You are a genious thalaiva!! I kinda knew concept this but was too lazy to do the math. And here you are here solving this puzzle like a boss!! Awesome content!!!! Wishing your more success!!
Vijay, precise information, love it. I think, distributing both pre-tax and Roth would be more appropriate as nobody knows what would be future tax situations after 25-30 years and Roth has its own advantages for bulk expenses/purchases. I am seeing some employers offering After-Tax accounts too. After contributing $20500 in pre-tax 401K, if you wish the money needs to grow tax-free, you can park that extra amount into an after-tax account and then immediately do the "Roth-in plan conversion" to Roth 401K. Through this one contribute the maximum limit of pre-tax 401K (current tax benefits) and Roth additionally (no capital gain tax).
Hello Vijay, I appreciate your efforts for educating people. I have been following your videos closely. Your videos motivated me to invest in stocks and ETFs and recently started doing it. All videos are educating all perspectives, not only in stocks, it shows what other possible places we can invest, save and grow the money. I am into IT for 20 years, earning and not invested money in anything including real estate, share market..etc. I had invested only on FD for 10% of my savings and rest of them were simply in savings account. I really feel bad as I was not having good investing knowledge. Thank you so much for all your videos, efforts. Keep up the good work.
Thanks Vijay, please cover the topic for H1B visa holders who want to go back, so that they can pre-withdraw the entire money at the time of exiting. I know that the intention was not a retirement in perfect sense, I just wanted to contribute the minimum so that I can get the employer match, I didnt want to lose that benefit. I initially had 401k traditional, but changed to Roth 401k after looking at how the tax may be computed in case I move back to India and after year I lose the NRI status, after which I might have to pay the tax as an income in India. The best option for me is to withdraw in one shot and take the money to India as with the NRI status intact, where it may not be taxed(NRE) as well as not taxed in US( as it is a pre-taxed).
Good explanation.... Please also highlight the importance of Required Minimum Distribution to viewers that comes into play after age 72. It will be a factor in deciding between Roth 401k and Regular 401k. Also with married filing jointly... You are subjected to lower tax. If one of the spouse is deceased, then the status becomes filing single... Which pushes your tax bracket significantly higher. In such situation Roth 401k will help.
Dear Vijay, hope you are doing well. please help with this question. I am in Chicago and I heard there will be no state tax for retirement account transactions in Illinois. I have traditional ira, can I start taking fund from traditional ira from my age 60 without having any state tax? Or do I need to convert traditional Ira to Roth IRA at my 60?
Good information, one piece of information that would great is, which is best for someone who wants to return to India after working a couple of years, but before retirement age...
Hi Vijay, you’re doing an amazing job. I wish these kind of educative videos existed much earlier. Can you please explain about mega back door Roth? Despite spending multiple hours, I couldn’t understand. Looking for a simplied lecture from you 🙏🏽🙏🏽🙏🏽
One more suggestion - would be good to explain some stock market jorgans, recently was going through earning call and trying to make sense of headwinds, tailwind, drawdown etc.
Hi, Can you plz let me know what would be the tax to be paid for 401K and 401k Roth in India on returning back, no more on NRI and on withdrawing after 60 years of age in the current scenario (assuming current tax %)? I came to know it would be 30%
I am in my 40's and planning on retiring at 55. I am already maxing out 401k and roth ira. If I have extra money should I use that to fund roth 401k or my brokerage account? Reason for brokerage account is that I can withdraw from that account first when I am 55-60 before I tap 401K. Your thoughts?
Thanks for explaining clearly. Can you please make a video on how to conver MF and shares to NRI account while being abroad and how to convert it back after settling in India. With zerodha it is offline process and with Kuvera they used to say to close all existing and start new NRI account where we will loose old Investments. Will this conversion works in same way for OCI card holders also as they will renounce Indian citizenship? Thank you for your other explanations too.
Hi... Thank you for well made video. But boss you missed to mention a major problem with the Pre-Tax 401k withdrawal in Retirement. The Tax Slab is not going to be the same after 10,20,30 years.. It is subjected to change in future depending on the Country's Debt & Govt funding. US may not be having the same Tax Slab in future years to come. That 22%, 24% tax slabs may get subject to change in future and can increase to any rates like 27% to 35% like the other europen & developed countries like canada, UK etc.. Even in US year 2025, the Trumps 2017 Tax Slab of 22%, 24% is going to expire and will be subjected to new Tax Slabs.. It may increase to new Tax Slab depending on country's current economic, social situation. The current US Individual Tax slab is the lowest in the US History. In US History, we had 40% to 99% Tax slab happened before. We never know what is going to happen in Future. So, its better to Hedge it for Future. And Roth 401k, comes for in picture for Hedging Pre-Tax 401k tax subjects in future.
Agree with this. One thing to note due to inflation tax slabs themselves will grow make more of your money under taxed. Roth is always safer option if effective tax rates are same.
There will be always unknown variables. For comparison purpose, we will not be able to account for unknowns. But yeah, if we are worried about that and contributing to Roth helps to sleep better. Sure. Why not.
@@InvestmentInsightsTamil at the contrary , with the inflation high, the government might increase the amount for the base slabs in the future ( to help lower income )The government always want to keep the Lower bracket to help low income . Hence I don’t anticipate them increase the slabs substantially for mid level income category , but could be higher for higher percentage . As long as the withdrawal is in reasonable amount , traditional might be still benefit . Just an alternate theory , as no one can predict how it will be 20-25 years later .
Sir elllam ok, historically the current tax slabs have been the lowest, what if the future tax slabs go way higher ?? Can you make a video on how the tax slabs have been last 100 years or why do you think the tax slabs will remain the same for next 50-60 years. I have been jumping between pre and post tax for a while in my contributions thinking this scenario.😭🙄
Great Insights and Thanks for sharing this information. How can i open a Roth 401K. Should that be provided by employer? Can i have both Pre-Tax 401K and Roth 401K?
Yes, it needs to be provided by the employer. And Yes, you can have both Pre-tax and Roth 401K, but the total contribution should not exceed the annual contribution limit.
Traditional IRA and 401(k) must be completely withdrawn after certain age that might push us to higher tax rate. While ROTH can be withdrawn at our own pace or inherited to kids
I hope all this logic applies provided if we are our kids going to be in US all the time. what if I moved to India or my kids moved to India - if i use the money in ROTH still I have to pay tax in India? what if my kid moves to India or other country - if he wants to withdraw my ROTH money - he has to pay tax in US or the country he is going to be or in both places?
Great Insights with simple explanations. Beneficial to learn new things. If we have reached the max contribution in 401 k per year Is it worth continue the contribution when employer contribution is matching ?
We will not be able to contribute more than our contribution limit to pretax 401K or Roth 401K. But we can in After tax 401K. I will cover that in next episode.
Nice content! Missing piece is mentioning the advantage for ROTH, which is it is possible to do withdrawal of Roth contribution prior to retirement age for emergencies without penalty/tax and you can convert Roth 401k to Roth IRA and protect yourself from RMD requirement..
I am not sure if you are planning to explain this , but would love to hear theory about front loading of 401k (benefits /side effects ) of doing that in the next coming episodes .
Nice video Vijay but one question about your excel output regarding traditional 401K which does not mention anything about Required Minimum distribution (RMD) which starts from the age of 72 or 73. Whereas there is no RMD for Roth 401K
For 1.6M balance, RMD would be $58K after we turn 72. The calculation in spreadsheet has $150K withdrawal, well over the RMD requirement at 72. Hope that helps.
Hi Vijay, have a clarification. In our 401k series 1 video, I understood we save tax at marginal tax rate (22%) and pay post retd at effective tax rate, which I thought was a flat 10%. So in our example here when we withdraw $125K post retirement why wouldn’t the tax be a flat 10% for withdrawal? Instead we calculate tax for $125K based on income brackets. Thanks in advance for your response and wishing all the best and continued success.
No. It is not flat 10%. The tax depends on the amount we are withdrawing from our 401K/IRA. 401K/IRA withdrawal after retirement is considered same as regular income as if we earned that money in that specific year.
You can contribute to both, but only a total maximum of the contribution limit ($23K for 2024). And of course Roth 401K is better than a brokerage as it has tax free growth.
Thank you sir unga video romba helpful ah irunthuchu. Sir oru help ,na share market ku beginner na investment pannalam nu irukken.ennala monthly 500 - 1000 investment panna mudium.enakku 26 age aachu . long term (20-30)ku investment pannalam nu irukken. Enakku entha mutual fund la investment panrathu nu therila sir.
Hi, You are an eye opener for me. I didn't do any investments so far. You have made me to decide that I will save from this month. I am an NRI studying in Germany with plans to settle back in India later. Should I invest in Euros or in rupees for buying US Index ETFs? I am asking because of the Indian rupee depreciation. Thank you
No. But we can only plan with what we know. There will always be unknowns - up to you how you want to account for it. Here is the historical tax rates: bradfordtaxinstitute.com/free_resources/federal-income-tax-rates.aspx
I believe Roth 401k can be transferred to Rotha IRA while switching jobs, Roth IRA will have wider investment options and allow early withdrawals for people planning early retirement
It is important people create Roth IRA account early enough even with a small amount. Because clocks ticks from the time when you setup the account to determine 5 year eligibility for withdrawal. So when they are converting Roth 401k to Roth IRA.. clock does n't reset.
@@InvestmentInsightsTamil Sir, can you please explain the withdrawal process of money out of 401k after returning to India and whether it is possible to withdraw the funds systematically from 401k after returning to India
Hi, Is it require to add spouse in the 401 k beneficiary? Or spouse can take this money after complete 60 years incase the payer is no more on that time.
Boss - That's what he did! Please watch again and also read about these topics in investopedia. You will understand better. I too learned few things from his video even though I am contributing in Pre & Roth 401k and IRA. There are some changes coming in 2024 on Roth 401k where there is no RMD.
How realistic is it to assume 8% growth in retirement? Is it reasonable to assume one would have the same risk tolerance in retirement as in accumulation phase? Also I didnt quite get the rationale for lumping brokerage with pre-tax account.
8% growth totally reasonable assuming that we are investing in an equity index fund. Risk tolerance needs to change when we approach retirement. This will be covered in next week episode. Which part you did not understand about the brokerage part? If we are investing 20.5K in Roth, the equivalent money in pretax will be 20.5K + tax. As the pretax account is maxed out, the potential tax savings is going to brokerage for a fair comparison.
How to withdraw money from retirement corpus after retirement? How to invest retirement corpus after retirement? I'm planning to retire at my 55, please answer my question with this detail.
Hi , your 401k vs Roth video was very useful . I am part of that 99% group . But I recently changed jobs and I have an option to do rollover or Roth ira.I would fall under 22% bracket . What would you prefer for me ? Rollover or Roth ? In new employer I am gng to do pre tax 401k. Question is what to do with old employer 401k. Roth or rollover ?
I would recommend pretax rollover IRA. Reserve the Roth conversion to a downtime year where we will have less income for that year. I will cover those options in IRA episode.
Hi Vijay Mohan, Thanks for the nice video. My MAGI income for Married Filing Jointly is under $218,000. Can I contribute $6500 for myself and $6500 for my spouse?
I was confused to choose which one to go.. tada you are here😍💐 Thank you Vijay
You are a genious thalaiva!! I kinda knew concept this but was too lazy to do the math. And here you are here solving this puzzle like a boss!! Awesome content!!!! Wishing your more success!!
Calculations were eye opening!👍
Vijay, precise information, love it. I think, distributing both pre-tax and Roth would be more appropriate as nobody knows what would be future tax situations after 25-30 years and Roth has its own advantages for bulk expenses/purchases. I am seeing some employers offering After-Tax accounts too. After contributing $20500 in pre-tax 401K, if you wish the money needs to grow tax-free, you can park that extra amount into an after-tax account and then immediately do the "Roth-in plan conversion" to Roth 401K. Through this one contribute the maximum limit of pre-tax 401K (current tax benefits) and Roth additionally (no capital gain tax).
That is the main content of the next episode. 🙂
Sir ,pls share about NPS and othe pension scheme in india.how to manage invest and pension.
Hello Vijay,
I appreciate your efforts for educating people. I have been following your videos closely.
Your videos motivated me to invest in stocks and ETFs and recently started doing it. All videos are educating all perspectives, not only in stocks, it shows what other possible places we can invest, save and grow the money. I am into IT for 20 years, earning and not invested money in anything including real estate, share market..etc. I had invested only on FD for 10% of my savings and rest of them were simply in savings account. I really feel bad as I was not having good investing knowledge.
Thank you so much for all your videos, efforts. Keep up the good work.
Thanks Vijay, please cover the topic for H1B visa holders who want to go back, so that they can pre-withdraw the entire money at the time of exiting. I know that the intention was not a retirement in perfect sense, I just wanted to contribute the minimum so that I can get the employer match, I didnt want to lose that benefit. I initially had 401k traditional, but changed to Roth 401k after looking at how the tax may be computed in case I move back to India and after year I lose the NRI status, after which I might have to pay the tax as an income in India. The best option for me is to withdraw in one shot and take the money to India as with the NRI status intact, where it may not be taxed(NRE) as well as not taxed in US( as it is a pre-taxed).
Good explanation.... Please also highlight the importance of Required Minimum Distribution to viewers that comes into play after age 72. It will be a factor in deciding between Roth 401k and Regular 401k.
Also with married filing jointly... You are subjected to lower tax. If one of the spouse is deceased, then the status becomes filing single... Which pushes your tax bracket significantly higher. In such situation Roth 401k will help.
Dear Vijay, hope you are doing well. please help with this question. I am in Chicago and I heard there will be no state tax for retirement account transactions in Illinois. I have traditional ira, can I start taking fund from traditional ira from my age 60 without having any state tax? Or do I need to convert traditional Ira to Roth IRA at my 60?
Crystal clear explanation sir 🙏🙏
Hi.. Can you plan to post detailed video about NPS investment for Indian investors ?
Good information, one piece of information that would great is, which is best for someone who wants to return to India after working a couple of years, but before retirement age...
Hi Vijay, you’re doing an amazing job. I wish these kind of educative videos existed much earlier. Can you please explain about mega back door Roth? Despite spending multiple hours, I couldn’t understand. Looking for a simplied lecture from you 🙏🏽🙏🏽🙏🏽
That will be the main content of next episode.
When markets are down is it better to do Roth to benefit from paying tax on lower valuations and benefit from higher growth tax free. Any thoughts?
One more suggestion - would be good to explain some stock market jorgans, recently was going through earning call and trying to make sense of headwinds, tailwind, drawdown etc.
Hi, Can you plz let me know what would be the tax to be paid for 401K and 401k Roth in India on returning back, no more on NRI and on withdrawing after 60 years of age in the current scenario (assuming current tax %)? I came to know it would be 30%
I am in my 40's and planning on retiring at 55. I am already maxing out 401k and roth ira. If I have extra money should I use that to fund roth 401k or my brokerage account? Reason for brokerage account is that I can withdraw from that account first when I am 55-60 before I tap 401K. Your thoughts?
Thanks for explaining clearly. Can you please make a video on how to conver MF and shares to NRI account while being abroad and how to convert it back after settling in India. With zerodha it is offline process and with Kuvera they used to say to close all existing and start new NRI account where we will loose old Investments. Will this conversion works in same way for OCI card holders also as they will renounce Indian citizenship? Thank you for your other explanations too.
Hi... Thank you for well made video. But boss you missed to mention a major problem with the Pre-Tax 401k withdrawal in Retirement. The Tax Slab is not going to be the same after 10,20,30 years.. It is subjected to change in future depending on the Country's Debt & Govt funding. US may not be having the same Tax Slab in future years to come. That 22%, 24% tax slabs may get subject to change in future and can increase to any rates like 27% to 35% like the other europen & developed countries like canada, UK etc.. Even in US year 2025, the Trumps 2017 Tax Slab of 22%, 24% is going to expire and will be subjected to new Tax Slabs.. It may increase to new Tax Slab depending on country's current economic, social situation. The current US Individual Tax slab is the lowest in the US History. In US History, we had 40% to 99% Tax slab happened before. We never know what is going to happen in Future. So, its better to Hedge it for Future. And Roth 401k, comes for in picture for Hedging Pre-Tax 401k tax subjects in future.
Agree with this. One thing to note due to inflation tax slabs themselves will grow make more of your money under taxed. Roth is always safer option if effective tax rates are same.
There will be always unknown variables. For comparison purpose, we will not be able to account for unknowns. But yeah, if we are worried about that and contributing to Roth helps to sleep better. Sure. Why not.
@@InvestmentInsightsTamil at the contrary , with the inflation high, the government might increase the amount for the base slabs in the future ( to help lower income )The government always want to keep the Lower bracket to help low income . Hence I don’t anticipate them increase the slabs substantially for mid level income category , but could be higher for higher percentage . As long as the withdrawal is in reasonable amount , traditional might be still benefit . Just an alternate theory , as no one can predict how it will be 20-25 years later .
Sir elllam ok, historically the current tax slabs have been the lowest, what if the future tax slabs go way higher ??
Can you make a video on how the tax slabs have been last 100 years or why do you think the tax slabs will remain the same for next 50-60 years. I have been jumping between pre and post tax for a while in my contributions thinking this scenario.😭🙄
If you are worried about that, split the contribution 50/50 between two.
For investment should I buy stock at NSE or BSE
Great Insights and Thanks for sharing this information. How can i open a Roth 401K. Should that be provided by employer? Can i have both Pre-Tax 401K and Roth 401K?
Yes, it needs to be provided by the employer. And Yes, you can have both Pre-tax and Roth 401K, but the total contribution should not exceed the annual contribution limit.
Traditional IRA and 401(k) must be completely withdrawn after certain age that might push us to higher tax rate. While ROTH can be withdrawn at our own pace or inherited to kids
Hai Mr.Vijay sir, how to invest US ETF and Stock from India? Please suggest best platform.
Thank you,
I hope all this logic applies provided if we are our kids going to be in US all the time. what if I moved to India or my kids moved to India - if i use the money in ROTH still I have to pay tax in India? what if my kid moves to India or other country - if he wants to withdraw my ROTH money - he has to pay tax in US or the country he is going to be or in both places?
Great Insights with simple explanations.
Beneficial to learn new things. If we have reached the max contribution in 401 k per year Is it worth continue the contribution when employer contribution is matching ?
We will not be able to contribute more than our contribution limit to pretax 401K or Roth 401K. But we can in After tax 401K. I will cover that in next episode.
Nice content 🙏
Nice content! Missing piece is mentioning the advantage for ROTH, which is it is possible to do withdrawal of Roth contribution prior to retirement age for emergencies without penalty/tax and you can convert Roth 401k to Roth IRA and protect yourself from RMD requirement..
That will be covered as part of IRA episodes. 🙂
I am not sure if you are planning to explain this , but would love to hear theory about front loading of 401k (benefits /side effects ) of doing that in the next coming episodes .
Watch the lumpsum investment episode. The same logic is applicable for front loading as well.
Nice video Vijay but one question about your excel output regarding traditional 401K which does not mention anything about Required Minimum distribution (RMD) which starts from the age of 72 or 73. Whereas there is no RMD for Roth 401K
For 1.6M balance, RMD would be $58K after we turn 72. The calculation in spreadsheet has $150K withdrawal, well over the RMD requirement at 72. Hope that helps.
Hi Vijay, have a clarification. In our 401k series 1 video, I understood we save tax at marginal tax rate (22%) and pay post retd at effective tax rate, which I thought was a flat 10%. So in our example here when we withdraw $125K post retirement why wouldn’t the tax be a flat 10% for withdrawal? Instead we calculate tax for $125K based on income brackets. Thanks in advance for your response and wishing all the best and continued success.
No. It is not flat 10%. The tax depends on the amount we are withdrawing from our 401K/IRA. 401K/IRA withdrawal after retirement is considered same as regular income as if we earned that money in that specific year.
என்னோட question எந்த funds 401 la வைக்கலாம்.. hope Next video cover panreenga
Can we maxout both 401K and Roth 401k? or just max out 401k and contribute in brokerage instead of Roth 401k? Which has advantage
You can contribute to both, but only a total maximum of the contribution limit ($23K for 2024). And of course Roth 401K is better than a brokerage as it has tax free growth.
Thank you sir unga video romba helpful ah irunthuchu.
Sir oru help ,na share market ku beginner na investment pannalam nu irukken.ennala monthly 500 - 1000 investment panna mudium.enakku 26 age aachu . long term (20-30)ku investment pannalam nu irukken. Enakku entha mutual fund la investment panrathu nu therila sir.
Watch the stocks portfolio episode.
Hi, You are an eye opener for me. I didn't do any investments so far. You have made me to decide that I will save from this month. I am an NRI studying in Germany with plans to settle back in India later. Should I invest in Euros or in rupees for buying US Index ETFs? I am asking because of the Indian rupee depreciation. Thank you
It does not matter as you are buying US Index anyways in USD.
Super 👍
But is it realistic to assume the tax will remain the same now Vs during retirement ( let’s say 20 yrs ). How has the historical tax been
No. But we can only plan with what we know. There will always be unknowns - up to you how you want to account for it. Here is the historical tax rates: bradfordtaxinstitute.com/free_resources/federal-income-tax-rates.aspx
I believe Roth 401k can be transferred to Rotha IRA while switching jobs, Roth IRA will have wider investment options and allow early withdrawals for people planning early retirement
It is important people create Roth IRA account early enough even with a small amount. Because clocks ticks from the time when you setup the account to determine 5 year eligibility for withdrawal. So when they are converting Roth 401k to Roth IRA.. clock does n't reset.
Yes... I will be covering that as part of IRA episodes.
@@InvestmentInsightsTamil Sir, can you please explain the withdrawal process of money out of 401k after returning to India and whether it is possible to withdraw the funds systematically from 401k after returning to India
Hi, Is it require to add spouse in the 401 k beneficiary?
Or spouse can take this money after complete 60 years incase the payer is no more on that time.
Spouse is automatic beneficiary of your 401K. They can inherit the money in their own 401K or IRA.
Top up எப்படி கணக்கு போடுவது சார்
Can you explain more simple layman term
Boss - That's what he did! Please watch again and also read about these topics in investopedia. You will understand better. I too learned few things from his video even though I am contributing in Pre & Roth 401k and IRA. There are some changes coming in 2024 on Roth 401k where there is no RMD.
How realistic is it to assume 8% growth in retirement? Is it reasonable to assume one would have the same risk tolerance in retirement as in accumulation phase? Also I didnt quite get the rationale for lumping brokerage with pre-tax account.
8% growth totally reasonable assuming that we are investing in an equity index fund.
Risk tolerance needs to change when we approach retirement. This will be covered in next week episode.
Which part you did not understand about the brokerage part? If we are investing 20.5K in Roth, the equivalent money in pretax will be 20.5K + tax. As the pretax account is maxed out, the potential tax savings is going to brokerage for a fair comparison.
Hi why is your old video got deleted which says how to withdraw from pre tax 401. I think your son was there in that video
Check this out: www.madfientist.com/how-to-access-retirement-funds-early/
Sir na mutual fund la long la term 20 years ku (lamsam) investment panratha irukken.enakku entha mutual fund correct ah irukkum sollunga sir.
Watch th-cam.com/video/KdCs3EWGJvQ/w-d-xo.html
How to withdraw money from retirement corpus after retirement? How to invest retirement corpus after retirement? I'm planning to retire at my 55, please answer my question with this detail.
@user-om1jx5wm7p Who the hell are you cheater?
@InvestmentsinsightsTamil please look into it.
Hi , your 401k vs Roth video was very useful . I am part of that 99% group . But I recently changed jobs and I have an option to do rollover or Roth ira.I would fall under 22% bracket . What would you prefer for me ? Rollover or Roth ?
In new employer I am gng to do pre tax 401k. Question is what to do with old employer 401k. Roth or rollover ?
I would recommend pretax rollover IRA. Reserve the Roth conversion to a downtime year where we will have less income for that year. I will cover those options in IRA episode.
Sir, ஒரு நாள் live வாங்க 🙏
🙏
✌️✌️✌️✌️✌️
Hi Vijay Mohan,
Thanks for the nice video.
My MAGI income for Married Filing Jointly is under $218,000. Can I contribute $6500 for myself and $6500 for my spouse?
For 2023 Roth IRA, yes. For 2022 Roth IRA, the income has to be less than 204K to contribute full 6K per person.