401k roth

Discussion in 'UPS Discussions' started by yeldarb, Aug 28, 2011.

  1. yeldarb

    yeldarb Member

    I have participated in the 401k for a while, and on July 1, a Roth 401k became available, and I was on the site trying to figure out how to get that started. Am I able to do everything online if I am already doing a standard 401, or do I need to enroll in a Roth 401k completely separate? I was hoping to do it on the site, but had no luck with figuring it out. Thanks
     
  2. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Did you receive the CD/DVD in the mail? That should answer all of your questions.
     
  3. Jones

    Jones fILE A GRIEVE! Staff Member

    You can do it all online, go to "contribution rate" under the Future Money menu and you can make all the changes right there. You don't have to enroll or anything like that, you'll just be increasing your contribution rate from zero to whatever. Your fund allocations will stay the same as they are now.
     
  4. yeldarb

    yeldarb Member

    Got it done. Thanks Jones
     
  5. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Jones, from what I could see, there is no way to transfer the balances within an existing 401k directly to the Roth 401k nor is there any way to convert or rollover an existing 401k to the Roth 401k until we are done working. The traditional 401k gives you the tax benefit now while the Roth 401k delays the tax benefit until you begin taking withdrawals. Wouldn't it then make sense to continue contributing to the traditional 401k until just before retirement, set up the Roth 401k and then rollover the traditional in to the Roth upon retirement? There are no tax consequences for rolling over your 401k as it not considered to be a withdrawal. Having two separate 401k's is not nearly as effective as one for compounding purposes. Does this make sense or am I way out in left field?
     
  6. Just Lurking

    Just Lurking Member

    UpstateNYUPSer, you pay taxes when convert from pre-tax 401k to roth 401k. Its the say way converting transitional IRA to roth IRA. I believe that you can spread the tax consequences over a short number of years (2 to 5 not sure) but you cannot escape paying the taxes.
     
  7. satellitedriver

    satellitedriver Moderator Staff Member

    Yep, and there is the caveat that you can not draw any money out of a Rothe for 5 years, after the money was contributed, without a tax penalty.
     
  8. Jones

    Jones fILE A GRIEVE! Staff Member

    You don't really believe the government would leave a big ol tax loophole like that do you? You will pay taxes if and when you convert from traditional to Roth, regardless of when you do it. Having two separate 401k's (Roth and traditional) makes no difference as far as compounding interest goes, it's the total amount you have invested that matters. Having both types of 401K is a good way to hedge your bets though, as you never know what the tax rate is going to be in the future. It's a pretty safe bet that it will go up from where it is now though, and assuming that's the case you would be better off making all your future contributions to a Roth rather than a traditional, which is the route I'm going.
     
  9. satellitedriver

    satellitedriver Moderator Staff Member

    You can only put $5,000.00-($6,000.00 if you are over 50yrs old)- a year into a roth.
    I can only hope that full time drivers are putting away more than that every year.
     
  10. Jones

    Jones fILE A GRIEVE! Staff Member

    That limit is for a Roth IRA, for a Roth 401K you can contribute up to $16,500.00
     
  11. The Roth, be it the Roth 401k or the Roth IRA, is hands down the best retirement account out there. Period

    And the sooner you start it, the better.

    One exception and only one, a regular 401k with a match.

    UPS has no match, but if you have one , you do up to the match only, and then get back to the Roth up to the maximum contribution before anything else.

    The 1st sentence is the point here.

    IMO, which I am an expert in.
     
  12. satellitedriver

    satellitedriver Moderator Staff Member

    Wrong
     
  13. yeldarb

    yeldarb Member

    From what I read, the limit is 16,500 also.
     
  14. brett636

    brett636 Well-Known Member

  15. brett636

    brett636 Well-Known Member

    I have completely stopped contributing to my traditional 401k and am not fully investing into the Roth. At my age there is a gigantic benefit to being able to pay the taxes today at today's rates rather than pay them at tomorrow's tax rates. The growth is also tax free so you know every penny in that Roth 401k is yours rather than having to remember that 20% or more of your traditional 401k goes straight to uncle sam.
     
  16. Jones

    Jones fILE A GRIEVE! Staff Member

    Also remember that 16,500 is the total you can contribute to both funds, ie, if you're putting 5000 per year in the traditional 401K, the most you can put in the Roth is 11,500.
     
  17. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    To add to what Jones is saying--there is a "catch-up" provision for us older guys. You can contribute up to an addiitonal $5K when you turn 50.

    I guess I will have to decide if I want the tax break now or when I retire.
     
  18. Jones

    Jones fILE A GRIEVE! Staff Member

    Like I said earlier, it's a pretty safe bet that tax rates are going to up which means you will be better off taking that tax break in retirement.
     
  19. moreluck

    moreluck golden ticket member

    [QUOTE)--there is a "catch-up" provision for us older guys.
    [/QUOTE]

    Catch-up ?? mail the check to me and you'll be all caught up.
     
  20. satellitedriver

    satellitedriver Moderator Staff Member