Brownslave688
You want a toe? I can get you a toe.
Yes. But a summing contributions are the same....
I need advice on 401K
- Thread starter Damondogg
- Start date
upschuck
Well-Known Member
Basic math principle.
upschuck
Well-Known Member
Summing contributions? Not familiar with that term
Brownslave688
You want a toe? I can get you a toe.
Yes basic math double the money means double taxes paid.
Also a distribution from the pretax can make part of your Social security taxable.
Face palm
Brownslave688
You want a toe? I can get you a toe.
If there was no advantage to a Roth there wouldn't be income limits on it.
upschuck
Well-Known Member
Didn't think about that. Good point. The others still lacking.
I will explain later.
Brownslave688
You want a toe? I can get you a toe.
It's like leaves all over agaib
upschuck
Well-Known Member
No need, no difference.
upschuck
Well-Known Member
You're right. I was right then, I'm right now.
Big difference.
Brownslave688
You want a toe? I can get you a toe.
Remember. Little frog brain.
upschuck
Well-Known Member
Example
Pretax
$100 doubles =$200 @ 20% tax = $160
Post tax
$100 @ 20% = $80 doubles = $160
Same either way. Doubling can be any increase %, same thing applies.
Only difference would be tax on SS which I acknowledge to be plus for Roth, but that assumes you stay in same bracket while working
Pretax
$100 doubles =$200 @ 20% tax = $160
Post tax
$100 @ 20% = $80 doubles = $160
Same either way. Doubling can be any increase %, same thing applies.
Only difference would be tax on SS which I acknowledge to be plus for Roth, but that assumes you stay in same bracket while working
olroadbeech
Happy Verified UPSer
I was always told that it was better to be taxed when you take the money out since you would probably be at a lower tax rate. now the rxperts are saying the opposite. the roth is the way to go.
if I was just starting out , I would go with the roth and pay taxes upfront. it would be nice to get that money tax free after im retired. now I have to plan my IRA and 401k distributions and not take too much out so we don't get hit with big taxes. a pain.
olroadbeech
Happy Verified UPSer
the nice thing about the 401k and a traditional IRA is that you can deduct your contributions from your taxes. we maxed out both and was able to shelter 34,000 a year from taxes. at the 28% rate that is a savings of about 9000 a year in taxes.
plus when you retire , your income from the 401k will probably be taxed at a much lower rate . about 15%.
IF YOU MAX out the 401k, they suggest opening a roth as a counterbalance depending on your income. there is more flexibility with a roth. your money is not locked in. you can take your contributions out at any time without penalty but not the earnings.
plus when you retire , your income from the 401k will probably be taxed at a much lower rate . about 15%.
IF YOU MAX out the 401k, they suggest opening a roth as a counterbalance depending on your income. there is more flexibility with a roth. your money is not locked in. you can take your contributions out at any time without penalty but not the earnings.
upschuck
Well-Known Member
Either one is good. I only plan on touching 401 for special purchases. Pension and SS will cover expenses with plenty to spare.
By The Book
Well-Known Member
Did you end up owing on taxes? By putting more in the 401k do you get more back on your tax returns, and is there a percentage where there is a noticeable difference? Use 100,000.00 as the income level.
olroadbeech
Happy Verified UPSer
if I made 100k my AGI ( adjusted gross income ) would be 66,000 since my w2 would be adjusted for the 401k withheld and my IRA deduction on my federal tax form.
my standard deduction was what? around 13k last year? so now we are down to 53000. then the exemptions of 3900 times 2 because of spouse. say 8k. so now my taxable income is about 45000.
I get a refund every year since I only claim 2 and had a bunch with held. oh, ya. we don't itemize anymore since house paid off , etc.
yes, we get pretty good refunds.
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