401ks

New
cyzfbn

New

cyzfbn
Apr 11, 2020 11 Comments

How does 401k work? How much money should I put in it? I will start working at Amazon this Monday and will need to decide then. I will be 23 later this year, should I put more money in stocks or 401k? Can I take money out of 401k if needed? Is there 401k available for non-resident aliens?

tc. 180k
yoe 2 months

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 TOP 11 Comments
  • Apple
    Cupid19

    Go to company page Apple

    PRE
    AMD
    BIO
    Spittoon of Upper Mgmt
     Cupid19
    Do both pre and post tax contributions to retirement accounts - totally worth it.
    Apr 11, 2020 2
    • New
      cyzfbn

      New

      cyzfbn
      OP
      Why should I not invest the money in let's say buying a house?
      Apr 11, 2020
    • Apple
      Cupid19

      Go to company page Apple

      PRE
      AMD
      BIO
      Spittoon of Upper Mgmt
       Cupid19
      Because you would make more in retirement accounts esp when you contribute at this time when the market is so down. Perfect time to buy. If you still have money left after that, then go ahead for the house as well.
      Apr 11, 2020
  • Facebook
    50Scheckel

    Go to company page Facebook

    50Scheckel
    Max out. For other questions google
    Apr 11, 2020 2
    • New
      cyzfbn

      New

      cyzfbn
      OP
      What if I don't know if I will stay in US in the next 5 years?
      Apr 11, 2020
    • Facebook
      50Scheckel

      Go to company page Facebook

      50Scheckel
      You can cash out. There’s a 10% penalty and the cash out is considered income
      Apr 11, 2020
  • 401k is a retirement savings account that gets invested and grows in value. IRS limits how much you can contribute per year, where the money is taken out of your paycheck before you get taxed (so essentially you pay less taxes now). The max you can contribute per year is $19,000 (I could be off a little). This number usually gets bigger over the years. Now, many companies match your contribution to some extent. For example my company matches 50% up to 1st 6k contribution by me which is 3k. So if the IRS has a limit of 19k, I should adjust my contribution to be 16k for the year along with 3k from my company, then I max out what I can contribute per year. You do not have to do max, but do at least enough to fully take advantage of your company’s match. The contribution amount gets a bit more complicated when you’re above 50, and depending on other factors. What I said is true for vast majority of people. After you hit 65 1/2 years of age, IRS requires you to withdraw money from your 401k and you’ll be taxed according to the rate at your age/status. There’s also Roth IRAs to which you contribute after tax, but growth is tax free. Because it is such a good deal, yearly contribution limits are much less. In summary, contribute to 401k, max it out, and leave it to grow. Do not be tempted to take loans against it, to make early withdrawals, unless it’s a hardship case, or move it around depending on markets. Timing the market with 401ks is generally a bad idea unless you’re really good at reading market peaks and bottoms in crises times like now.
    Apr 11, 2020 2
  • Indeed / Eng
    rainwater

    Go to company page Indeed Eng

     rainwater
    House is not a good investment. Do the math yourself and you will see
    Apr 12, 2020 0
  • Sephora
    telltale

    Go to company page Sephora

    telltale
    Stocks and 401ks aren’t mutually exclusive. A 401k is just a type of investment account (tax deferred) in which you can invest in things like stocks. You should max out, 19k/year, and be at least 90% invested in stocks (get low fee index funds).
    Apr 11, 2020 0