Employer doesn't offer 401k
04-16-2012, 09:28 PM
#6
2 Props,3 Dildos,& 1 Cat
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a) assume they will be the same
b) assume the roth will be killed
c) assume you should hope for a) and not be surprised by b) and expect you'll be no worse off than going all IRA but with a chance of the roth.
b) assume the roth will be killed
c) assume you should hope for a) and not be surprised by b) and expect you'll be no worse off than going all IRA but with a chance of the roth.
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04-17-2012, 08:47 AM
#7
Boost Czar
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still rather be taxed now, considering, if there is a recovery and i do acutally make compounded interest, even if the tax rate dropped off significantly the math is still probably in my favor to go with a roth.
lets say I've put in 5K every year for 10 years and stopped; im taxed at 20%.
that's 10,000 in taxes.
that money makes about 4% each year--after 10 years when I stopped that would be around $70,000 already.
in another 20 years: 153,378.62
10% of 153,378.62 = $15,378, you think that day would ever come?
assuming the tax rate is the same as today and I dont go UP a bracket, it's $30,000 in taxes vs. $10,000
Last edited by Braineack; 04-17-2012 at 10:29 AM.
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04-17-2012, 10:25 AM
#8
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I just got off the phone with my boy Bernie, he says he can get you in on the cig trade if you want. He says he is getting 25%+ rates of returns. Let me know if you want in.
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04-17-2012, 10:51 AM
#9
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Mark - This is going to depend on a number of factors. Assuming you are not covered by any employer plans:
Typically, if you are in the 28% or above marginal tax bracket, a deductible (traditional) IRA may be more attractive. If you are under that, a Roth IRA may make more sense. No one can tell you what tax rates will look like 30 years from now.
If you are married and your spouse is covered by a workplace plan, there is an (Adjusted Gross) income phase-out for the non-covered spouse.
Alternatively, you can look at tax diversification and contribute to both (up to a maximum combined $5k).
Typically, if you are in the 28% or above marginal tax bracket, a deductible (traditional) IRA may be more attractive. If you are under that, a Roth IRA may make more sense. No one can tell you what tax rates will look like 30 years from now.
If you are married and your spouse is covered by a workplace plan, there is an (Adjusted Gross) income phase-out for the non-covered spouse.
Alternatively, you can look at tax diversification and contribute to both (up to a maximum combined $5k).
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04-17-2012, 11:46 AM
#10
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I do not think the Federal Government will be the same in 10-20 years.
Don't put tax deferred money aside that you hope you can withdraw from tax-free in 10-20 years. That tax law may change. (e.g. a new 3% "Patriot Tax" when withdrawing from retirement accounts)
Additionally don't put money into a 401k with crappy Wall St only choices for investments.
Scrappy won't agree but the Fed Gov is on an unsustainable spending path. When the ***** hits the fan, politicians will get desperate and they will see retirement accounts as a pot at the end of a rainbow. They will itch to raid them.
Imagine this announcement:
"As part of the Economic Recovery Plan, the government will exchange 50% of all retirement accounts with Bonds that pay a guaranteed 8% per year. It is the patriotic duty for all Americans with savings in the form of retirement accounts to help "
Bonds that will be funded by the printing press.
Don't put tax deferred money aside that you hope you can withdraw from tax-free in 10-20 years. That tax law may change. (e.g. a new 3% "Patriot Tax" when withdrawing from retirement accounts)
Additionally don't put money into a 401k with crappy Wall St only choices for investments.
Scrappy won't agree but the Fed Gov is on an unsustainable spending path. When the ***** hits the fan, politicians will get desperate and they will see retirement accounts as a pot at the end of a rainbow. They will itch to raid them.
Imagine this announcement:
"As part of the Economic Recovery Plan, the government will exchange 50% of all retirement accounts with Bonds that pay a guaranteed 8% per year. It is the patriotic duty for all Americans with savings in the form of retirement accounts to help "
Bonds that will be funded by the printing press.
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04-17-2012, 12:27 PM
#13
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Blaen,
Don't you think the tax laws have a HUGE impact on investment decisions?
To think otherwise is naive. ESPECIALLY for something you plan to benefit from 10-20 years in the future.
I have a nice chunk of money in my 401k. It is trapped. I wish I'd eaten the tax instead and invested elsewhere.
Go check out Kiyosaki's books. He gives an example, the real estate tax shelter that doctor types took advantage off in the 80s. The tax loophole was changed, and instantly millions lost a crapload of money and it caused a collapse in R.E. prices in certain sectors.
His advice is, do not go for investments that require tax laws to be a certain way, or stay a certain way, in order for said investments to be profitable. If it will stay profitable despite tax law changes, then it's a contender.
Others who say the same thing, suggest that you are better off investing what would go into a 401k, into a small biz.
Don't you think the tax laws have a HUGE impact on investment decisions?
To think otherwise is naive. ESPECIALLY for something you plan to benefit from 10-20 years in the future.
I have a nice chunk of money in my 401k. It is trapped. I wish I'd eaten the tax instead and invested elsewhere.
Go check out Kiyosaki's books. He gives an example, the real estate tax shelter that doctor types took advantage off in the 80s. The tax loophole was changed, and instantly millions lost a crapload of money and it caused a collapse in R.E. prices in certain sectors.
His advice is, do not go for investments that require tax laws to be a certain way, or stay a certain way, in order for said investments to be profitable. If it will stay profitable despite tax law changes, then it's a contender.
Others who say the same thing, suggest that you are better off investing what would go into a 401k, into a small biz.
Last edited by JasonC SBB; 04-17-2012 at 12:42 PM.
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04-17-2012, 01:35 PM
#17
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All investments are affected by tax laws at any given time, whether they are tangible (rental property) or intangible (financial securities).
A 401k/IRA/Roth does not depend on current tax law or rates to be profitable. They may be less profitable or efficient if tax law changes - or they might be more so, depending on how the tax law changes.
I cannot think of an example where the US government has completely changed the taxation of an investment vehicle (like a 401k/IRA/pension/annuity/etc) that would affect the majority of the investing public. I am open to being corrected.
I am not talking about specific asset classes like Canadian royalty trusts, master limited partnerships, etc.
If you feel there is a reasonable probability of financial collapse in the USA, you should be buying a house in Costa Rica or saving for an apartment in Singapore and stockpiling canned goods and ammunition and planning your escape route once the mayhem ensues.
A 401k/IRA/Roth does not depend on current tax law or rates to be profitable. They may be less profitable or efficient if tax law changes - or they might be more so, depending on how the tax law changes.
I cannot think of an example where the US government has completely changed the taxation of an investment vehicle (like a 401k/IRA/pension/annuity/etc) that would affect the majority of the investing public. I am open to being corrected.
I am not talking about specific asset classes like Canadian royalty trusts, master limited partnerships, etc.
If you feel there is a reasonable probability of financial collapse in the USA, you should be buying a house in Costa Rica or saving for an apartment in Singapore and stockpiling canned goods and ammunition and planning your escape route once the mayhem ensues.
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04-17-2012, 01:56 PM
#19
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Re: "Financial collapse" - what I think is most probable is the Fed Gov will face a severe deficit, and REAL cuts will be needed. No, it's not a "collapse". These sacred cows will be seen as easy to gore:
- Military
- gov't contractors
- Gov't pensioners
- Retirees
- Medicare/Medicaid/Obamacare
- home loan interest tax breaks
- retirement accounts
The "mayhem" will probably be limited to riots a la England and Greece, and swaths of the population dependent on the gov't teat, seeing their handouts shrink.
- Military
- gov't contractors
- Gov't pensioners
- Retirees
- Medicare/Medicaid/Obamacare
- home loan interest tax breaks
- retirement accounts
The "mayhem" will probably be limited to riots a la England and Greece, and swaths of the population dependent on the gov't teat, seeing their handouts shrink.
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04-17-2012, 01:57 PM
#20
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Scrappy won't agree but the Fed Gov is on an unsustainable spending path. When the ***** hits the fan, politicians will get desperate and they will see retirement accounts as a pot at the end of a rainbow. They will itch to raid them.
Imagine this announcement:
"As part of the Economic Recovery Plan, the government will exchange 50% of all retirement accounts with Bonds that pay a guaranteed 8% per year. It is the patriotic duty for all Americans with savings in the form of retirement accounts to help "
Bonds that will be funded by the printing press.
Imagine this announcement:
"As part of the Economic Recovery Plan, the government will exchange 50% of all retirement accounts with Bonds that pay a guaranteed 8% per year. It is the patriotic duty for all Americans with savings in the form of retirement accounts to help "
Bonds that will be funded by the printing press.
"Because the US government has run out of US dollars (which we can create out of thin air), we plan on raiding the retirement plans of hundreds of millions of US savers so that we can source more US dollars."
Then ask yourself if that sounds plausible enough to base your investment decisions on it.
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