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  #11  
Old 05-01-2006, 03:30 PM
Emily Emily is offline
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Originally Posted by Double High C
Also, the fact that the inside buildup (regardless of whether money is in a 401K/IRA or a Roth IRA) avoids being taxed (repeatedly) until the money is taken hout is a huge benefit.
Well, the argument here is that you can do the same thing by buying and holding individual stocks in regular brokerage accounts.
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  #12  
Old 05-01-2006, 04:13 PM
Suthrn Suthrn is offline
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I'll argue that maximizing your 401k contribution makes sense for a nonactuarial reason ... for most people the alternative is spending it.
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  #13  
Old 05-01-2006, 04:29 PM
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Double High C Double High C is offline
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Quote:
Originally Posted by Double High C
Also, the fact that the inside buildup (regardless of whether money is in a 401K/IRA or a Roth IRA) avoids being taxed (repeatedly) until the money is taken hout is a huge benefit.
Well, the argument here is that you can do the same thing by buying and holding individual stocks in regular brokerage accounts.
I see your point, but you cannot divest (without being taxed on the inside buildup) of your individual stocks (or funds) to move to different ones if your idea about their future prospects changes. Not so for 401K/IRA/Roth IRA.
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  #14  
Old 05-01-2006, 04:33 PM
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So, you're really worried that they'll tax the hell out of everyone's 401(k) distributions to save Social Security? You don't think it will occur to anyone that that doesn't make a tremendous amount of sense?
Since when does any government financial program have to make sense?
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  #15  
Old 05-01-2006, 04:58 PM
Steve Grondin Steve Grondin is offline
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Quote:
Originally Posted by Emily
So, you're really worried that they'll tax the hell out of everyone's 401(k) distributions to save Social Security? You don't think it will occur to anyone that that doesn't make a tremendous amount of sense?
It isn't so much that they will be taxing the heck out of just 401(k) distributions to save SocSec. They will tax all income, 401(k) distributuions just happen to be one flavor, to spend it. SocSec won't always be the cash cow for the feds it currently is. We expect too much from the govt and are paying too little. Tax rates will go up.

I think the main risk to be evaluated is the tax structure. Outside of tax sheltered accounts, even individual stocks can force timing of recognizing gain, through dividends or sale of company/spinoffs etc. I think the best way to do it is to do some multi-scenario analysis.

Some 401(k) plans allow you to roll out ee contributions to a personal IRA without losing right to er match. If yours has high fees see if this option is available.

Based on this and other threads, I think I'm gonna rename DeepPurple DeepPockets

Remember, DP, that the child tax credit starts phasing out at $110K MFJ AGI. This is an extra 5% marginal rate on fed. Course, median FCAS might be beyond phaseout even at max 401(k)/cafeteria plan deferrals, but for the rest of us making less, it is something to remember.
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  #16  
Old 05-01-2006, 05:01 PM
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I agree with Charles Grodin.
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  #17  
Old 05-01-2006, 05:51 PM
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What if you want to retire before 59.5? Why should everyone set their sights that far off?
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  #18  
Old 05-01-2006, 05:53 PM
Surfohio Surfohio is offline
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Wouldn't another consideration be if you would be paying alternative minimum tax (AMT) now on the money you could be investing in your company 401k? Married filing separately, the AMT is a possibility for many people. Also, your itemized deductions are reduced after income of a certain level (also very attainable for married filing separately). I just run into these things cause my state laws are beneficial to married filing separately in my case.
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  #19  
Old 05-01-2006, 06:03 PM
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Originally Posted by HangerAngler
What if you want to retire before 59.5? Why should everyone set their sights that far off?
Is this in refrence to the 10% penalty? Becuase if it is there are ways around that before age 59.5 if the $ is really being used to fund retirement.
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  #20  
Old 05-01-2006, 06:30 PM
Westley Westley is offline
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Quote:
Originally Posted by Emily
So, you're really worried that they'll tax the hell out of everyone's 401(k) distributions to save Social Security? You don't think it will occur to anyone that that doesn't make a tremendous amount of sense?
It'll make a lot of sense to somebody who doesn't have anything in their own 401k, and their only chance to retire is to ensure the solvency of SS. So, it depends on the relative strength of the voting bocks.
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