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401(k) isnt really a good deal unless you earn $1mm+ (Julia)
Poast new message in this thread
Date: January 20th, 2018 2:05 PM Author: Out-of-control Mother Boiling Water (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197259) |
Date: January 20th, 2018 2:05 PM Author: hilarious school cafeteria legend 401(k) makes sense only if you get dat match (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197265) |
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Date: January 20th, 2018 2:06 PM Author: Out-of-control Mother Boiling Water Untrue. It still makes sense without a match unless your employer only offers a plan with actively managed funds with high fees (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197273) |
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Date: January 20th, 2018 2:07 PM Author: fantasy-prone digit ratio orchestra pit Still makes sense. Pay way lower tax rate down line AND avoid capital gains taxes.
Everyone forgets capital gains advantage |
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Date: January 20th, 2018 2:14 PM Author: hilarious school cafeteria legend there's a high risk that a future Democrat congress will impose a 100% tax on outstanding 401(k) balances to pay for universal healthcare (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197316) |
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Date: January 20th, 2018 2:20 PM Author: Out-of-control Mother Boiling Water There’s a risk that a meteor will hit the earth and kill us all. Don’t save anything (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197368) |
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Date: January 20th, 2018 2:24 PM Author: erotic state This is utterly retarded. 401k distributions are taxed as ordinary income. Depending on your tax bracket, this may be higher than capital gains. That’s why retirees in high tax brackets are advised to draw on funds from taxable accounts first, and avoid 401k distributions as much as possible. Thus the concept of the RMD. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197386) |
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Date: January 20th, 2018 2:28 PM Author: fantasy-prone digit ratio orchestra pit Yea retard but you avoid the original income tax and for most people the withdrawals will be at a much lower tax rate. AND no capital gains tax. Of course if you end up loaded then it's not really as helpful but most people shouldn't plan on that.
You are really fucking stupid. |
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Date: January 20th, 2018 2:31 PM Author: Out-of-control Mother Boiling Water Lol at ur stupid ass. Julia is a FINANCIAL ADVISOR (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197415) |
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Date: January 20th, 2018 2:32 PM Author: fantasy-prone digit ratio orchestra pit CR who am I to argue with a CNBC contributor (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197420) |
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Date: January 20th, 2018 2:33 PM Author: erotic state You’re really fucking dumb. No. You do not avoid the income tax - you are just paying it later when you claim the distribution. Theres no telling what your income bracket will beat retirement - if you’re a working professional who saves regularly, it may well be higher. Just do some basic reading and educate yourself:
In most cases, you want to draw on taxable accounts first. In a few cases, you’ll need to draw more from 401ks to manage the RMD issue. |
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Date: January 20th, 2018 2:38 PM Author: Offensive Reading Party Parlor you would have to save a shitload of money for your tax bracket in retirement to be higher than while working. It's not going to happen for 95% of people. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197461) |
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Date: January 20th, 2018 2:41 PM Author: erotic state Not necessarily; it could also reflect changes in the tax code. What the idiot above doesn’t understand is that you only pay one of either cap gains or ordinary income taxes on money from taxable or tax deferred accounts. There is no “saving” on cap gains taxes. If you put the money in a brokerage account, you get taxed on cap gains when it’s withdrawn; if you put it in a 401k, it's ordinary income. Never both. He doesn’t seem to see this. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197476) |
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Date: January 20th, 2018 6:00 PM Author: Sickened swashbuckling keepsake machete tank Look you dumb bitch, if you put it in a brokerage account you get taxed TWICE. Once as ordinary income on a paycheck and once as capital gains when you sell the stocks you invested that ordinary income in. The 401k avoids that double taxation. Are you really this stupid? (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35198666) |
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Date: January 21st, 2018 9:14 AM Author: citrine odious brunch I avoid your sub threads as a rule but that doesn't sound correct. Isn't the $ you put in a regular brokerage account $ you've already paid income taxes on (or had withheld from your paycheck)? (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35201842) |
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Date: January 21st, 2018 9:17 AM Author: Offensive Reading Party Parlor exactly, but don't expect her to get this point (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35201847) |
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Date: January 21st, 2018 7:12 PM Author: electric friendly grandma newt jfc (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35205137) |
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Date: January 20th, 2018 2:44 PM Author: Yellow bawdyhouse idiot 1. Millenials aren't going to get rich af starting in middle age. There is not "no telling." I know this is the conventional wisdom but just think about it for a second. You can pretty much tell where you'll end up based on OCI and phenotype.
2. 401k money is still money that no one can get to i.e. if you get sued and shit. If you randomly get rich in your 50s - good for you! Now you have other accounts to draw from that are more advantageous! Hooray! So you draw the 401k money last - so what? Something has to come last.
3. Income is generally low af in retirement and when it's not, that is generally apparent relatively early in one's life.
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Date: January 20th, 2018 2:47 PM Author: erotic state I’lm going out now. Will respond substantively later today. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197504) |
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Date: January 20th, 2018 2:48 PM Author: Yellow bawdyhouse idiot Thanks for the heads up. Cheers! (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197512) |
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Date: January 20th, 2018 6:02 PM Author: Sickened swashbuckling keepsake machete tank Can't wait for the substantive response from picasso-tits. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35198672) |
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Date: January 21st, 2018 10:49 AM Author: Yellow bawdyhouse idiot Thanks for nothing. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35202177) |
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Date: January 20th, 2018 2:34 PM Author: hilarious school cafeteria legend what capital gains tax are you avoiding (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197432) |
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Date: January 20th, 2018 2:37 PM Author: erotic state This guy is seriously confused. It’s either cap gains or ordinary income. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197453) |
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Date: January 20th, 2018 2:40 PM Author: hilarious school cafeteria legend although ppl probably don't give enough weight to the ability to reinvest pretax dividends in a 401(k). (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197473) |
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Date: January 20th, 2018 2:42 PM Author: fantasy-prone digit ratio orchestra pit You are missing a big step (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197483) |
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Date: January 20th, 2018 2:38 PM Author: fantasy-prone digit ratio orchestra pit On non 401k gains you pay capital gains on your earnings.
yes you is income tax on your earnings in 401k but the earnings are much higher than if you had paid income tax originally (non 401k).
I'm not doing the math for you but if you do it you'll see |
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Date: January 20th, 2018 2:42 PM Author: erotic state Please retype in English. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197482) |
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Date: January 20th, 2018 2:43 PM Author: fantasy-prone digit ratio orchestra pit You've proven to be a retard time and time again on here. I'm not arguing with an idiot any longer.
If you want to do the math to show I'm wrong go for it.
Wtf do you think the advantage of a Roth is? |
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Date: January 20th, 2018 2:46 PM Author: erotic state Ok, so I won. Thanks for playing! (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197495) |
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Date: January 20th, 2018 2:46 PM Author: fantasy-prone digit ratio orchestra pit I'm guessing you thought about it a little more and realized what step you were missing (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197501) |
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Date: January 20th, 2018 2:26 PM Author: erotic state Cr, or if you need to lower your taxable income now. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197394) |
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Date: January 20th, 2018 2:11 PM Author: zombie-like thriller area Makes no sense if both your parents died in early 60s from cancer. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197303) |
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Date: January 20th, 2018 2:51 PM Author: fragrant self-centered corner the anti 401k screeding is tryhard nonsense. tax deferred growth where you can arrange to pay low taxes 40 years from now. oh i wonder why they have to limit contributions. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197525) |
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Date: January 21st, 2018 9:20 AM Author: misanthropic selfie party of the first part Cr. Julia...I retract my advice. Go to law school part time and take all the tax classes and do tax clinic. You will see in like week 4 of fed tax why 401 et seq is a good deal. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35201854) |
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Date: January 20th, 2018 2:58 PM Author: diverse slate box office There's NO CHANCE tax rates will be lower in the future. They're currently at historic lows, GOP hasn't cut spending at all and all that debt will be to be paid back eventually, and libs will control government in the future. It actually makes more sense to reduce your 401k contributions now since we're at a market peak and taxes are much lower that they will be when you retire. Put that shit into a roth and so you avoid future high tax rates (yes, this requires you to assume the risk that libs won't double tax roths). (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197595) |
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Date: January 20th, 2018 3:04 PM Author: fantasy-prone digit ratio orchestra pit Example for Julia:
Suppose you invest $10k in 401k 20 years before retirement with a 30% marginal rate (that you avoid). 10% yearly growth gives you about $25,937 in 20 years. Say your income is still taxed at 30%, that leaves you with $18,156 when withdrawn.
If you instead put the $10k in normal account and pay the 30% tax now, in 20 years at 10% growth that comes out to $18,156, but you are done paying taxes. So equal to 401k.
But wait! In the second scenario you are paying capital gains taxes on the interest and dividends every year and when you sell you are paying it on the gains.
So it comes out to much less than the 401k amount of $18,156 even if there is no income tax rate advantage.
Julia?!?! |
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Date: January 20th, 2018 3:05 PM Author: diverse slate box office "10% yearly growth gives you..."
stopped reading right here |
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Date: January 20th, 2018 3:07 PM Author: fantasy-prone digit ratio orchestra pit Make it 2% and it still applies dumbass (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197669) |
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Date: January 20th, 2018 3:12 PM Author: Cerise sadistic wrinkle long term capital gains tax rate is 0% right now for bulk of retirees (married filing joint retirement income is 75.9K or less).
https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/ |
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Date: January 20th, 2018 3:15 PM Author: fantasy-prone digit ratio orchestra pit Okay then just include the interest every year (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197731) |
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Date: January 20th, 2018 3:17 PM Author: Cerise sadistic wrinkle she can put 100% of it in equities or some other form of non-interest yielding assets.
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Date: January 20th, 2018 3:21 PM Author: fantasy-prone digit ratio orchestra pit Lol ok. You got me (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197786) |
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Date: January 21st, 2018 9:30 AM Author: trip point So your tax rate assumption for retirement is 0 percent capital gain and 30 percent on ordinary income? That's retarded. If you're at 0 on gains it is because your income is low and your marginal rate on ordinary is also likely to be low. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35201877) |
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Date: January 20th, 2018 3:13 PM Author: Out-of-control Mother Boiling Water Also take into account how much you have to earn in order to invest $10k. Under the 401kk scenario it’s $10k. Under the second, it’s a number higher than $10k (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35197710) |
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Date: January 20th, 2018 3:48 PM Author: erotic state This is, again, stupid:
1) Long-term capital gains rates are zero for most middle-income filers, so there's no advantage vs. a 401K - especially if they want to withdraw before full-retirement age and avoid penalties. 2) What in fuck are you talking about interest? A typical equity portfolio carries no interest. 3) You can engage in tax-loss harvesting, etc, to offset a portfolio that includes other types of assets. 4) 401K fees and offerings are often less advantageous than a taxable account. 5) Funds in a brokerage account can be converted into IRAs, or you can pool many account types, making you a preferred customer and qualifying you for preferential treatment/rates.You can't convert a 401K into anything except a rollover account. 6) Opportunity cost of keeping money tied in a 401K and not invested more lucratively elsewhere.
Again, the advantages of a 401K are limited to 1) Employer match 2) bankruptcy protection, 3) lowering current taxable income ( for IBR or PAYE, for example), and 4) encouraging undisciplined savers to keep heir hands out of the cookie jar.
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Date: January 20th, 2018 3:54 PM Author: fantasy-prone digit ratio orchestra pit Ljl. So basically you listed a bunch of exceptions to refute the capital gains tax savings (which you denied existed earlier); most of which don't even make sense.
Just do never have dividends or bonds! You really are the worst combination of arrogant and dumb.
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Date: January 20th, 2018 3:56 PM Author: erotic state I see you just got pwned and are butthurt. Sorry :(
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Date: January 20th, 2018 4:12 PM Author: fantasy-prone digit ratio orchestra pit What's the advantage of a Roth if capital gains tax savings aren't important? Why not just put in regular taxable account? (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35198165) |
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Date: January 20th, 2018 6:08 PM Author: Cracking Fanboi Home Also, her argument assumes that there will still be a large 0% capital gains bracket in the future, and that the poors who end up in it don't currently qualify for the savers credit. (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35198694) |
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Date: January 20th, 2018 4:59 PM Author: arousing deranged public bath The real answer here is “diversify on tax”, just as you diversify on the underlying securities.
I have about 3x more in my Roth than in 401K accounts (and I also have about the same amount as is in the 401K in normal accounts), but I have no problem at all putting eggs in both (or all three) baskets, though I avoid holding bonds in my normal, taxable account. Who knows what tax rates are going to be 40 years from now? I tend to think Roth accounts are likely to be a better deal overall, but those, too, depend upon the government not deciding just to double-tax the money after all. If there are low-ish income years in retirement where it’s advantageous to do so, I’ll pull extra from the 401K and come out ahead. If not, well, I favored the Roth anyway. |
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Date: January 20th, 2018 5:43 PM Author: fantasy-prone digit ratio orchestra pit Worse case with Roth is they capital gains tax everything so it ends up just being like a normal taxable account except for restrictions. Worth the risk IMO (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35198610) |
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Date: January 20th, 2018 5:54 PM Author: arousing deranged public bath I completely agree, worth the risk. I also have a fair amount of investment real-estate, which is tax-advantaged in its own way of course.
Maximum flexibility about where, exactly, to draw income from in retirement is a good thing, I think. |
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Date: January 21st, 2018 10:49 AM Author: shimmering idea he suggested it's a complete scam (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35202179) |
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Date: January 21st, 2018 11:25 AM Author: lake bateful market mexican Dividends, bonds, or any other interest bearing instrument are never taxed while held in a tax-sheltered account. In other words, you can enjoy 30+ years of growth without the government taking it's yearly cut.
I'm not reading through sub-thread wastelands, but there are many people that do not make a million dollars per year, and would have a good reason to hold dividend paying stocks or bonds in their investment portfolio. If they do so, it is more advantageous to hold them in tax sheltered accounts. I don't see how this is open for serious debate.
Edit: this point is separate and independent from issues such as fund/administrative fees, and the ROTH vs Trad issue. Those things vary from person to person. |
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Date: January 21st, 2018 5:41 PM Author: fantasy-prone digit ratio orchestra pit Nah Julia says the income tax you eventually pay is the same thing as paying capital gains. Worse actually! (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35204462) |
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Date: January 21st, 2018 7:00 PM Author: orange space Julia spends a few dozen hours every month scanning clickbait 'personal finance hack' listicles to rip off for her own 'freelance finance writing' career. career should probably be taken in the loosest sense possible, given the individual being discussed.
anyway, she has lost touch with ordinary financial reality because she only understands personal finance as some kind of 'identify hacks/tricks/loopholes' scheme where decades-long sound planning for security and growth is reduced to a few binary points targeted at middle class neckbeards and Carmella Soprano-style hausfraus who can't really grasp how investment works.
Julia is moste definitely the type of dilettante who is too dumb and lacks the background to overcome her own posturing, so she inevitably grows to think that the bullshit she sells to the gullible/indifferent is actually great advice. |
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Date: January 21st, 2018 7:23 PM Author: Stubborn Marvelous Gas Station (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35205259) |
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Date: January 21st, 2018 11:27 AM Author: ungodly whorehouse international law enforcement agency Weird thread (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35202379) |
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Date: January 21st, 2018 5:15 PM Author: Out-of-control Mother Boiling Water (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35204285) |
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Date: January 21st, 2018 5:21 PM Author: buck-toothed puce lettuce toaster :_(
I max out 401k every year, get a 1/2 match, borrow against my 401k and invest those proceeds into stocks. Shrewd? |
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Date: January 22nd, 2018 8:26 AM Author: Out-of-control Mother Boiling Water Cr. What could go wrong? (http://www.autoadmit.com/thread.php?thread_id=3865563&forum_id=2#35208280) |