ABF | RB's Infinite Wisdom

[dokman]

You have just repeated what I have been posting for two years. It's called personal responsibility. Those who depend on others for their financial security are foolish. 401K contributions are tax free money. The employer match is totally free money. You are saying that Teamsters are not smart enough to take free money and you are correct.

You realize that you pay tax when you withdraw? And this Teamster started 401k as soon as it was offered, even though there was no match from company, my pension will be drastically lower than ABF guys because of YRC, Yellow, Yellow freight, or one Yellow, or what ever they decide to call themselves.

 

[Steward of the Rock]

NO!! 401K doesn't work that way. It's not a one-time investment. It's a set percentage from each paycheck matched at some rate by the employer. Dollar cost averaging over decades will make anyone wealthy in retirement.

So you are saying that your $10,000 investment would be over a 42 year period? You do of course realize that that comes up to like $4.58 per week invested for 42 years. And you are saying that $4.58 a week for 42 years would be worth $800,000.00?
I agree that your initial investment of $10,000.00 in 1980 would now be worth $800,000.00 and probably even higher. But, you will have to explain to me how $4.58 a week over 42 years will be worth $800,000.00. Remember to talk slow so this ‘ole simple minded Arkansan can understand it.

 

[ABF381]

I started this thread since RB was hijacking an excellent thread...

 

[victor93]

Is RB a running back?

 

[victor93]

We knew O J Simpson was guilty, he was always running thru the airport to get in the Avis rent a car

 

[Triplex]

Not completely accurate there Blade. There are 401K’s out there that do not get any kind of match from an employer. For example, the Teamsters have a 401K for it‘s members, but to my knowledge they match nothing. So what you contribute and what you earn over time is what you get. Nothing else. Unless something has changed that I am unaware of. If it has changed, please inform us about it.

A non-matching 401-K has the benefit of reducing your gross income in an amount equal to the amount of your contribution. You therefore save on taxes that year. Also your investment earnings are not taxed until you take dispersements when you retire, typically at a lower tax rate at that time. 401-K's are a win-win regardless of what anyone says. I contributed to 401-K plans whenever I was allowed and have never regretted doing so.

 

[Homesick]

A non-matching 401-K has the benefit of reducing your gross income in an amount equal to the amount of your contribution. You therefore save on taxes that year. Also your investment earnings are not taxed until you take dispersements when you retire, typically at a lower tax rate at that time. 401-K's are a win-win regardless of what anyone says. I contributed to 401-K plans whenever I was allowed and have never regretted doing so.

A 401k is good for most people (IMO) until you get old enough and experienced enough to understand money. Then if your 401k is a non-matching account, I think an IRA is better. For the simple reason that an IRA has more choices and less fees than a 401k.

 

[almost13ranch]

NO!! 401K doesn't work that way. It's not a one-time investment. It's a set percentage from each paycheck matched at some rate by the employer. Dollar cost averaging over decades will make anyone wealthy in retirement.

It’s called compounding and if very effective. It’s the same thing the pension plans use.

 

[almost13ranch]

A 401k is good for most people (IMO) until you get old enough and experienced enough to understand money. Then if your 401k is a non-matching account, I think an IRA is better. For the simple reason that an IRA has more choices and less fees than a 401k.

You are correct about the IRA’s, although in that instance, a Roth IRA should be chosen. The growth carry’s zero tax liability. And there are about 8,000 funds that you could choose from.

 

[Triplex]

A 401k is good for most people (IMO) until you get old enough and experienced enough to understand money. Then if your 401k is a non-matching account, I think an IRA is better. For the simple reason that an IRA has more choices and less fees than a 401k.

What's wrong with doing both? I contributed to an IRA almost as soon as they started up and contributed to 401-K's whenever I was offered one.

PS - I think I'm much older than you and certainly old enough and experienced enough to understand money and investing. Just saying and no offense taken. Youngsters, what can I say?

PPS - IRA/401-K fees and investment options depend on the financial firm you go with for your IRA and where the company chooses for your 401-K. And when you leave the company you can usually transfer your vested 401-K to your IRA.

 

[Triplex]

You are correct about the IRA’s, although in that instance, a Roth IRA should be chosen. The growth carry’s zero tax liability. And there are about 8,000 funds that you could choose from.

Unless the rules have changed, Roth contributions are made with after tax money so you still do pay taxes to some degree on them but not when you take disbursements. And again, the investment choices depend on which financial firm you use for your contributions.

 

[almost13ranch]

Unless the rules have changed, Roth contributions are made with after tax money so you still do pay taxes to some degree on them but not when you take disbursements. And again, the investment choices depend on which financial firm you use for your contributions.

You’re correct, the contributions are made with after tax money. My point was that instead of a regular IRA, where the gain is taxed, Roth’s gains are not taxed.

 

[Homesick]

You’re correct, the contributions are made with after tax money. My point was that instead of a regular IRA, where the gain is taxed, Roth’s gains are not taxed.

True but let me ask a question...... when you are working you earn about 80k to 100k. But when you retire you take 50k to 70k out. Which will put you in the higher tax bracket?

Just saying most people have more bills, house, car, work, transportation expenses, when they are in their working years than they do in their retirement years. On the other hand, having a Roth to draw from in your retirement years will allow you to pay less taxes while taking more money out. Neither is a wrong choice and who can accurately predict what our retirement years will be like?

 

[almost13ranch]

True but let me ask a question...... when you are working you earn about 80k to 100k. But when you retire you take 50k to 70k out. Which will put you in the higher tax bracket?

Just saying most people have more bills, house, car, work, transportation expenses, when they are in their working years than they do in their retirement years. On the other hand, having a Roth to draw from in your retirement years will allow you to pay less taxes while taking more money out. Neither is a wrong choice and who can accurately predict what our retirement years will be like?

I think I see what your question is an I’ll answer it this way.

The company I worked for only offered a 401K and had a large match. The plan also has some good funds to choose. They fell on hard times and suspended the match. At that point I chose to stop my contributions and started funding with a Roth instead. My thinking was that even with paying more taxes at first, the disbursements would have zero taxes due. The 401K was the biggest portion of all of the funds, the Roth gave me more flexibility and I’m using it for say a larger purchase like a kitchen remodel and it won’t affect my Social Security limits. In my case, my 401K dispersement and SS payments leave me with about a 7% tax liability.

I retired and started drawing SS at 62. Your situation may be totally different. I also found a financial advisor that explained everything to me and helped me with the decisions.

You’re correct that no one can accurately predict what will happen in retirement, all we can do is prepare the best we can.

 

[almost13ranch]

I guess my point about the long post was that if you’re going to invest in an IRA for whatever your reason, a Roth IRA is a good choice because of no future tax on any dispersments.

 

[dokman]

One thing to consider also, are the rules that apply when the accounts are turned over to spouse or beneficiaries of your estate. 401k and an Ira are treated the same and have timelines for liquidation. A Roth does not.
401 and Ira have RMD’s which can affect taxes also in retirement, Roth has no RMD.
Some people have all three.
Another option is a back door conversion (keep your mind out of gutter) to a Roth IRA, not going to explain that just Google to learn about that.
Key to any of them don’t listen to the break room BS that you will lose everything in the stock market, they are the ones that are uneducated and unwilling to learn.
There are a lot of blue collar working class who retire with a million dollars in investments, because they stayed the course and invested for the long run.

 

[Homesick]

I think I see what your question is an I’ll answer it this way.

The company I worked for only offered a 401K and had a large match. The plan also has some good funds to choose. They fell on hard times and suspended the match. At that point I chose to stop my contributions and started funding with a Roth instead. My thinking was that even with paying more taxes at first, the disbursements would have zero taxes due. The 401K was the biggest portion of all of the funds, the Roth gave me more flexibility and I’m using it for say a larger purchase like a kitchen remodel and it won’t affect my Social Security limits. In my case, my 401K dispersement and SS payments leave me with about a 7% tax liability.

I retired and started drawing SS at 62. Your situation may be totally different. I also found a financial advisor that explained everything to me and helped me with the decisions.

You’re correct that no one can accurately predict what will happen in retirement, all we can do is prepare the best we can.

Great answer!

 

[Homesick]

One thing to consider also, are the rules that apply when the accounts are turned over to spouse or beneficiaries of your estate. 401k and an Ira are treated the same and have timelines for liquidation. A Roth does not.
401 and Ira have RMD’s which can affect taxes also in retirement, Roth has no RMD.
Some people have all three.
Another option is a back door conversion (keep your mind out of gutter) to a Roth IRA, not going to explain that just Google to learn about that.
Key to any of them don’t listen to the break room BS that you will lose everything in the stock market, they are the ones that are uneducated and unwilling to learn.
There are a lot of blue collar working class who retire with a million dollars in investments, because they stayed the course and invested for the long run.

LOL. Good answer. Personally I'm less concerned about the MD for my heirs than my taxes. When I'm dead I hope all or most of my problems will disappear with me. My wife gets a life insurance policy (provided I die before 68) that will cover her for several years. As for the rest of my heirs......not my problem and I'm not talking on any new problems after I'm dead!

 

[dokman]

LOL. Good answer. Personally I'm less concerned about the MD for my heirs than my taxes. When I'm dead I hope all or most of my problems will disappear with me. My wife gets a life insurance policy (provided I die before 68) that will cover her for several years. As for the rest of my heirs......not my problem and I'm not talking on any new problems after I'm dead!

This is true in your thinking, one thing to consider passing tax free money to an heir or passing tax money to Uncle Sam.
That to me is a no brainer un disputed question.

 

[Triplex]

LOL. Good answer. Personally I'm less concerned about the MD for my heirs than my taxes. When I'm dead I hope all or most of my problems will disappear with me. My wife gets a life insurance policy (provided I die before 68) that will cover her for several years. As for the rest of my heirs......not my problem and I'm not talking on any new problems after I'm dead!

This is true in your thinking, one thing to consider passing tax free money to an heir or passing tax money to Uncle Sam.
That to me is a no brainer un disputed question.

If I've planned correctly, when I die I expect that the last check I wrote will bounce!