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foreigngirl
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I have ni clue about these stuff. Can someone explain this please? While I was working I had 401K. Now that I am not working anymore I get letters from IRA companies telling me I should roll over my 401K into IRA
the difference between 401K and IRA?
- Thread starter foreigngirl
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foreigngirl
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PAUL_WALL said:
gay ass name
foreigngirl
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mightymouse69 said:
Thanks
Is it gonna hurt me if I stay with 401K? What is the big difference?
foreigngirl
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ceasar989 said:
oh, you know it was a typo.
I thought you gonna give me a serious opinion.
foreigngirl
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mightymouse69 said:
oh, shit. I dont want that happening. I never liked the fact that they invest my money in what they choose
Look for my PM.foreigngirl said:
foreigngirl
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mightymouse69 said:It's really simple to roll it over, I suggest getting the paper work rolling ASAP. You will thank me in the future
thank you and thanks thelion2005
Many big differences.
401(k) is an employee sponsored plan, which basically means that the company owns the plan, not you. That usually doesnt matter, but every now and then you have an Enron situation where the employees lose everything.
Max contribution to a 401 is $15k this year, whereas max to an IRA is $4000. Both are made with pretax dollars and grow tax deferred. You cant begin withdrawls until 59 and 1/2.
If you have a 401k, go for a Roth Ira. You dont want all your retirement savings to be in tax-deferred investments.
401(k) is an employee sponsored plan, which basically means that the company owns the plan, not you. That usually doesnt matter, but every now and then you have an Enron situation where the employees lose everything.
Max contribution to a 401 is $15k this year, whereas max to an IRA is $4000. Both are made with pretax dollars and grow tax deferred. You cant begin withdrawls until 59 and 1/2.
If you have a 401k, go for a Roth Ira. You dont want all your retirement savings to be in tax-deferred investments.
foreigngirl
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75th said:
thanks 75th. Bottom line is I have to roll this into IRA
slat1
New member
foreigngirl said:
A Roth IRA!!
A Traditional is not taxed until the money comes out. You have no idea what tax bracket you will be in then. If you play your cards right you will be in a higher one. So they will take more.
A Roth you pay on the way in. When you take your money out it is not taxed. So whats your is yours.
Meet with a financial adviser and have him check your risk tolerance. He will then put you in the appropriate funds. I prefer guys who are independant so they are not tied to certain companies and certain funds!
230lbs
New member
foreigngirl said:
Forgiengirl..
Slat1 is right. I work as a financial agent and this is the situation in a nutshell. You CAN leave your money right where it is, although you can no longer make any future contributions to it. The money will appreciate or deprecciate depending on the funds which you have previously chosen. BUT in general you can no longer make changes to the portfolio. You are stuck where you are. The smartest thing to do is...look at the ROTH IRA. This way you can roll the money from the 401k to the ROTH without paying taxes on the roll over. This will now give you the option to do as you please on the investment side of things. He (slat1) is correct in saying that you will be earning interest on a TAX DEFFERED basis. Meaning you will only pay taxes when you withdraw the money...hopefully not for sometime soon.
IRA stands for Individual Retirement Account. SO, roll the money over to the roth, have an agent in your area help you to pick your investments by using the "prospectus" and make changes as the market moves up and down....
If you have any other guestions you can get me on a private message.
foreigngirl
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230lbs said:
Thank you sooooo much. I am new to this country and all confused about these retirement plans. I am not planning to take the money out of my fund at all. I'll shoot you a PM little bit later, cause I have some other questions too.
230lbs
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Foxxie said:
Are you in a 401k with your employer that you are still making contributions to....are you still working and putting money into it? Does your employer match your contributions in any way?
OR..
Have you LEFT your employer and your money is still in the employers 401K? Just sitting there.....
401k = pre tax contributions, get taxed when you pull it out
IRA = post tax contributions, no taxes with you pull it out
there are also some other little benefits, with most IRAs you can pull interest you have made out tax free after certain criteria has been met
with 401k you can loan against the balance and pay the principle and interest back to yourself (with POST tax dollars though)
IRA = post tax contributions, no taxes with you pull it out
there are also some other little benefits, with most IRAs you can pull interest you have made out tax free after certain criteria has been met
with 401k you can loan against the balance and pay the principle and interest back to yourself (with POST tax dollars though)
foreigngirl
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75th said:
I am in Michigan
Shallow Hal
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230lbs said:
I thought you could not roll a 401k directly into a Roth. First you need to roll the 401k into a traditional IRA. Then roll the traditional IRA into the Roth. And when you roll the traditional into the Roth you WILL have to paxes on that.
B
BrothaBill
Guest
Lestat said:
Thats not true, a 401k or 403b is the same as an IRA being that its pretax dollars. Once you leave employment you can roll it over to an IRA but it is still pretax dollars you roll over.
Roth IRAs are different, they are after tax dollars so you should specify that the IRA is a Roth IRA and not a traditional IRA which is identical to a 401k basically.
So Roth IRA is not a traditional IRA or a simple IRA.
Anyhow, lots of advantages to a Roth IRA, but virtually no difference between a 401k and a traditional IRA and its usually rolled over to an IRA once you leave employment where you had your 401k or 403b(which is the same as a 401k but tax law codes it slightly different if its offered by a notforprofit entity say for hospital employees)
So really, not much difference FG, unless you invest later in a Roth with aftertax dollars allowing no taxation on the amount.
Pretax dollars allow you to put more in obviously and lower your taxable income which can be VERY important if you can put yourself in a lower tax bracket by doing so. Thats a key advantage. They take the money out on a pretax basis then you are also in a lower tax bracket and you usually get some matching by the employer too which is like an automatic raise.
All of this stuff though is easily done with a sound financial plan to prevent mistakes that can cost you money.
They are all retirement plans and some offer better solutions depending on the individual and their goals. Even insurance plans like variable universal given you have a family can work to help build things and have more flexibility given how situations change.
Got to put it all together to have it sound
spongebob
New member
75th said:
it only mattered in enron because the money they had in the 401k was invested in enron stocks.
the money in the 401k is yours, whether the company flops or not, as long as you are not invested in that company. the last company i worked for filed ch11, nothing happened to our 401K.
you can only contribute 15k pretax dollars but you can contribute as much as you like after tax. just wanna be clear.
and you are allowed to make some withdrawls before 59.5 without penalty. i dont know the percentage or reasons but i think you can.
Employers often match (or contribute) a certain percentage of what you put into your 401(k).Foxxie said:
One example would be a company matching $.30 to every $1 you put in...that means that every dollar you invest into your 401, your employer will throw in an additional 30 cents.
Keep in mind, though, that most employers have vesting schedules, often around 5 years or so. That means that if you were to leave the company after 4 years, you wouldnt be able to take the $.30 contributions they gave you.
spongebob
New member
75th said:
yea usually its 5 years to be 100% vested, but along the way you are vested at determined percentages. not sure if its 20% every year but you are vested even after 6 months or one year. thats why its called a vesting schedule.
and as far as the company matching a certain percentage of what you contribute, its a certain percentage of what you earn, not what you contribute. for example, my company matches up to 7% of my earnings. as long as im contributing 7%. if i contribute less they match that, if i contribute more they will only match 7% of my earnings.
they contribute 7% even after my contributions max out on pre-tax and spill over into after tax contributions.
Shallow Hal said:
This was my understanding as well. Unless things have changed, I think he's right.
Also, for a better understanding of 401k and IRA etc... Just think of them as vehicles to put your money in. They are not the actual investment but a plcae to "store" them and tweak/adjust once in a while to help your money continue grow.
If Hal is right, then you should think hard about the tax consequences before rolling it into the Roth. Some people just don't want to give up any money right now. wether it's good for them or not.
Also, if you're contributing to a 401k plan, keep doing it. Easiest money to make while working. I'd contrbute the max I'm able to or at least up to what the employer matches.
Send a $50 money order to gonelifting at Jones road Jonesville Jones jone. thanks
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