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UPS Prudential 401k after I retire questions?
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<blockquote data-quote="satellitedriver" data-source="post: 2616954" data-attributes="member: 1664"><p><span style="color: #006600"><strong>I am sure your financial "advisor" has only your best interest at heart. </strong></span></p><p><span style="color: #006600"><strong>You can not just roll over a traditional 401k into a Roth IRA without paying taxes on the amount transferred. Those monies transferred are taxed as earned income.</strong></span></p><p><span style="color: #006600"><strong>As an example, if you transferred $200,000.00 from your 401k to a Roth you would pay an effective tax rate of 18.6%, which would be about about $37,000.00.</strong></span></p><p><span style="color: #006600"><strong>If you transferred $400,000.00 your effective tax rate would be 28.8%, which would be about $115,000.00.</strong></span></p><p><span style="color: #006600"><strong>That being said, you "expect" a 8% return, not a guaranteed 8%. Only an annuity can make that promise.</strong></span></p><p><span style="color: #006600"><strong>Now that your nest egg has been reduced by paying taxes, your "advisor" will still take 1.5% yearly commission on your monies no matter what percent the funds make. If you "make" 8%, you only keep 6.5%. If you lose 10%, your "advisor" still makes 1.5% on what you have left.</strong></span></p><p><span style="color: #006600"><strong>For young people under the age of 45, the Roth is the best way to go. I will not go into the math of why that is the case.</strong></span></p><p><span style="color: #006600"><strong>If you only take 5% out of your 401k yearly, you will pay less effective tax rate and not give away your hard earned money to an "advisor".</strong></span></p></blockquote><p></p>
[QUOTE="satellitedriver, post: 2616954, member: 1664"] [COLOR=#006600][B]I am sure your financial "advisor" has only your best interest at heart. [/B] [B]You can not just roll over a traditional 401k into a Roth IRA without paying taxes on the amount transferred. Those monies transferred are taxed as earned income.[/B] [B]As an example, if you transferred $200,000.00 from your 401k to a Roth you would pay an effective tax rate of 18.6%, which would be about about $37,000.00.[/B] [B]If you transferred $400,000.00 your effective tax rate would be 28.8%, which would be about $115,000.00.[/B] [B]That being said, you "expect" a 8% return, not a guaranteed 8%. Only an annuity can make that promise.[/B] [B]Now that your nest egg has been reduced by paying taxes, your "advisor" will still take 1.5% yearly commission on your monies no matter what percent the funds make. If you "make" 8%, you only keep 6.5%. If you lose 10%, your "advisor" still makes 1.5% on what you have left.[/B] [B]For young people under the age of 45, the Roth is the best way to go. I will not go into the math of why that is the case.[/B] [B]If you only take 5% out of your 401k yearly, you will pay less effective tax rate and not give away your hard earned money to an "advisor".[/B][/COLOR] [/QUOTE]
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