401k questions

drewed

Shankman
If hes a ft driver....honestly how long does it take to save up for his own place? Unless hes wanting to pay cash for a house...i dont think it would take that long...
 

What'dyabringmetoday???

Well-Known Member
401k contributions can be both pre-tax and after-tax. The amount that you contribute each year comes right off of the top of your gross income, which, as Tex noted, was one of the main selling points of the 401k. Your withdrawals are then taxed at the income tax rate at the time of the withdrawal, which will most likely be lower than your current tax rate, when you turn 59 1/2 (why the 1/2--I have no clue).
Thank you E.friend. Hutton.
 

What'dyabringmetoday???

Well-Known Member
The part of this thread that I found upsetting was that we finally found a topic which Drewed not only doesn't know what he is talking about but actually admits it.
The part I found upsetting was that you added one more to a long line of posts that nobody really cares to read. Now get in there and get that truck sorted before start time and impress Roger.
 

mountaingoat

Well-Known Member
Now is the time to start planning for retirement. I would contribute has much as possible. Remember You will not have to pay Federal Tax on contributions.You will pay taxes when you withdraw. You should diversify according to your tolerance of risk. Being that you have 30-40 years till retirement I would go pretty agressive Maybe something along the lines of
55% in a Growth fund
20% in an International Fund
10% in a Small Cap fund
10% in a Mid-cap fund
5% in a bond Fund
Rebalance your porfolio once a year. This is a sure way to buy low and sell high.
not sure what kind of funds your 401k has but you get the jist Good Luck.

All good advice. With a 30-40 year time horizon, my suggestion would be to go 100% equities. 25% each in Large-Cap Index, Small-Cap Index, Mid-Cap Index, and International Index. Rebalancing at least once a year forces you to sell your good performers and buy the not-as-good performers. Each Index rises at a different pace and by rebalancing, you are locking in your gains with one fund and purchasing the others that have not risen as much.

Another thing to think about - you mentioned that you planned to purchase a house. That goal has a different time horizon than your retirement. Since you mentioned mid-20's as your age, let us assume that you will be purchasing in your early 30's, which would give you about a 5-6 year horizon. And, you do not want to be as risky with that shorter timeframe as you would be with your retirement. For this goal, I would suggest a bond fund that is less risky than equities, and will return you 3-4%.

Also remember that with the house, the more money that you put down initially, the less that you will pay in interest over time. Aim for at least 20% down so that you avoid PMI (it's an insurance payment if you have <20% down) when you purchase your house.
 

Ms.PacMan

Well-Known Member
I was pretty sure my 401k contributions were taxed...
401K is the tax code. It was originally thought of as a loop hole.

1978​
The Revenue Act of 1978 included a provision that became Internal Revenue Code (IRC) Sec. 401(k) (for which the plans are named), under which employees are not taxed on the portion of income they elect to receive as deferred compensation rather than as direct cash payments. The Revenue Act of 1978 added permanent provisions to the IRC, sanctioning the use of salary reductions as a source of plan contributions. The law went into effect on Jan. 1, 1980. Regulations were issued in November of 1981. Source
 

NedFlanders

Well-Known Member
If hes a ft driver....honestly how long does it take to save up for his own place? Unless hes wanting to pay cash for a house...i dont think it would take that long...

Well i would agree with you if i was at top pay, but thats about 16 months away. I bring home around 600/week. After paying the bills and pleasing the gf, there's really not enough there to be thinking about buying a house. I wouldnt be able to pull that off until top pay comes.
 

drewed

Shankman
Well i would agree with you if i was at top pay, but thats about 16 months away. I bring home around 600/week. After paying the bills and pleasing the gf, there's really not enough there to be thinking about buying a house. I wouldnt be able to pull that off until top pay comes.
People do more with less, maybe you shouldnt worry that much about pleasing the gf....
 
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