Do you believe in 401k?

Oscar / Eng
tc/gtfo

Oscar Eng

BIO
Fuck you, but wats up bro.
tc/gtfomore
Jun 3, 2018 21 Comments

While 401k portfolio seems quite good, but taking money out means paying interest and tax. How does this compare to go straight to stock? I understand the latter option is post tax money (or roth deferral in 401k).

If you do 401k, how much percentage of your income?

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TOP 21 Comments
  • Barracuda / Sales
    YourMama

    Barracuda Sales

    PRE
    Google
    YourMamamore
    It’s an absolute no brainer. Just contribute the max $18.5k/yr even if your company doesn’t match. Tax deferred compounding is a massive advantage.

    You’re not paying interest to take distributions if you wait until you retire and your tax rate should be way lower then than it is now. Not to mention you compound on the larger pre tax amount for x years.
    Jun 3, 2018 12
    • Facebook / Eng :?
      Fidelity mutual funds are like 5-7% ROI
      Jun 3, 2018
    • Box / Eng Box/\xoB
      I setup brokerage accounts and use my 401k contributions to trade stocks.
      Jun 3, 2018
    • LinkedIn @@$$$@@
      Wrong in term of tax. Whatever gain in 401k will be taxed as ordinary income later. That’s bad.
      Jun 4, 2018
    • Box / Eng Box/\xoB
      @@@$$$@@ can you elaborate? I Thought 401k distributions are taxed as income after you retire, regardless of the types of funds you invested in.
      Jun 4, 2018
    • Barracuda / Sales
      YourMama

      Barracuda Sales

      PRE
      Google
      YourMamamore
      Not bad if you don’t draw on it until retirement when your marginal tax rate is a small fraction of what it is now while you are working.
      Jun 4, 2018
  • Contribute enough to max out your employers match. Then contribute remaining, up to max allowable, in your choice of IRA/Roth.
    Jun 3, 2018 2
    • Microsoft / Eng
      lusername

      Microsoft Eng

      BIO
      Yeah, right.
      lusernamemore
      Why use an IRA vs 401k? Also many engineers make too much to contribute to Roth (ignoring backdoor contribution)
      Jun 3, 2018
    • Google hQvrjflaHg
      Don't ignore backdoor Roth.
      Jun 4, 2018
  • Facebook hypome
    Have both pretax and post tax retirement (Roth) plans. 50/50 until this year to have options on which bucket I pull from when retired. Dumping all of it into Roth now because my employer matches those contributions into 401k bucket, like the flexibility of being able to withdraw contribution without penalty, don't know when I'll die/retire/income level at retirement.
    Jun 4, 2018 2
    • Oscar / Eng
      tc/gtfo

      Oscar Eng

      BIO
      Fuck you, but wats up bro.
      tc/gtfomore
      OP
      Why roth? Isn’t pre tax much better?
      Jun 4, 2018
    • Facebook hypome
      For reasons stated above I don't do pretax now. It's the way you think about buckets of money and future income when retired and when you retire.

      If I retire with no additional income at 40, I won't be able to tap my 401k without penalty if I need it. While I can do so with my Roth contribution. People have set up Roth ladders for this.

      Saving on tax now vs later doesn't matter much if you set up income sources in retirement at same level as you are making now. You do get the tax free growth, but not the lower tax bracket as a person with little income would get.

      future income tax rate is anyone's guess.

      I value flexibility more in case I need money. I hate the idea of having a penalty on withdrawing money until I'm 65-70.

      Some companies can do megabackdoor Roth, so you can get both. I'm mostly 50/50 because I like having options. Realistically, if you're a person that is maxing out retirement this extent, you're way ahead of the game than most. This is just optimizing 1-2% 30 years down the road.
      Jun 4, 2018
  • LinkedIn / Eng
    howd

    LinkedIn Eng

    PRE
    Amazon
    howdmore
    I believe in 401k company match
    Dec 27, 2018 0
  • Amazon KenobiBack
    You are misinformed my friend. Google roth ladder conversion. Also look into mad fientist website
    Jun 3, 2018 0