Personal Finance. ... 401K. The most violent, ... For instance, the last time I wrote about why a house is a bad thing to buy, someone wrote an article, "James must be an idiot." Researchers once looked at some data to try to figure out why many poor 401(k) investment choices linger on fund lineups. Tweet. Deciding between the Roth 401(k) and the traditional 401(k)? Actual quote from r/atheism. A 401k plan is the most popular type of company retirement plan and a great tool to utilize to build retirement wealth. I use it liberally for these use cases: Ad-hoc queries. The problem is not with the 401k … If used to their fullest extent, they work just as well as a pension and offer a level of flexibility that pensions do not. Facebook Twitter Reddit Email RSS Feed Newsletter Donate. The U.S. and Europe are still recovering. You pay tax when you put the money in, but not when you take it out likely many years later. This video is in response to the countless people who have asked me about 401k’s/retirement accounts. “Withdrawing from your 401k can be a viable option to help you in a financial bind, but it’s important to consider the costs and the impact it will have on your long-term goals,” Tayne said. In his book “Tax-free Wealth” he states that investing into a 401(k) is actually unwise for anyone seeking to build wealth for the following reasons: #1 Investing in a 401(k) causes you to pay a higher tax rate on the profits from your investments. Why Investing in a 401k is a Bad Idea By: Steve Johnson 8/5/2008 - 130 Comments. “It’s a decision that should be taken very seriously and not simply used as an easy way out of a bad … Roth 401k’s compound over time and grow tax-free. Discover what to know before taking a 401(k) loan here. But he makes excuses. Why 401(k)s and IRAs Aren’t Enough. 401(k)s and IRAs are two great tools to use when you’re saving for retirement, but they’re not great for other purposes. 401(k) Loans Not As Bad As They Used To Be, But Still Bad. Here are a few of the best perks. The problem with the 401k is the 10% early … Why I’m Moving My Money Into a Max Funded IUL Policy If you want to invest your money for goals like buying a house or paying for college, you’ll need to use a … Published Thu, Jun 28 2018 3:38 PM EDT Updated Thu, Jun 28 2018 4:34 PM EDT. I have a young co-worker who keeps making excuses for why he won't sign up for our 401k. Share. He's overwhelmed, it's confusing, he doesn't have a lot of cash, etc. If you can start withdrawing from your 401k when you're in a lower income tax bracket, then you've successfully conducted some tax engineering to boost your wealth. Why I Recommend the Roth 401(k) If you’re investing consistently every month—whether it’s in a Roth 401(k), a traditional 401(k) or even a Roth IRA—you’re already on the right track! Let’s take a look at a 401k plan’s basics and the most commonly asked questions. I looked him up. A safe harbor 401(k) plan is one that's set up to give employers some flexibility regarding IRS nondiscrimination rules for contributions. 2) After-tax. I don’t think that 401k’s are quite as bad as you make them out, so long as they are used intelligently. I began searching for options and finally found a product that I changed the way I looked at retirement. If you only have one 401K plan during a calendar year, it is very unlikely that you will ever make an excessive deferral, or over-contribute to your 401K. In many cases they would need a Cash Balance plan if they want to save enough for retirement. Why a Roth 401k is the Best 401k Investment Choice. Quora is ranked #345 … I’ve heard all the arguments about why everyone should take advantage of their 401k and at a minimum match their company’s contribution. Many people get excited when they first start learning about smart mutual fund investing, and then go take a look at their employer-sponsored plans where the excitement rapidly wears off as they realize that not only does the 401(k) plan have high fees, but it is filled … It's bad enough when you run a search company in an increasingly social world. Keep going and you'll have a shit ton of money. As far as the mutual funds Acorn has about $300,000 in it and a large amount of that value is capital gains if I sell. That's up to 10% of our salary in free money! A. They're financially ignorant. What Is A 401k? The great thing about a 401k is that you are contributing with pre-tax money. It helps me just see what's going on without having to do a boatload of research as to what the underlying column names are. Why? I wanted to … Because it’s full of teenagers and teenagers are annoying. 4 Reasons Why a 401(k) Is Better Than a Pension Pensions can provide substantial retirement income, but that money is far from risk-free. We get 6% immediate match and another 4% that vests over time. It's worse when anti-trust regulators say you have unfairly and illegally used your dominance in … December 13, 2018 by IWB. If you have a 401k plan at work, it may be the easiest and most efficient way to save for retirement. That Quora answers questions may be one of the reasons why Google ranks Quora so highly. NerdWallet outlines the factors to consider, including taxes and account rules. Why Your 401k Is A Bad Investment. So, instead, let’s talk about something you are less likely to discuss—when you should stop contributing to your 401k. If you had an outstanding loan and were fired or left the job, you had to have it paid back within 60 days or it would not only become taxable income to you, but there would be a … Almost everyone I know believes in and invests in their 401k, yet I believe it’s a bad idea and here is why. This type of plan offers three options to ensure that the average contributions of highly compensated employees don't exceed the average contributions of everyone else by more than 2%. 3k in your 401k is fantastic! Parents that withdraw from their 401k to pay for a student’s education are in fact increasing their EFC, because that withdrawal is counted as untaxed income on the FAFSA. You don’t have to worry about calculating the precise dollar or percentage amount to perfectly nail that 401K maximum on your last paycheck of the year (or promptly cut off 401K contributions, if you max out sooner). 08/20/2015 12:46 am ET Updated Dec 06, 2017 I hate writing about finance. I'm 31, started recently putting max in 401k a year 19.5k and plan to continue till I; retire (hopefully between 55-62 but I would like the option to retire at 55-58 if possible and i don't want to work at that time- who knows yet if i will want to bc I don't see work as that bad if … This means that all of the compound interest – or money that your money makes won’t be taxed when you take it out. The researchers identified one fairly clear explanation: a sub-par fund is much more likely to stay on the menu if it’s managed by the mutual-fund company that’s helping administering the plan. They assure you that you can make money because times are bad and are getting worse. They’re a natural and symbiotic fit. ; Familiar investment options: If you like the investment options in your former employer’s retirement plan (or you just aren’t sure what to do with it yet), … Essentially this reader is asking what to do with a crummy 401(k), not how best to pick an actively managed fund. 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