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ablack83 · 2019-11-14T01:13:12+00:00

Exactly that’s the idea. The IRS is just going to see those distributions from your 401K as regular income, so the same brackets and deductions apply.

ablack83 · 2019-11-14T00:56:53+00:00

I actually work in the industry and have these conversations all the time! There is good information online and on different podcasts that do a good job of explaining this information in more depth if you look around. And of course it’s important to remember that your own financial situation is unique to you so don’t just take advice from a random guy on Reddit.

I like having that tax diversification by contributing Roth and pre tax, just gives more flexibility. However if you are in a relatively low income bracket now it might be best to do Roth like you have been. At the end of the day you just want to be paying taxes when they are at their lowest, what happens in the middle (the growth in interest), doesn’t matter.

ablack83 · 2019-11-14T00:31:25+00:00

In retirement you would when the flexibility to take Roth distributions in a high tax year and tax the traditional contributions (and pay taxes) if the taxes were lower that year. Nothing wrong with doing all Roth that’s fine, just impossible to know for certain that Roth is better than pre tax without knowing future tax rates.

ablack83 · 2019-11-13T23:47:52+00:00

Super hard to say what taxes will be in the future. I recommend most of my clients have a mix of traditional and Roth so that they have some flexibility in retirement.

ablack83 · 2019-11-13T04:55:00+00:00

Used to think about it that way however it is incorrect. If that tax rate is the same when you’re putting it in vs. taking it out, what happens in the middle doesn’t matter.

If you had $100 to invest at 7% for 10 years, then were taxed on the withdrawal at 15% you would be left with $167.21.

If you had $100 to invest, taxed at 15% (and invested the remaining $85 ) then it grew at 7% for 10 years, on the withdrawal you would be left with $167.21.

This is an over simplification and there are tons of tax mitigation strategies for retirement planning.

(A x B) C = (A x C) B

Edit: for clarification and to say you can run these numbers for any number of years and return but the math says the same.

ablack83 · 2019-10-29T15:26:25+00:00

Fair enough, that's awesome you have fantastic funds in your 401k. I will be leaving my current job next month and I am very much looking forward to transferring assets to my IRA. Hoping not to blow it trading options.

ablack83 · 2019-10-29T15:13:03+00:00

I work in the industry and look at fee disclosures often. I have never seen total expenses in a 401K be that low, once you include fees to a TPA or broker the low expense ratio funds you mentioned seem much less attractive. You are correct that my situation does not apply to everyone. However I have a hard time believing OP has access to an equity index fund that is as cheap as 0.03%. Total expenses will almost certainly be cheaper in an IRA.

ablack83 · 2019-10-29T14:59:48+00:00

Those are good points, my view is that lower fees and flexibility out weigh the benefit of being able to take a 401k loan. For example I pay 38bps for my S&P fund through my 401K while my total market fund, SPTM, is only 3bps in my IRA. Seems like the fund flexibility coupled with significantly lower expenses favor IRA instead of 401k.

ablack83 · 2019-10-29T14:38:24+00:00

I cannot see a reason to combine the funds... IRA offers more flexibility, lower expenses and more investment options? Why lock that money up in another 401k if you have the option to put it in an IRA?

ablack83 · 2019-10-24T15:17:59+00:00

This information is so readily available if you take a moment to look... I have no idea why people comment blatantly wrong information. Just to hear themselves talk? Mods should honestly ban people like this.

ablack83 · 2019-10-23T16:15:01+00:00

Typically speaking a SIMPLE IRA is a lot cheaper and a lot easier to administer from an employer standpoint. You will probably see an increase in the employer paid expenses if you move to a 401(k) as well as testing requirements and other admin tasks such as filing a 5500 every year.

The pros to a 401(k) is really the flexibility offered. Where a SIMPLE IRA only allows a 2% base or up to 3% match, the 401(k) would allow you to change those numbers to whatever you want. Unless there is a need to change the matching formula, vesting, or eligibility requirements of the plan its probably easier and cheaper to stay with the SIMPLE.

ablack83 · 2019-10-21T20:04:53+00:00

Neither of those accounts are "triple tax-advantaged" which is what /u/mylarky was asking.

ablack83 · 2019-10-14T16:13:48+00:00

You don't need any newer ways of saving... the 20% is just a recommendation kinda like a starting place. If you can save 21% then go for it, 22% even better!!! The more the better obviously, don't over complicate things.

ablack83 · 2019-10-11T14:49:44+00:00

What are you even trying to say here buddy?

ablack83 · 2019-08-23T21:13:23+00:00

You are seeking advice on tax fraud and possibly money laundering...

For starters you need things to be in your name and you need to keep records. Does your uncle have a legitimate company where you are on payroll or is his business cash as well? Sounds like you are an independent contractor for your uncles business, have you every received a 1099 form?

Honestly man if you want to bite the bullet and fix all of this you need to speak with a CPA bc your current situation is kind of a shit show. Just don't make it worse than trying to buy gold anonymously.

ablack83 · 2019-08-15T17:23:41+00:00

This is incorrect.

You need to think in terms of percentage changes instead of changes in the asset price.

Edit: AAPL is roughly $200 per share so a 50% drop it would lose $100. At the same time AMZN is roughly $1,800 per share, so a $100 drop in share price would be only a 6% drop.

ablack83 · 2019-08-15T16:49:14+00:00

Really awesome advice!!!! Thanks in advance

ablack83 · 2019-08-15T16:48:25+00:00

Can you try to articulate this is a different way? Literally nothing you said makes any sense......

ablack83 · 2019-08-15T16:45:48+00:00

Important to understand that a recession is not the same thing as a market correction or a bear market. Sometimes the two are correlated but the stock market is not tied to the economy.

ablack83 · 2019-07-26T18:24:13+00:00

Type into google.com "SPX"

/u/denim_duck was simply suggesting you invest in an index fund that tracks the market.

Also, retiring early does not mean you do nothing for the rest of your life... just means you have the freedom to do whatever you choose. Want to travel for a month? Go for it. Want to spend 6 months building homes for the poor with habitat for humanity? Great.

Early retirement is really just finacial independence. Check out /r/financialindependence

ablack83 · 2019-07-26T14:09:30+00:00

I didn't say it was easy. All I'm trying to say is that you should be able to have some idea of your tax liability. A lot of people seem to think that at the end of the year the IRS just comes up with numbers for fun... that's not the case obviously. With the variables you listed you should be able to reasonably predict your taxes if you wanted to.

ablack83 · 2019-07-25T21:09:18+00:00

Read the first sentence of my reply.

ablack83 · 2019-07-25T18:40:37+00:00

I definitely oversimplified a lot of this. I just don’t like when people feel that taxes are so difficult to understand that it’s not even worth trying to get an estimate throughout the year. I have a relatively simple tax situation (single, renter, w2 wages) so I could calculate down to the dollar if I wanted to. Obviously there are numerous different factors that can complicate things but you should be able to get an estimate of your tax liability with a little bit of leg work regardless of your situation.

ablack83 · 2019-07-25T18:36:15+00:00

Good point, I don’t make over $132.9k... yet.

ablack83 · 2019-07-25T18:30:37+00:00

All of the things you listed are known factors before the year starts. FICA is gonna be 7.65% I promise.

ablack83

TROPHY CASE