complicates things

    You may be able side-step this by rolling everything (old 401k, any existing traditional IRAs) into your new employers 401k. If the offerings are okay and you like where they are (401k managed by Fidelity does not suck). Many programs accept "roll ins". Unfortunately few support "in service withdrawals". So you'll be stuck once you do dat.
    If you are close to income phase out and plan to now or in the future perform backdoor roth, look up the pro-rata rule as that may dictate how you want to handle the old 401k with your available options.

    0 Not allowed!

  2. #1177
    Fast is contagious JettaJayGLS's Avatar
    Join Date
    May 2009
    Location
    San Francisco
    Age
    30
    Posts
    3,716

    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    Vanguard vs Fidelity is a draw. Both are excellent. The "screw the man" part of me gravitates towards Vanguard as it is investor owned, somewhat more transparent and that's all just a little bit hippie. But then I've had accounts with Fidelity for a long time and their customer support has been phenomenal. Fidelity dropped the expenses on a lot of their stuff and lowered mins. Vanguard followed suit by lowering mins on their admiral class and basically doing away with their base investor class. Consumer victory either way.
    I got the same exact story elsewhere. The millennial in me wants to keep it all in one place with Fidelity.

    Quote Originally Posted by nhbubba View Post
    I would aim to max every tax dodge you can.

    Max the 401k.
    Max the IRA. Sounds like you are income'ed out of a deductible traditional IRA. So go ROTH. Income'ed out of that too? Go back-door. (clickme)
    401K is maxed. Incomed out of traditional and roth IRA. This is where I get confused about the backdoor. If I am incomed out of the traditional IRA, why would I put money into that to then convert to a roth? Am I only doing this with the funds I rollover from my prior 401K?

    Quote Originally Posted by nhbubba View Post
    Go with a HDHP and max that HSA. Pay for health expenses (do you even have those, young mr super-human?!) out of pocket and keep those receipts.
    Investigate the "mega" backdoor IRA. (moar clickage)

    Work offers an FSA, not an HSA, can't play that game. Despite the fact I occasionally slide across the pavement in nothing but spandex, I can't spend $500 a year on bandages and I don't want to lose my lunch money. However, working for an early stage company is nice because I get excellent health care for next to nothing. Although I rarely have health expenses, I only have one option for a LDLP plan. Not the worst problem to have.


    Quote Originally Posted by nhbubba View Post
    There are two reasons why YOU may not want to roll your 401k into an IRA:

    1) The existing support and investment options with the Merrill 401k are good or good 'nuf for you not to want to care
    2) Your new-found income is > the phaseout on ROTH IRA. If this is the case and you want to back-door, having ANY money in a traditional IRA incurs taxes and complicates things

    You may be able side-step this by rolling everything (old 401k, any existing traditional IRAs) into your new employers 401k. If the offerings are okay and you like where they are (401k managed by Fidelity does not suck). Many programs accept "roll ins". Unfortunately few support "in service withdrawals". So you'll be stuck once you do dat.


    I don't care how low the Cheetah set the tax rates. If your income is high every $ you push into a tax shelter is $1 off your highest bracket. That ain't nothin'.
    ROTHs have no immediate tax savings. But never paying taxes on the gains ain't nothin' neither. If you're saving anyway, why would you not take advantage of that?!


    That's my $0.02
    I came to the same conclusion about the ROTH but its nice to get confirmation.

    Appreciate all the advice, for reals. Sorry if all of this has been answered prior. Kinda like the bicycle thread...I don't expect people to read back and I hope people are okay that I do the same!

    2 Not allowed!
    Last edited by JettaJayGLS; 03-14-19 at 03:03 PM.
    A man of many names...Jay, Gennaro, Gerry, etc.
    Former LRRS EX #978
    Tony's Track Days

  3. #1178
    Member Zolden's Avatar
    Join Date
    Jul 2005
    Location
    NJ/NY
    Posts
    211

    Re: educate me 401-k

    Read some interesting bits about drawing from or rolling over an old 401k in ways to maximize value and not get penalized... long haul though.

    Without airing too much of my own dirty laundry, if you exit a company prior to vesting happening and deem that you'd rather get out of that 401k and make it liquid, go tIRA > Roth IRA (within limits you mentioned) and then it can be drawn from without penalty prior to being 59 1/2 correct?

    Are there any other options that don't take 5 years? Having not ever bought a house, should I just keep the 401k as is for when the time comes and view it as savings for now?

    0 Not allowed!
    '19 Husqvarna FS450 Race
    2017 Aprilia Tuono Factory
    2007 Aprilia RSVR Factory (For Sale)

  4. #1179
    Burns retinas nhbubba's Avatar
    Join Date
    Jun 2011
    Location
    Seacoast NH
    Posts
    15,680

    Re: educate me 401-k

    Quote Originally Posted by JettaJayGLS View Post
    I got the same exact story elsewhere. The millennial in me wants to keep it all in one place with Fidelity.
    You'll be fine. Excellent web-site. Excellent C/S. Huge selection of low-fee jimmy jam. Not a lot to complain about.

    If I may, my one mark against Fidelity is that it is a capitalist company hell-bent on separating you from your $. Read the fine print. Pay attention. Be on your toes. Be suspect of the marketing BS. .. Basically all the normal stuff.

    But yeah, other than that.


    Quote Originally Posted by JettaJayGLS View Post
    401K is maxed. Incomed out of traditional and roth IRA. This is where I get confused about the backdoor. If I am incomed out of the traditional IRA, why would I put money into that to then convert to a roth?
    Because you want a savings vehicle that will let your savings grow tax free. Don't get me wrong, my first choice is to avoid paying taxes now and save the difference. But if that isn't an option.. then this is the next best thing. Instead you can chuck money in today, invest, let it grow and spend the gains later tax free. Plus you can always pull the contributions out later if the poop hits the oscillating blades. Also you can make trades as often as you want without worrying about short or long-terms gains taxes, wash sales, all that crap.

    Or you can skip the back-door IRA, drop the $ into a regular savings or brokerage account and pay dividends and gains tax forever.

    Quote Originally Posted by JettaJayGLS View Post
    Am I only doing this with the funds I rollover from my prior 401K?
    No. This is only with new savings. Leave your old stuff in "pre-tax" land. Converting any 401k or tIRA money that you've already taken income deductions for in the past into a ROTH would trigger a tax bill. You don't want that. The backdoor works as you are paying income tax on your income, then taking that income and stuffing it into a tIRA, then immediately converting it to a ROTH without taking a deduction for it. Thus it is already taxed.

    You are effectively saving to a ROTH IRA just like anyone else. I have no idea why they didn't just do away with the ROTH limits. But it would take an act of congress to change this. And they don't seem to be doing much lately. It is what it is.

    There is some history. It started that folks above a certain income level couldn't convert tIRA -> ROTH at all. Then they changed that and it opened up this loophole. The IRS itself has issued clarification that this is perfectly legal and okay.

    Quote Originally Posted by JettaJayGLS View Post
    Despite the fact I occasionally slide across the pavement in nothing but spandex, I can't spend $500 a year on bandages and I don't want to lose my lunch money.
    If you're talking about FSAs.. Yeah. They don't work out that well IMO. The one time I tried to use one for an expensive, non-essential surgery I wound up losing out. Cannot blame you for skipping that one.

    I have a "dependent-care" FSA available that I may need to read up on now that there is a Bubbette Jr afoot. But so far my read is that the tax benefit is really not that significant.

    401k. IRA. HSA. These are the big wins.

    Quote Originally Posted by JettaJayGLS View Post
    Sorry if all of this has been answered prior. Kinda like the bicycle thread...I don't expect people to read back and I hope people are okay that I do the same!
    That's exactly how it goes in these long B/S threads and exactly how it should be. No harm. No foul.

    Good luck setting all this up and congrats on the new gig. Hope ya'll turn into the next FANG.

    0 Not allowed!

  5. #1180
    Burns retinas nhbubba's Avatar
    Join Date
    Jun 2011
    Location
    Seacoast NH
    Posts
    15,680

    Re: educate me 401-k

    Quote Originally Posted by Zolden View Post
    Without airing too much of my own dirty laundry, if you exit a company prior to vesting happening and deem that you'd rather get out of that 401k and make it liquid, go tIRA > Roth IRA (within limits you mentioned)
    That would generate a taxable event. Taxed as ordinary income in his highest bracket. Considering he's making valley money, that's a lot!

    IMO converting tIRA > ROTH is terrible advice for him right now. Do this when "retired" or taking a year off or unemployed or whatever.
    The only place tIRA > ROTH conversions make sense is if the tax is already paid. IE the back door with new funds.

    I do suppose it is worth noting that if you have an existing tIRA already then you either have to roll that into a 401k or pro-rate per db79's comment. That is true.

    Quote Originally Posted by Zolden View Post
    and then it can be drawn from without penalty prior to being 59 1/2 correct?
    ROTH IRA conversions may be withdrawn tax and penalty free at any time after a 5 year seasoning period.

    Quote Originally Posted by Zolden View Post
    Are there any other options that don't take 5 years?
    Maybe. I don't know. There are 72(t) withdrawals. I read enough about them to decide they were too complicated for me.
    There are some options re: hardships and buying your first house or some such. I know nothing about this.

    Quote Originally Posted by Zolden View Post
    should I just keep the 401k as is for when the time comes and view it as savings for now?
    Yes. I would view 401k savings as savings. Very long-term savings.

    0 Not allowed!

  6. #1181
    Member
    Join Date
    Aug 2014
    Location
    Southington, CT
    Posts
    164

    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    I have a "dependent-care" FSA available that I may need to read up on now that there is a Bubbette Jr afoot. But so far my read is that the tax benefit is really not that significant.
    I've done the $5k dependent-care FSA for several years and for my specific situation it was more tax advantageous than just taking the $3k credit. But, I stopped the FSA this year as my son is now in elementary school and will just use the credit for the small sum we pay for aftercare.

    1 Not allowed!

  7. #1182
    Lifer tsorfas's Avatar
    Join Date
    Sep 2011
    Location
    in my own little world...
    Posts
    9,690

    Re: educate me 401-k

    I’m so fucking happy that I understand this conversation now

    0 Not allowed!

  8. #1183
    Lifer Not Sure's Avatar
    Join Date
    Dec 2007
    Location
    NH
    Posts
    1,195

    Re: educate me 401-k

    Quote Originally Posted by tsorfas View Post
    I’m so fucking happy that I understand this conversation now
    Finally!!!


    2 Not allowed!

  9. #1184
    I've been here before. Mustang's Avatar
    Join Date
    Sep 2008
    Location
    Boston
    Age
    35
    Posts
    1,372

    Re: educate me 401-k

    Quote Originally Posted by carsick View Post
    For my purposes, by using form 8880 Retirement Savings Contribution Credit ("Saver's Credit"), I put all my return into the Roth and get a sizeable tax credit for it for the previous year (yes, deducted right off taxes owed!).
    Tax savings
    Forced saving
    Time in the market
    Getting revenoor money for doing what I was gonna do anyway?

    Priceless.
    Make sure "you" read the instructions carefully; F8880 has AGI limitations and phase-outs.

    0 Not allowed!
    Bill Cool --- LRRS/CCS EX #47 --- 2018 LRRS Double Backup Champions GTL and ULSB , 2012 LRRS Champion AM Thunderbike --- RSP Racing / Tony's Track Days / MTAG-Pirelli / Woodcraft / Dyno Solutions / Sport Bike Track Gear / Knox / Brunetto T-Shirts / GMD CompuTrack

  10. #1185
    Day late, dollar short carsick's Avatar
    Join Date
    Nov 2011
    Location
    Cabot, VT
    Posts
    2,946

    Re: educate me 401-k

    Quote Originally Posted by Mustang View Post
    Make sure "you" read the instructions carefully; F8880 has AGI limitations and phase-outs.
    You've seen my racebike. My AGI is not even close to phased out.

    0 Not allowed!
    99 + 02 SV650 ex-race - 91 FJ1200 street - 03 KDX220R woods - 12 WR450F motard/ice

  11. #1186
    Member Zolden's Avatar
    Join Date
    Jul 2005
    Location
    NJ/NY
    Posts
    211

    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    That would generate a taxable event. Taxed as ordinary income in his highest bracket. Considering he's making valley money, that's a lot!

    IMO converting tIRA > ROTH is terrible advice for him right now. Do this when "retired" or taking a year off or unemployed or whatever.
    The only place tIRA > ROTH conversions make sense is if the tax is already paid. IE the back door with new funds.

    I do suppose it is worth noting that if you have an existing tIRA already then you either have to roll that into a 401k or pro-rate per db79's comment. That is true.



    ROTH IRA conversions may be withdrawn tax and penalty free at any time after a 5 year seasoning period.


    Maybe. I don't know. There are 72(t) withdrawals. I read enough about them to decide they were too complicated for me.
    There are some options re: hardships and buying your first house or some such. I know nothing about this.



    Yes. I would view 401k savings as savings. Very long-term savings.
    Thank you. Your fifth sentence scenarios are something that is a possibility right now, though unlikely with the decent job market out there. It sucks to think what you've been sinking some decent cash into and watching grow with matching is ultimately going to be worth half. I'd rather be rid of it if it ends up being the case. By the time my career is over I'll probably have 8-10 separate 401k accounts, fidelity advised against any kind of consolidation at this point.

    0 Not allowed!
    '19 Husqvarna FS450 Race
    2017 Aprilia Tuono Factory
    2007 Aprilia RSVR Factory (For Sale)

  12. #1187
    Soul Rider Paul_E_D's Avatar
    Join Date
    Sep 2003
    Location
    western, MA
    Age
    48
    Posts
    13,468

    Re: educate me 401-k

    Quote Originally Posted by tsorfas View Post
    I’m so fucking happy that I understand this conversation now
    I was just going to say the opposite. This has gone over my head.

    0 Not allowed!
    Paul_E_D


  13. #1188
    Lifer tsorfas's Avatar
    Join Date
    Sep 2011
    Location
    in my own little world...
    Posts
    9,690

    Re: educate me 401-k

    Quote Originally Posted by Paul_E_D View Post
    I was just going to say the opposite. This has gone over my head.
    Last couple weeks I have dedicated a lot of time on researching that stuff and had a very long meeting with a friend who is a financial advisor for living (cost me just dinner). I realize it’s a lot easier for me to learn during conversation rather than reading, although reading was much more effective after the conversation.

    1 Not allowed!

  14. #1189
    Burns retinas nhbubba's Avatar
    Join Date
    Jun 2011
    Location
    Seacoast NH
    Posts
    15,680

    Re: educate me 401-k

    I am pretty sure some here use the services of a fiduciary / financial manager/planner / "money guy" or whatever.

    What kind of services do you expect or look for?
    What kind of fees are you comfortable paying?
    Is your decision performance based?

    0 Not allowed!

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •