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re: Just increased my 401k percentage
Posted on 5/24/22 at 9:36 am to TigerFanatic99
Posted on 5/24/22 at 9:36 am to TigerFanatic99
quote:
How are you going to put half your income into your 401k and stay under the annual limit?
50% for a few months, not the whole year.
Posted on 5/24/22 at 9:37 am to Weekend Warrior79
quote:
It would be a great time to consider switching from traditional 401k to Roth 401k if your company has that as an option
Curious as to why?
Thank you!
Posted on 5/24/22 at 10:07 am to ThatsAFactJack
Roth plans do not require RMDs when you hit 72. Therefore, if you don't need the money now, you can just let it continue to build
You are paying taxes on your ROTH investments now; therefore, they will grow tax free (current laws). As a result, you do not pay taxes on any growth.
There is the tax bracket argument. In theory, you will be in a lower tax bracket when you retire. However, future tax brackets are unknown. The more we continue to foot the bill for entitlement programs and the world; the higher tax rates will need to be in the future. Therefore, you are hedging against potentially higher taxes.
I also had an advisor run through the time value of money calculation about paying taxes now and letting it grow tax free, v a tax deferred program that is taxed at withdrawal; but do not recall how the calculation worked in favor of a ROTH plan (I was already transitioning to ROTH, so didn't really care)
You are paying taxes on your ROTH investments now; therefore, they will grow tax free (current laws). As a result, you do not pay taxes on any growth.
There is the tax bracket argument. In theory, you will be in a lower tax bracket when you retire. However, future tax brackets are unknown. The more we continue to foot the bill for entitlement programs and the world; the higher tax rates will need to be in the future. Therefore, you are hedging against potentially higher taxes.
I also had an advisor run through the time value of money calculation about paying taxes now and letting it grow tax free, v a tax deferred program that is taxed at withdrawal; but do not recall how the calculation worked in favor of a ROTH plan (I was already transitioning to ROTH, so didn't really care)
Posted on 5/24/22 at 10:11 am to Weekend Warrior79
quote:
It would be a great time to consider switching from traditional 401k to Roth 401k if your company has that as an option
That's what we both do already. We contribute via ROTH while company matches go in pre-tax so both buckets in that instance are being built up. We both did traditional for years until learning about the power of ROTH especially when you're not in the top brackets. But the best part outside of the tax free withdrawals later is the fact you dont have to take out RMDs at all for ROTH IRAs so just rollover that ROTH 401k balance to a ROTH IRA before 72 and you're golden to have 100% decision making power over that money.
This post was edited on 5/24/22 at 10:17 am
Posted on 5/24/22 at 10:16 am to TDsngumbo
Wealth-building is the way to go! Well done.
Know people who spend too many hours per week trying to find higher rates of return on their money; meanwhile, their lifestyle expenses are full of bloat.
Don't forget the % return you can create by ridding of expense bloat, if possible. Cutting out expense bloat is 100% guaranteed return, too, to your wealth-building.
Know people who spend too many hours per week trying to find higher rates of return on their money; meanwhile, their lifestyle expenses are full of bloat.
Don't forget the % return you can create by ridding of expense bloat, if possible. Cutting out expense bloat is 100% guaranteed return, too, to your wealth-building.
Posted on 5/24/22 at 10:17 am to Weekend Warrior79
quote:
Roth plans do not require RMDs when you hit 72. Therefore, if you don't need the money now, you can just let it continue to build
You are paying taxes on your ROTH investments now; therefore, they will grow tax free (current laws). As a result, you do not pay taxes on any growth.
There is the tax bracket argument. In theory, you will be in a lower tax bracket when you retire. However, future tax brackets are unknown. The more we continue to foot the bill for entitlement programs and the world; the higher tax rates will need to be in the future. Therefore, you are hedging against potentially higher taxes.
I also had an advisor run through the time value of money calculation about paying taxes now and letting it grow tax free, v a tax deferred program that is taxed at withdrawal; but do not recall how the calculation worked in favor of a ROTH plan (I was already transitioning to ROTH, so didn't really care)
Just 1 thing to add here is it must be in a ROTH IRA to avoid RMDs. As ROTH 401k or traditional 401k require minimum distributions at 72 right now. But obviously just roll it over to a ROTH IRA before then and you're fine.
Posted on 5/24/22 at 10:18 am to Turf Taint
quote:
Know people who spend too many hours per week trying to find higher rates of return on their money; meanwhile, their lifestyle expenses are full of bloat.
Based. ABC - Always Be Contributing.
You don't need to YOLO on the latest shitcoin if you are constantly investing every year and controlling expenses.
Posted on 5/24/22 at 12:28 pm to Weekend Warrior79
Thanks for the explanation.
Was increasing my contributions but directed it to Roth 401k instead of traditional 401k. Another egg in the basket instead of relying on one vehicle.
Much appreciated.
Was increasing my contributions but directed it to Roth 401k instead of traditional 401k. Another egg in the basket instead of relying on one vehicle.
Much appreciated.
Posted on 5/24/22 at 12:39 pm to TDsngumbo
quote:
Went from 15% to 18% with a 3% company match. Figured I’d take advantage of all this retirement on clearance right now and for the next 5 years. I think everyone under age 50 should consider doing the same thing right now. I’m not a trader, I’m a wealth builder (saw that here recently and thought it was a brilliant way to explain attitude going into this recession). Therefore, I want to accumulate as many shares as I can while still maintaining my current lifestyle. If the market really starts to skid into March 2020 levels, I may up it to 50% for a few months. It would be enough to feel it significantly for those few months but I think we could make that work.
I’m capped at 6% but wish I could.
Posted on 5/24/22 at 12:45 pm to TDsngumbo
Went 1099 Sole Proprietor earlier this year. Maxed my Roth last week. Will be maxing my wife's shortly. Contributions are withdrawalable if shite ever really hits the fan (don't plan to touch).
I've been saying I hope there's a crash for years. No sense in shying away now. I have 30 years and a job I can work until then with side hustles that pay too.
I did rollover a decent chunk from a former employer into VTSAX about a month ago at $109. The timing of that kind of hurts looking at it now.
I've been saying I hope there's a crash for years. No sense in shying away now. I have 30 years and a job I can work until then with side hustles that pay too.
I did rollover a decent chunk from a former employer into VTSAX about a month ago at $109. The timing of that kind of hurts looking at it now.
This post was edited on 5/24/22 at 12:50 pm
Posted on 5/24/22 at 12:56 pm to Grinder
quote:
Very smart move. Just make sure you’re maxing out the 401K dollars every year. Wife and I have both done this every year for the last 22 years, and our results have been great.
I’m curious why my response got downvotes. What am I missing?
Posted on 5/24/22 at 1:28 pm to Grinder
quote:
I’m curious why my response got downvotes. What am I missing?
A large faction of people on this board take offense when someone posts that they have some level of financial success
Posted on 5/24/22 at 1:46 pm to Rize
quote:
I’m capped at 6% but wish I could
You aren't allowed to contribute more than 6% of your income to your 401k? Is it a 401k or some other type of plan?
Posted on 5/24/22 at 2:04 pm to TDsngumbo
I max out 401k and Roth.
If I couldn't afford to do both then I would contribute to 401k whatever amount necessary to get the full company match.
I would then max out my Roth.
Then I would add what I could to 401k.
Of course some of this depends on your tax bracket for obvious reasons.
If I couldn't afford to do both then I would contribute to 401k whatever amount necessary to get the full company match.
I would then max out my Roth.
Then I would add what I could to 401k.
Of course some of this depends on your tax bracket for obvious reasons.
Posted on 5/24/22 at 2:53 pm to TDsngumbo
quote:
You aren't allowed to contribute more than 6% of your income to your 401k? Is it a 401k or some other type of plan?
It’s 401k.
Posted on 5/24/22 at 4:35 pm to Fat Bastard
quote:
Are you making well above 100k a year? most here make well over that.
No only 15.3% of total household income is above that. So def no most.
quote:
Are you making well above 100k a year? most here make well over that.
No only 10.3% of total households income make over 200k
Posted on 5/24/22 at 4:53 pm to LSUtiger89
quote:
quote:
Are you making well above 100k a year? most here make well over that.
No only 15.3% of total household income is above that. So def no most.
quote:
Are you making well above 100k a year? most here make well over that.
No only 10.3% of total households income make over 200k
Adve
you must be new here
most on this board who are regulars are in the top 10%
IDGAF about the national average
I am talking THIS BOARD aka MOST HERE
This is THE fricking MONEY BOARD man not some reddit trash
This post was edited on 5/24/22 at 4:55 pm
Posted on 5/24/22 at 6:37 pm to Fat Bastard
What most people also don't realize is the income mobility in the US. That is one of the best things about America no matter what others will say considering all of the "American Dream is dead" comments you hear.
61% of households will find themselves in the top 20% of household incomes for at least 2 consecutive years in their lifetime.
39% of households will be in the top 10% for at least 2 consecutive years. It is something like 12% of households will make it to the top 1% for at least 1 year.
So yes in any one year the % that makes a certain threshold might be relatively low but over a career or lifetime of earnings the amount of households crossing those thresholds is much higher.
As FB and many also state this board isn't your average and in general your average and below average earners generally aren't as interested in the money talk board topics as the higher income earners.
61% of households will find themselves in the top 20% of household incomes for at least 2 consecutive years in their lifetime.
39% of households will be in the top 10% for at least 2 consecutive years. It is something like 12% of households will make it to the top 1% for at least 1 year.
So yes in any one year the % that makes a certain threshold might be relatively low but over a career or lifetime of earnings the amount of households crossing those thresholds is much higher.
As FB and many also state this board isn't your average and in general your average and below average earners generally aren't as interested in the money talk board topics as the higher income earners.
Posted on 5/25/22 at 3:26 am to bod312
quote:In Louisiana, you can thank the Gordons for contributing to this statistical anomaly.
It is something like 12% of households will make it to the top 1% for at least 1 year.
There is decent economic mobility in the US, contrary to what some folks would want us to believe.
Posted on 5/25/22 at 6:16 am to Rize
Is this a subtle way to say you make $345,000/year or your employer's retirement plan has weird limits?
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