What Should You Do With Your 401k When You Retire?
ฝัง
- เผยแพร่เมื่อ 12 มิ.ย. 2024
- In this episode of Ready for Retirement, James discusses what you should do with your 401(k) when you retire.
Questions Answered:
What are the best ways to reduce fees in a 401(k)?
Should you move your 401(k) elsewhere?
How can your overall retirement strategy be improved?
Timestamps:
00:00 - Introduction
1:45 - Listener Question
3:23 - 401(k) Hidden Fees
7:52 - Gaining More Control
9:45 - Investment Options
13:40 - Clunky Planning
17:03 - After-Tax Contributions
21:05 - Net Unrealized Appreciation
24:02 - Tax Treatment
26:08 - Age Importance
29:50 - Working With Us
Learn the tips & strategies to get the most out of life with your money.
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I just recently came across this, it’s a good thing. For a such young man you are full of knowledges on social security informations. You have very clear and concise speaking voices, easy on listening ears. Thank you for the information. 👍
I never mis an episode of yours and Ari’s TH-cam postings
Great information about 401k. Thanks 🙏
Enjoying the music AND info. 😊
Nice job James 15 months and counting👍🏽
Great info! Especially regarding taxing company stocks as capital gain instead of income. I was not aware of that. Thank you! Always enjoy your videos James! Not only you tell us a tax rule, you explain it, AND you illustrate with easy to understand scenarios! 🙏🏾🥰
One consideration you mentioned in passing but did not focus on: what if your 401 K investments are all down?Wouldn’t it be better to wait until the funds recover? For instance, all my investments were down more than 20% last year. Had I moved my entire portfolio at once, I would not have had a chance to regain my losses. I think it’s better to sell each index funds shares and roll over to an IRA only when each index funds regain their value. Too bad you did not go into details with that scenario. I love comparing my investment strategies against yours. 😊 It’s like having a one-on-one conversation with you where I get to pick your brain on investing 🥰
if you roll them into similiar or indentical investments if really won't matter if they are down or up in the 401k.
Spend it, enjoy it!
My type of guy😂
How deep would you have to dig to find the costs of your 401k. I have fees listed on my statements would there be more hidden fees other than the funds expense ratio?
When doing an in-plan rollover of the contribution part (i.e. not including any gains) from my after-tax 401k to my Roth 401k, is there a mandatory waiting period once the contribution is made, or can the rollover happen immediately?
401k is Pre-Tax (you don't pay Taxes now on what you contribute to 401k, and the ENTIRE money gets Taxed at Ordinary Income Highest Tax Rates at the time of conversions to ROTH or withdrawal with 10% penalties or in Retirement when you need this money), it's ROTH 401k contribution which is after Tax (you pay Taxes the same year on the money you contribute to ROTH 401k and ROTH (both accounts can be used by the same person if your income permits (see rules) but then this money alledgedly does not get taxed later and they already changed Secure Acts to not allow Inherited IRA distribution being stretched based on the lifetime of the Beneficiaries for non Spouses). They don't allow in plan conversions for most ordinary people while In Service or still working. They only allow this in Service 401k to ROTH 401k conversions for companies run by mostly Wealthy and without ordinary cheaper compensated Employees (so that there is no way these cheaper compensated Employees get to use the same lucrative benefits from Mega ROTH IRAs by converting 401k into ROTH 401k). The only thing in these cases is to contribute only to ROTH 401k (consult your Tax Advisor) instead of 401k and plus additionally contribute Max to a separate ROTH IRA and that is if your goal is to have Tax Free in Retirement ROTH 401k IRA.
Another possible reason to keep your 401k...I am retiring and receiving severance payments for a period of time. I still want to do Backdoor Roth contributions during the severance period, therefore I do not want to have funds in an existing IRA during that time.
How do you execute a backdoor conversion directly from a 401k to a Roth IRA with first rolling a 401k into a traditional IRA???
You don’t. You make the Backdoor Roth from after tax funds, passing them through an IRA account in the process. But the IRA needs to start with a zero balance.
@@davidatkinson5396 I wish I'd known more about Backdoor Roth's more before I rolled over so many 401k's to consolidate them into my IRA.
You don't have to zero the IRA to backdoor, but it simplifies your basis and the tax paperwork.
Thank you for the Video! Don't even try to check with your 401k Plan about in Service or while you work conversions from 401k into ROTH 401k... 😢They don't allow this in any companies with Non Wealthy Ordinary Employees (this opportunity exists only in 401k Plans of those companies run by Wealthy only at around same compensation level)...😂
Great information however, i believe it to be most helpful if you and others would talk more about widow options. There are so many women who are in desperate need of SS information as a widow getting ready to retire. They need to know how to protect themselves and their money.
Agree and single or divorced women also.
Please single women with one 401k (starting saving late but grateful to have it
If I put $30,000 for regular 401K in 2023, but I still need to pay Social Security and medical tax for $30,000, correct?the only saving is no federal and state tax.
But if I convert $30,000 from existing regular 401k to Ruth 401k, I will only pay Federal and State tax for these $30,000 conversion money but don’t need to pay Social Security and medical tax.
Am I understanding correct or not? Thanks
Are you still interested in an answer?
In retirement, if I’m drawing down my taxable, tax deferred, and tax-free accounts (in that order) and simultaneously applying the “4% rule”, then, theoretically, I won’t be able to draw down the taxable account to get to the others. Correct?
How old are you?
Do you have videos geared for single people?
The principles are generally the same, the numbers just need to be adjusted accordingly.
My husband is 56 and would like to retire at 62. He is maxing out his 401 k every year and the company matches almost half of the maximum contributions he puts in. I don’t know what will happen retiring in this financial crisis. I don’t know if we can recover. We have lost a lot already.
You’ll be fine 😊
Option I thought up, that my Fidelity accountant thought was brilliant (in my case). I split my 401K in 2 at age 62. 50% went into a fixed Income Annuity that will build for 15 years, 50% went to a 15 year Certain Income Annuity that will pay out 8.92% - 15 years of payments until it draws down. At that time, I will convert the Fixed Income Annuity TO another 15 year Certain Income Annuity to replace the other. This strategy isn't for everyone, but works for me.
I can think of NO reason why you would keep money in a 401K vs rolling it over. You seem to describe situations where some 401Ks have high fees, and some have low fees. Most IRAs have NO fees. What is better, no or low. I go with no. Similarly, you correctly describe why IRA's are better for control and choice. Similar situation. Some 401K plans are better than others in regard to investment options, but IRAs always give you MORE choice. (Like virtually unlimited.) So, what is better? A 401K that gives you many choices, or an IRA that gives you total control on where to invest. I think we would agree that more choices you have in life, the better. So for those reading this. JUST roll that 401K to an IRA. (And I agree with him, do not consider a lump sum. Why pay the government taxes until you have to. Even if you are over 50 and you can do the conversion to an ordinary account, you will be paying taxes on that transaction.
This Roth 401k is deferred tax , but there are taxed Roth 401k.
Yes
Who cares ease of use im not gonna just not use it bc it’s too hard to fill out a form