• This site contains affiliate links. If you choose to make a purchase after clicking a link, Poker Chip Forum may receive a commission at no additional cost to you. Thank you for your support!

The Retirement Planning/ Investment/ Savings Thread (3 Viewers)

davin said:
Still lost, think I need a financial advisor **cough cough** @Jeff
Click to expand...
Lol...
Here goes...
The employer must sponsor 401(k), SEP IRA and SIMPLE IRA plans. So if you work for the family business, that business would have to sponsor it and rules require you offer it to employees who meet the eligibility requirements. This may mean expenses for the business to administer the plan or to make contributions or both. In some cases these expenses can be up to 3 to 4% of eligible employees pay. So you’d have to talk the rest of the family into it.

If you are self employed (no employees) you can write any of these plans for yourself because you are both the employee and employer. Best case since you can get the high deductions without any cost for others.

Everyone has the ability to invest in a non-deductible IRA, everyone without a retirement plan at work can invest in a traditional deductible IRA, people who have a plan at work have income limitations to invest in a Traditional Deductible IRA and everyone has income limitations to be able to do a Roth IRA.

Sometimes your best option is simply st set aside money and invest it. Not hard, no rules.
 
Jeff said:
Lol...
Here goes...
The employer must sponsor 401(k), SEP IRA and SIMPLE IRA plans. So if you work for the family business, that business would have to sponsor it and rules require you offer it to employees who meet the eligibility requirements. This may mean expenses for the business to administer the plan or to make contributions or both. In some cases these expenses can be up to 3 to 4% of eligible employees pay. So you’d have to talk the rest of the family into it.

If you are self employed (no employees) you can write any of these plans for yourself because you are both the employee and employer. Best case since you can get the high deductions without any cost for others.

Everyone has the ability to invest in a non-deductible IRA, everyone without a retirement plan at work can invest in a traditional deductible IRA, people who have a plan at work have income limitations to invest in a Traditional Deductible IRA and everyone has income limitations to be able to do a Roth IRA.

Sometimes your best option is simply st set aside money and invest it. Not hard, no rules.
Click to expand...
Thankyou sir I knew you came into my life for a reason
 
I am sure there are many good companies. I have a good friend that works with Edward Jones so I use him for my wife's IRA's I would check and just make sure you are dealing with a fiduciary.

David
 
davin said:
I'm 30 years old, have no ritirement!!!! Help me guys. I work for family buisness my dad is the owner and we have no 401K what is my best option
Click to expand...

David O said:
Look into a Roth IRA and fully fund it every year.
Click to expand...

I second this advice. If your employer does not offer a pre-tax deductible 401k or IRA, I think a Roth IRA is the best choice for someone young. It's a bit more painful to make the contributions pre-tax but you'll accrue 30+ years of compounding interest and be able to collect that at retirement tax free. It's one of the best retirement options available and is extremely beneficial the younger you are and if you consistently fund it.
 
DJ Mack said:
I scan all my receipts, download PDFs of all my EOBs and my year end credit card summary. I've now amassed about $8,000 in medical expenses that I've paid out of pocket since I established my HSA. That's allowed my HSA balance to climb to about $12,000. I keep a spreadsheet listing every out of pocket bill I've paid along with the names of each file that will support the expense.
Click to expand...
By the way, I was explaining this method to someone offline once and they said that's a lot of work. They're right, in can be if you don't have a system. But here's the rub - with the exception of the credit card statement you have to retain the same information for anything spent out of your HSA. I've never been challenged by the IRS on my few but large distributions but I know somebody who has. They asked for documentation to support every transaction totaling the HSA distributions he had in that year. Though his expenses were legit it was a bizzatch for him to try to get copies of bills and EOBs that were three years old. In the end he came up with all but about $100 and he did the worst thing you can do during an audit: he document bombed the IRS. They let the $100 slide but strongly warned him to keep better records next time. And guess what? His number got called for the next two years.

Also, don't let your wife go thinking she can buy vitamins and OTC stuff using the HSA card. Yes, the transaction will go through but that doesn't make it a valid expense. A thermometer to check the kiddo's temperature? Eligible expense. Tylenol to get the fever down? Not without a prescription. That's another advantage to paying out of pocket on the small stuff: I can figure out what's truly eligible at my leisure and not have to deal with mistaken distribution forms over this or that $20 item.
SixSpeedFury said:
Is a CD account bad to invest in?
Click to expand...
If you're OK with locking your money up at very low interest rates, then sure. But if you're looking for long term growth, no. Right now I have an online savings account with Barclays that pays a smidgen lower than the current 11 month CD rate (1.5%). And that money remains fully liquid.
 
I always liked this short and sweet list from Scott Adams - the author of Dilbert.

Dilbert’s One Page Personal Finance List:
  • Make a will.
  • Pay off your credit card balance.
  • Get term life insurance if you have a family to support.
  • Fund your company 401K to the maximum.
  • Fund your IRA to the maximum.
  • Buy a house if you want to live in a house and can afford it.
  • Put six months’ expenses in a money market account.
  • Take whatever is left over and invest it 70 percent in a stock index fund and 30 percent in a bond fund through any discount brokerage company and never touch it until retirement
  • If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), hire a fee-based financial planner, not one who charges you a percentage of your portfolio.
 
DJ Mack said:
By the way, I was explaining this method to someone offline once and they said that's a lot of work. They're right, in can be if you don't have a system. But here's the rub - with the exception of the credit card statement you have to retain the same information for anything spent out of your HSA. I've never been challenged by the IRS on my few but large distributions but I know somebody who has. They asked for documentation to support every transaction totaling the HSA distributions he had in that year. Though his expenses were legit it was a bizzatch for him to try to get copies of bills and EOBs that were three years old. In the end he came up with all but about $100 and he did the worst thing you can do during an audit: he document bombed the IRS. They let the $100 slide but strongly warned him to keep better records next time. And guess what? His number got called for the next two years.

Also, don't let your wife go thinking she can buy vitamins and OTC stuff using the HSA card. Yes, the transaction will go through but that doesn't make it a valid expense. A thermometer to check the kiddo's temperature? Eligible expense. Tylenol to get the fever down? Not without a prescription. That's another advantage to paying out of pocket on the small stuff: I can figure out what's truly eligible at my leisure and not have to deal with mistaken distribution forms over this or that $20 item.

If you're OK with locking your money up at very low interest rates, then sure. But if you're looking for long term growth, no. Right now I have an online savings account with Barclays that pays a smidgen lower than the current 11 month CD rate (1.5%). And that money remains fully liquid.
Click to expand...
We have an FSA through the Compnay I work for. We can fund pretax but it has limits. I fully fund it every year and is great because it is also like getting bonus money. Since it is taken out pre tax you save the amount of the tax on every dollar. Let's say you are in the 25% tax bracket then the net affect on your paycheck is 75¢ for every dollar funded.

I think the one mistake I am making is I have my emergency fund in a Case savings account which is basically doing nothing. I have thought about an internet account which pays more and I was also going o look at the American Express Savings account where you leave the money in your current bank but go through AMEX. Anyone doing that or have you heard about that service from AMEX?

See now I am asking questions
 
SixSpeedFury said:
Is a CD account bad to invest in?
Click to expand...
A Certificate of Deposit account? As a retirement account? At your age? Yes, it isn’t a good choice. The returns are way too low.

Vanguard low-fee index funds. Instant diversification in the stock market and low cost. Leave it alone, reinvest all dividends and you’ll be happy come retirement.
 
I'm no investing guru and rely on my advisors, however I have a piece of advice. Many people know the name of the company I work. This year they are going public. There is no way I would touch any of this company in any way regarding any kind of investment. Don't do it. I won't answers questions here about it in public.
 
johnjohn said:
Good point on FSA. I use limited use FSA for dental and eyecare related expenses...roughly 2500/yr
Click to expand...
Yes I think that was the max last year. The max next year went up to $2650. I know we will easily hit our out of pocket maximum so I intend to fully fund it again!
 
If any employers need a 401(k), 403(b), defined benefit, or cash balance plan, I might know a guy that has credentials and 20+ years experiance as a third party administrator of qualified plans.

Full disclosure, it's me.
 
David O said:
I think the one mistake I am making is I have my emergency fund in a Case savings account which is basically doing nothing. I have thought about an internet account which pays more and I was also going o look at the American Express Savings account where you leave the money in your current bank but go through AMEX. Anyone doing that or have you heard about that service from AMEX?
Click to expand...
I'm not familiar with that Amex particular offering. The one I know about is a savings account and you transfer money to/from it using your regular bank account. The money doesn't stay on deposit with your regular bank. You transfer it back and forth as needed, within the six monthly transfer limit. Maybe you're misreading their materials? That's how all the online savings accounts work. There's typically no ATM card and you don't get paper statements, etc.

I was originally going to open mine with Ally because they offered a no penalty CD that you could redeem (completely) after five days. But they wanted me to pay to lift my credit freezes to check my credit - so that I could loan them money. I said no thanks and went with Barclays. The interest rate is currently 0.05% lower but that's a good trade.
 
Way back when I discovered a group on the internet called "Vanguard Die-hards". They preached low cost index investing based on asset classes and your age/goals. This is always the approach I have taken. I have often thought that the couch potato investor could do a whole lot worse, just invest 80% in Vanguard total stock market index and 20% in total bond market index then re-invest, rebalance and repeat! Oh yeah, save money early and often, and live a little below your means. I will not come in first place or have a hot stock tip for you, but I will probably be far from last place as well.
 
Post #2 updated with my rudimentary understand of social security, and managing sources of money during retirement. Definitely open to thoughts of those who are currently living in that environment!

I'm also a big proponent of low expense ratio index funds. For those who want to learn more, check out bogleheads.org, or search "John (aka Jack) Bogle" online.
 
inca911 said:
Getting to the Money During Retirement
....
In contrast, let’s look at the previous example, but with a combined income greater than $34k:
  • For each $100 of additional income, now 85% of the previously untaxed SS benefits become taxable. Assuming a 25% tax rate on that $185 ($100 additional income + $85 of SS benefit taxation), you are now going to have to effectively pay $46.25 in tax (at least until you have all 85% of your SS benefits taxed). Nothing like an effective 46% tax rate on that $100 additional income to drive you crazy!....
Click to expand...

If you've been successful with your saving plan, there's not much point in going crazy here, because you hit Minimum Required Distributions at age 70-1/2 that leave you no choice.

So your peace of mind is only temporary! :eek:

I say put it all in un-taxed poker chips, and cash out through PCF.
 
I'm a bit clueless when it comes to investing. My company has just started offering a Roth 401K option, should I change to the Roth 401k option?

Wife and I are both 50. I am putting in 10% into my 401k. I have Roth IRAs maxed out for both. I have been saving for years, so in theory I should have a decent size retirement fund.

I understand the tax different between the two, but can't figure out if it is better to fund with pre-tax dollars or after tax dollars. My gut is telling me Roth 401k but looking for a 2nd opinion.
 
p5woody said:
I understand the tax different between the two, but can't figure out if it is better to fund with pre-tax dollars or after tax dollars. My gut is telling me Roth 401k but looking for a 2nd opinion.
Click to expand...

In very general terms, funding with pre-tax dollars and paying the taxes later benefits you when you believe your marginal tax rate is higher now than it will be when you are withdrawing (and paying tax on) the money. However, if you believe you are in a lower tax bracket now than you will be when you are withdrawing the money, then using after-tax dollars (Roth) would be more beneficial.

Of course there are other factors to consider, including how much you already have in other pre and post tax retirement accounts. Plus, tax brackets can (and do) change, and it's not possible to know for certain what your marginal tax rate will be down the road.
 
There are calculators that can help you make the determination if a Roth or pretax is a better option. The best starting point is the end, will you need this money in retirement? If no, then a Roth would be best, as you can roll your Roth 401k to Roth ira and not be subject to Required Minimum Distributions (rmd). That way you could pass the whole amount to your heirs without taxes or rmd. If you do need the funds, but only some, then Roth is still a good option as employer contributions are always pretax, withdraw from pretax first to preserve as much Roth as possible. If you need it all, then it is a toss up based on income taxes. For example, my bonus would have jacked me into the next tax bracket, by deferring most into pretax 401k, I stayed in the lower bracket.

Everyone's situation is different. Your CPA or doing the calculators will give a better answer but really it is what you think the future will be. You could be like me and split it, half roth half pretax (except for 2018).

If nothing else, start the clock on the 5 year requirement to avoid taxes on gains from Roth. To be a qualified distribution, the Roth needs to be started 5 years before withdrawal. I always suggest if you have the option in your plan, defer something, even $1, to start the five year clock. You may not want to use Roth for 4 years, but once you start at year 5, the gains are not taxable.(assuming qualified and over age 59.5)

Full disclosure, I am not a CPA or licensed financial advisor. I am a credentialed professional with 22+ years of qualified plan administration experiance. I can help owners determine what plan is best for them and keep it in compliance with IRS DOL and ERISA regulations. If you PM me a question about your 401k plan, I am going to ask you if you read the summary plan description, because 75% of participant questions can be answered if you read that document. (Ask your HR person for a copy).

T
 
I know nothing about stocks, but have a fully funded Roth IRA and normal retirement with 5% matched at 200% (so 5%+10% total), and I am still relatively young, but graphs like these* are not fun to watch when you're losing tens of thousands of dollars....... :vomit: :banghead: :nailbite:

down.gif


*Not a real graph, just for illustrative purposes, you get the idea.....
 
  • Like
Reactions: BNM
p5woody said:
I'm a bit clueless when it comes to investing. My company has just started offering a Roth 401K option, should I change to the Roth 401k option? ...
I understand the tax different between the two, but can't figure out if it is better to fund with pre-tax dollars or after tax dollars. My gut is telling me Roth 401k but looking for a 2nd opinion.
Click to expand...
It partially depends on your top income tax brackets you fall in (Federal + State + Local). In general, if someone is in a higher top tax bracket and/or has a high state tax rate, they'll get more bang for their buck by using pretax dollars. (Pennsylvania rules may be different. See below*)

For example, I'm in DC, where my top state tax bracket is 8.5% (yes, it's a higher tax rate state) and my top federal bracket is now 22% (I think), so my combined top tax bracket rate is 30.5%, which means I get a 30.5% tax savings, for every dollar I contribute to my 401k. For example, for a $10,000 contribution:
- normal 401k - $10,000 contribution in pretax dollars (saves me $3050 in tax dollars)
- for the same contribution to a roth 401k - I would have to pay the $3050 tax dollars, which leaves $6950 after-tax dollars contribute to the roth 401k.

*My mom is from PA and is now retired and lives there, and I recall hearing from her that PA treats 401k contributions differently from most other states (if that's still current). I found this description on a Montly Fool website:
"Pennsylvania income tax laws make most retirement and pension income exempt from state tax. The reason for this is that Pennsylvania typically doesn't allow you to exclude your 401(k) contributions from your state taxable income in the year you make them, again departing from the federal practice."

If PA still taxes regular 401k contributions, then there may be no state tax savings benefit between a contribution to a normal 401k and a Roth 401k, and that may be an argument in favor of the Roth 401k for you.

1546558127864.png

1546557634961.png
 
Dangit, this thread reminds me that I really ought to meet with a financial advisor of some sort.

My company offers a 401k Roth Conversion, and I'm pretty sure I should be taking advantage of that (although the idea of paying a bunch of "back-tax" up front is not so appealing to me at the moment). Being young, a single income family and 4 dependents...I'm 99% sure my tax rates are only going to increase.
 
My personal rate of return for FY2018 was -4.2%......... :wtf:
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account and join our community. It's easy!

Register

Log in

Already have an account? Log in here.

Back
Top Bottom