401k question

[LeeW]

yeah, ive always gone to the maximum deduction considering my age bracket. eventually, ill switch to conservative from aggressive mode. 401k's so worth it as long as you're not gonna take the money out much earlier.

[C5 Golfer]

yeah, ive always gone to the maximum deduction considering my age bracket. eventually, ill switch to conservative from aggressive mode. 401k's so worth it as long as you're not gonna take the money out much earlier.

Don't know if I am overly optomistic but at 60 yr old I am 98% in stocks. I do not believe the financial guys/analysts that say after 55 or so you should be more conservative with 50-60% in bonds. If I live 30 years stocks will recover at least 2X in that time frame. my 2 cents

[bjvircks]

hope some that read this thread contributed to their 401k

Heck no...I bought a realy cool mountain bike for >$3k instead. :rolleyes:

OK, not really. I've always maxed out my contributions. Did folks know (depending on how your plan is structured) it may be possible to contribute up to $45k !! per year?

[C5 Golfer]

Heck no...I bought a realy cool mountain bike for >$3k instead. :rolleyes:

OK, not really. I've always maxed out my contributions. Did folks know (depending on how your plan is structured) it may be possible to contribute up to $45k !! per year?

HMMmm.. I think the IRS limits 401k deposits in 2007 to $15.5K if under 50 and $20.5K if over 50. I believe the limits of which you speak are for SEP plans - not 401k.

http://www.kelanroycpa.com/krcpa/2002_Contribution_Limits.htm

[Jon Dahl]

The best way to do it is to match funds with your employer, up to the limit allowable on the 401k, THEN any additional funds should go into a Roth plan. The Roth plan is after tax money, and isn't taxed when you take money out after retirement, even on the interest earned! If you do not have a match plan at work, go with the Roth plan, as much as allowed per year. Never borrow against your Roth/401k, as the loan comes due upon termination of employment.

[bjvircks]

if you count pretax, after-tax, company match, catchup... (edit: also included in this total would be any company contribution to a 'defined-contribution-pension') you may allowed $45k from all sources. My company program allows 50% of wages to go in. (only 1st 8% gets matched from company). After Pretax limit is hit all following go in as after-tax.

btw... my company just 'froze' their traditional pension and converted to a 'defined-contribution' pension that drops money into my existing 401k so I can protect/invest it as I see fit. No Friskies for me.

On the horizon is the potential for taking an 'AFTER-TAX' IRA and converting it into a ROTH without incurring any taxes like you would if you converted a more common pretax IRA. Now the money is TAX FREE, not tax deferred.

save early, save often

[LeeW]

The best way to do it is to match funds with your employer, up to the limit allowable on the 401k, THEN any additional funds should go into a Roth plan. The Roth plan is after tax money, and isn't taxed when you take money out after retirement, even on the interest earned! If you do not have a match plan at work, go with the Roth plan, as much as allowed per year. Never borrow against your Roth/401k, as the loan comes due upon termination of employment.

Roger that. Im gonna have to look into this option. Thanks for the heads up.

[GeoffV]

JRobb send me an email I work for Fidelity Investments. You are making a VERY unwise chose by not contributing to your 401k. Employers are trying to get employees to make a wise chose and enroll into 401ks, this is all about planning for the future and retirement.

Jon Dahl has got it right about maxing out your % that your employer matches and then putting the rest into a tax free Roth. The only thing about the Roth is that it is tax free right now but the legislation on the ROTH is up for renewal in 2010 and who knows what will happen. I suspect that the government will not change to much since they are trying to encourage folks to stash money away for retirement.