401k Rollover

[raceanoncr]

Here is the other thing to consider with an annuity, the money is paid out right when you pass away to your beneficiaries, with a 401k that all has to be named in your will costing you extra money for a lawyer. Plus, you have to consider probate or estate courts, which in my state are 9 months after you pass if you have a 401k set up in a will. Here is the other thing 401k's, cd's, and other things are subject to estate tax, on top of the income tax...Roth's are not subject to estate tax!

This may all be true but one big prob I have with Roths is that you're limited to just $5000 a yr. With 401 you still can log out going on $20000 right off the top. That's a big incentive to me.

 

[Catatonic]

This may all be true but one big prob I have with Roths is that you're limited to just $5000 a yr. With 401 you still can log out going on $20000 right off the top. That's a big incentive to me.

Can you get the $20k and keep it all. In management, we get 'refunded' ~$3500 every year because of lack of participation by others in the plan. Verrry frustrating.

 

[BigBrownSanta]

You can start a Roth, the company I have mine in is paying a bonus of 6.9% the first year, 3.9% after that, locked in rates. The nice thing about a Roth is that it is tax deferred, and when you retire, you pay no taxes on that money. Roth is a great thing to have as a backup plan, even if you just contribute the min of 500 a year with the right company, you will be glad you did.

I believe a Roth is not tax deferred. It's tax exempt. Deferred means that the taxes are deferred to a future date. A 401(k) would be an example of tax deferred.

At the moment, a Roth is tax exempt, but that could all change if our wonderful government decides to change it (and make it tax deferred).

I like the Roth's, simply because the initial amounts you invest can be withdrawn at any time without penalties and taxes. I'm not sure if you can do that with after tax contributions to a 401(k) (never checked).

Liquidity is very important to me.

 

[1989]

1989, I kinda hafta respectfully take issue with this.

With a Roth, you can only invest up to $5000, if you're over 50, a year. With a 401K, you can invest up to, what is it this year, $15000. Control? Well, what's not to control in your 401. There are alot of different funds to move it around in. Sure there are alot of different funds in Roth also. I say, "What's the diff"? Besides, in today's economy, NOTHING is gonna work.

Taxes? Right now, I want all the tax-deferment I can get. I have been maxing 401 for a number of yrs and it's worked great on taxes. Taxed at a higher rate later on? That much higher to make a diff? I don't think so.

The last few yrs, even with 401 maxing out, I've been taxed at 35%. Last yr, because of being out on dis for alot of months, and my income being slashed, I was taxed at 15%. I figured that when I retire (hopefully within the yr), with pension, early SS, wife's income, we'll be right at what I made last yr on dis, 15%, and I can make it on that just fine. Even if it jumps to 20% or 25%, it's still better than the 35% I was getting hit with working all year.

Do what you must, but in my case, this works just fine. Well, when the economy works just fine, that is.

Of course if you are saving more than the $5000 limit you must use other vehicles.

MLP's can work if you are worried about taxes now.

You have limited control in your 401K because you only have maybe 15 or so places to put the money. There are fees if you just have the money in the funds and expensive fees if you use a self managed account. If you move some money between funds the transaction doesn't take place until the end of days closing price. Which can be a 5% difference from 10AM to the close with the S & P 500. Plus the penalty for early withdrawal with the 401K.

With the Roth you have no fees. You can buy any ETF or stock immediately with a low $10 commision or lower.

Working people have many deductions against their income and have ways to make more money. Retired people are usually on a fixed income and just have the standard deduction against their income.

 

[brownmonster]

Just did my taxes this morn. Wife and I put over 10k in our 401k's and lost well over 100k. Sure could have enjoyed the extra 10 grand instead of flushing it.