To all you 20 somethings, you guys rock! Take advantage of all this TH-cam information Gen X didn't have access to in our 20s and 30s. I'm doing well, but oh if I could go back in time...
This. Resist the urge to live large in your 20s. Continue to live like a broke college kid for the first five or 6 years after college, then just live comfortably within your means after that, and you will pretty much have the last 30 or 40 years of your life already set up on autopilot.
LOVE my Roth 401k. This is the first year I'll be maxing it out. I was too concerned in my younger years (20s) with paying off debt that I didn't focus on investing. I know...I didn't handle it the best. I should have leveraged the low interest debt a bit more. Being 32 now though, I'm glad I'm really starting to get it, because I feel like I'm spraying jet fuel into my investments. At the start of 2020, my balance was 26k, but now I can proudly say that with a lot of effort and concentration and finally having debt paid off, my balance is somewhere around 73k! I'm so happy with the progress I've made and I only think it's going to continue to get better. Let's go everyone! Let's be smart with our money!
@@travis1240 I've been contemplating opening up a 401k for my side hustle so that me, as a business, can make traditional contributions into it, to get closer to that 57,000 number. I'm not quite sure which route I'd prefer right now.
@@dustinphillips3041 Nice! I'll take realizing it now versus realizing mid 40s, for sure. Just have to work with what we got. Now to kick things into overdrive! Haha
My older brother got me into all of this information before I was even old enough to open a 401K account. At the time the age was 21 to start a 401k, now I am 24 with over 100k in assets, and about to own my second house. Thankful for all of this information! You can never get too much of it.
I just wanted to say that I really enjoy watching the both of you. Your mannerisms, as well as your knowledge, makes this channel one of my absolute favorite to watch. Thank you 😊
Someone needs to hear this important message of mine I realized lately In this 21st Century,Almost 45% of people in the world have been Mislead and discouraged from taking step that could have changed their life in general ( from worst to better) and gained them 101% of financial Stability.
The greatest decision I’ve ever made in my life was investing in digital assets market.I earn profit of $7500 every 3days after reinvesting with expert Thomas Anderson,he’s of good help to newbies focusing and working hard on their financial goals.
I reinvest consistently in digital assets,through the administration of Thomas Anderson a financial expert.I operate an exclusive package and so far I' ve almost *$450k* started with *$19k* .
this is the best video you have ever done. thank you so much for the information. I have recommended you to everyone that I think wants to learn about such things. again, thank you.🥰😇
Im 30 I just started investing a year ago i have a roth 401k which im putting 500 a month in and plan on putting 50% or more of every raise towards it and I also have my own account on robinhood, I'm glad to see that my intuition and natural way of investing is right on track with your financial order of operations, and watching your videos just backs my method up thanks for the inspiration guys and keep pumping out this great content 👍
I was advised, both 401k and Roth IRA are tools on handling taxes when you are ready for retirement. Although, it would be good if all you had to do was withdraw from Roth IRA (no taxes) but that usually won't happen because of the 6k limitation. Although, there is a Roth 401k which has a higher limit. If you are lucky enough to have one of those, add to that as well if you can.
I remember my mother driving me through a neighborhood as a child. She said- “you’ll live here if you don’t go to college”. I have an MBA and make $160k/yr… I can’t afford that neighborhood
On a mega backdoor Roth transaction what do you do with the portion of the after tax that accrued earnings while sitting in the 401k plan. Assuming that the employer provided a breakdown in the contribution rollover check. Can you leave that potion in the contributory IRA and put the rest in the Roth?
Hey money guy team, whats your opinion on 3x leveraged stocks that track the snp500 (like upro). If i do plan to hold it in the long run and we're all confident that in the long term it'll grow, does it make sense to buy into these leveraged stocks?
I think the IRA is better than any 401(k) plan because the investment options in the IRA is flexible than the company sponsored 401(k) plan. The 401(k) may have the brokerage window and a higher contribution limit, providing that the employer has a match, but it depends how it is set up by the employer.
If your 20 you are literally mining diamonds, assuming 10percent return, every dollar equals $72.89 dollars, and you only need to invest 3.81 dollars a day to become a millionaire at 65!!! So stop drinking that premium Starbucks coffee. I became a millionaire at 34 years!!!!
The only problem I have with the Roth Ralph and Pre-Tax Patty assumptions is, if Pre-Tax Patty is only able to save $8000 a year in pre-tax dollars to her 401k, if she were to put that same investible income into a Roth, it would not be $8K as it would have been taxed. Hence the per year figure for the Roth would be less. The way the example is done in the video is assuming that both users are able to save the equivalent $ in each plan, which in theory is nice, but not applicable for many and thus not a true apples to apples comparisson for a large number of investors.
They accounted for that by giving pre-tax Patty after tax investments equivalent to the tax savings she got from making the traditional contributions ($1760 a year using their assumptions). So the ROTH scenario was investing a total of $8,000 per year, while the Traditional scenario was investing a total of $9,760 per year.
1 hour?! Woot ! Hey I have in-service withdrawals as an option Should I regularly rollover my 401k balances to their respective Roth and t IRA equivalents, to have more freedom of investment choices?
If you can do in service roll-overs, I believe the only benefit a 401k gives over an IRA is liability protection (and maybe 401k loans, but hopefully that's not something you'd ever need to do). If you get sued, who ever is suing you could come after what's in your IRA, but I believe 401k's are protected from that. I believe there are also some scenarios where you can withdraw from a 401k early if you retire before age 59 1/2.
Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers Book by Ellen E. Schultz Would love to hear their thoughts about this book and it’s implications for how defined contribution plans became the norm
assuming tax rates are somewhat stable, regular vs. Roth only matters if there will be a difference in your tax rate between now and when you retire. If you are high tax rate now, but expect low rate in retirement (deliberate low rate withdrawal) then regular would be better? Roth is better if you are low rate now, but expect to retire with a fat retirement income. The caveat is that if you are low rate, then you probably don't have much to put in, unless mom and dad is chipping in.
The math can get complicated, but Traditional actually beats out ROTH for most people, most of the time. As long as your yearly withdrawals are lowish (I don't know the exact math, but let's say under $100,000) Traditional probably beats ROTH. ROTH only starts beating traditional when the account balances start getting really high (interestingly, the example they gave in the video is actually fairly close to that tipping point). Which is not to say that you shouldn't do ROTH. If you properly balance traditional withdrawals and after-tax capital appreciation, you can be living off of $50,000 tax-free in retirement before even touching a ROTH account (with current tax laws at least).
@Lordeverfall100 In my Roth I have all VTI. I used to max my Roth but then I learned what ABLE accounts are and I put 5k a year in there and put some money in my Roth IRA now instead. In my ABLE account I have DFQTX because there were no low fee index funds aviable or anything and that was the best thing aviable in my ABLE account.
@Lordeverfall100 Do you think it may be wise if I stop putting more money in my Roth IRA for now sense the ABLE money also grows tax free but you can access it any time for ABLE qualified expensive. Have you seen there ABLE episode? By the way if I stopped putting money in Roth I would just add that much contributions to my ABLE is what I meant.
@@wyattpotter2103 This sounds like something that would need to be discussed with someone more familiar with able accounts than I am, but my understanding is they are structured the same way as ROTH accounts, correct? If that's the case, it might be a good idea to put the money into a traditional IRA rather than a ROTH IRA. That will get you a bit of a tax break, and give you more diversified tax buckets to pull from. You get the standard tax deduction each year when you're withdrawing the money and if all your assets are ROTH, you are essentially paying taxes on the contributions AND losing out on the standard deduction. Simple example: You invest $1,000 with a 20% total tax rate for both the contribution and withdrawal. Roth: 20% taxes get taken out, so you invest $800. It grows x10 to $8,000, and you withdraw $8,000 tax free. Traditional: You pay no taxes putting it in, so you invest $1,000. It grows x10, and you withdraw $10,000, but pay 20% taxes. Except, you have the standard deduction of $12,550 taken right off the top, taking your taxable income down to $0. So in reality, traditional has beaten ROTH by $2,000 because of the standard deduction. Now, this can get messy depending on current tax rates, future tax rates, and much money you can contribute now and withdraw in retirement, but point being, having everything as tax-free might not be as perfect as it seems at first glance. I don't know what your income is, but since you have no pre-tax savings, I'd say the traditional IRA might be a better move than the ROTH IRA.
@@Alan-jk1yi They are like a Roth in terms of everything you take out is tax free however you can take them out any time for ABLE qualified expensive which is very veg of what that actually meant. As in like anything to help make living with the disability better bacilcy you can take that money out tax free for like housing food cars and vacations anything 529 related as well along with like HSA relatable expenses and stuff to make living with the disability better meaning you could use it for vacations and stuff as well. The first 5k a year you put in one of those accounts you get a tax deduction on as well as being able to use that money tax free any time. Honestly from what you said of you get the standard tax deduction each year through the end of that first paragraph really confused me on what you meant. That seams like a smart idea but honestly I'm really confused by what you said. I make around like 45k a year or so and a lot of that money is tip money that I get as physical money driving for Jimmy John's and not nearly as much of that is paid in a direct deposit to me. Thanks for explaing that though even though I didn't really understand it.
@@wyattpotter2103 The ABLE account should take top priority since you get a tax deduction going in and and tax free coming out. Everything after that is the question. What I meant by standard deduction is, when you file your taxes, the government gives you a certain amount that you can take right off the top of your income and consider tax free. This year, that amount is about $12.5K. So, if you make $45k a year, when you file your taxes and claim the standard deduction of $12.5k, that subtracts $12.5k from what you have to pay taxes on, meaning you only owe taxes on $32.5k. A $5k pre-tax ABLE contribution would act the same way, and lower what you owe taxes on further to $27.5k. A pre-tax contribution to a traditional IRA would lower it even further, by how ever much you contribute. You will also get that standard deduction when you withdraw the money in retirement. The down side of traditional IRAs and 401k's is you have to pay taxes when you take them out, but if you factor in that standard deduction, if you have no other taxable income, you can withdraw up the standard deduction amount from a traditional pre-tax account, and owe no taxes on that withdrawal. Basically, under those circumstances, it's acting similarly to that first $5k in an ABLE account; you put the money in tax-free, and then withdraw it tax-free as well. It's admittedly a bit complicated, since you have to play around with the numbers a fair bit. But worrying about the particular account and exactly which is most tax efficient is a bonus on top after you have the hard part done. The actual saving part really matters much more than which account you put it in. If you can save a good chunk of your money every year into something that gives reasonable returns, you'll be good no matter which account you choose. Getting comfortable with the saving part first will benefit you much more in the long run than worrying about exactly which account is best. ROTH or tradition, doesn't make a huge difference either way, just pick one, and invest in it, and you can worry about which account is best later once you have the saving part down pat.
I’m 25 at the moment, earning a degree from a program that has 90%+ job placement by graduation with an average starting salary of around 100k. I want to maximize my saving potential so that my son and I are set up for the future. My current plan is to max out a Roth IRA and a Roth 401k (if employer offers), build my 3-6 month emergency fund, and then pay off my student loans with the monthly payments. Is this a good strategy or should I more aggressively tackle debt first before hyper saving?
Depends on what the interest rate on you debt is and how much you have. If the return on your investments is higher than the interest rate on the debt, then you should invest, especially since you're 25 and have many years of compounding interest ahead of you. If you'll be making $100k a year, you should max out the IRA and 401k regardless of whether you prioritize debt or not. If the interest rate on the debt is low, don't get in a hurry to pay it off. Also, probably a good idea to to invest at least some of you 401k in traditional even if a Roth option is available. Having at least enough in retirement to max out the two lowest tax brackets with withdrawals from traditional is a better overall value than Roth. Once you reach that, then jumping to Roth might make more sense. Maybe.
Great video! 👍🏼 hope in the future you guys can give a comparison of saving in an IRA vs Regular Brokage account. For example if planning to invest in Index Funds long term until retirement. Thanks in advance🙏
If it's intended for long term, then the only correct answer is max out the Roth IRA before starting on a regular brokerage. Both use after tax money, but the Roth is tax free on the growth, while the brokerage is not. Simple as that, Roth is objectively better, as long as you can commit to not needing the money until age 59 1/2. The brokerage is more liquid, but you can always withdraw what you put in tax and penalty free from the Roth IRA, as long as the account has been open at least 5 years. So the IRA has a good amount of liquidity too if you really needed it.
I have about 2.5 years to get $115k saved to be on track. Hard to keep up with the moving goalposts of income. When I started saving about ten years ago, my income was half what it is now.
Yeah a steadily rising income kind of throws a wrench in all of those formulas. At age 30 I make double what I made at 25, which was double what I made at 20. Putting a multiplier on my current pay gives me a portfolio benchmark that would have basically only been possible if I had perfect financial discipline starting at age 20 (which I did not). That's why they're just benchmarks though. You have to adjust for your own situation.
I put 10% into Roth, company puts 10% into traditional. Is it possible to transfer company contributed funds into my Roth? Or does it have to remain in traditional? I understand company contributions have to go into a traditional initially, but can it be moved into Roth later?
First of all, 10% company contribution, VERY nice. I don't think there's any way to do that inside the 401k itself, but if your 401k allows in-service rollovers, you could always roll the Traditional assets over into a ROTH IRA (and pay the taxes to do so). However, it's probably better not do that, as having at least some (and maybe even a lot of) pre-tax assets isn't a bad thing. If you factor in the standard deduction, it's actually possible to withdraw a lot of your pre-tax assets very cheaply, making them even better than ROTH as long as the withdrawals don't go above a certain point.
I need some serious professional advice on what I should do with my old 401k with my former employer. I just started a new job and my current employer offers a traditional 401k with a Roth 401k component with Fidelity. My old 401k is managed through Vanguard but I haven’t rolled it over into this new 401k plan yet because I truly believe my old investment funds will still perform better than these new funds even if I’m not actively contributing to the old plan. Also currently my employer has paused employer matching into 401k until “sometime” in 2022. Should I consider rolling my old 401k into a Vanguard IRA (already have one with brokerage account privileges)? Should I max out my new 401k even without employer match?
I'm no professional, but I can offer my opinion. Not sure how your specific 401k's are setup, but Vanguard and Fidelity are both generally very good, low fee custodians. So if you have similar investing options, you'd probably be fine either way. Rolling the Vanguard 401k into an IRA probably wouldn't hurt anything, just keep in mind you lose the legal protection of a 401k (they have some protection if you get sued, IRAs do not). It's also possible to withdraw from an old 401k starting at age 55 rather than the typical 59 1/2 penalty free, so if you're planning to be an early retiree, you might want to leave it as is. As for whether you should contribute to your 401k even without a match; yes. The tax benefits are still powerful even without a match. Again, this is assuming you have good investment options in your Fidelity 401k. If you somehow have a Fidelity 401k with terrible options, then you can always look into whether in-service rollovers are allowed on your 401k. If so, you can always invest in the 401k, then roll it over to an IRA. It's a hassle, but better than losing out on the tax advantages for almost $20,000.
@@Alan-jk1yi Thank you for responding to my question with such valuable advice! I started contributing to my new 401k yesterday with a heavier weight towards the Roth component and a smaller weight on the pretax side. I went through the step by step process to roll my old 401k into my pre existing Vanguard IRA but it seems like all my investment fund assets would be dumped into a money market account. This is not something I want to give up so I'll just continue to observe the performance of the new 401k for the next 3 months.
@@cheerios4canaries Yes, if you rolled your 401k, it would get liquidated into all cash. But you could always just immediately reinvest it once it's in the new account. My 401k is also through Vanguard, and it's very good. If you are happy with it, I don't see any reason you'd necessarily need to roll it over.
Other than being able to possibly do roll overs, conversions and receiving profit sharing... what is the advantage of contributing to an after-tax 401k versus investing in a traditional brokerage?
Compared to Roth/Trad IRA, 401k has Employer match (if offered) and ability to take loans. Also when money is taken out before you see it in your checking account it makes savings automatic that makes a big difference mentally. Compared to regular brokerage, there are tax advantages. If you are talking about after tax 401k ( Roth 401k ), gain is tax-free just like Roth IRA. If you dont have employer match maxing out HSA and IRA before 401k is better option.
Question. In a trad 401k, can you change your % contributions in the middle of the year, so you can contribute more pre-tax in your higher tax bracket late in the year when you go up to 24% tax bracket after $40k (I think)? My employer only lets us make changes once a year for the insurances, but not sure if I can go onto Fidelity and change to higher % in the summer.
I have changed my contribution amount multiple times in a year for both a 401k and a 457b. I'm not sure if the same would go for all providers. Changing insurance is usually just a short window near the end of the year.
@@marc8919 - That's good to know Thanks! I'll have to look into that. That can really save on over all taxes teamed with contributions and distributions, esp if plan to retire low income.
Minor correction, going above $40,000 will push you into the 22% marginal bracket, not the 24%. Your insurances can be changed during the open enrollment period, once a year unless there is some qualifying life event (getting married, having a kid, and various other things). The 401k is separate, as it isn't (typically) managed by your employer. You can usually change your contributions as often as you like, though there is usually a lag time between making the change and it actually going into effect. Though I don't see any benefit of changing your contribution percentage unless you got a raise or a big bonus.
@@Alan-jk1yi - Yeah I'm sure I could've missed the %'s. But the reason I'd like to do that, is the trad 401k is contributed pre-tax. So if I get into the 22% ranged mid year and raise my contributions % substantially, that's less money taxed at 22% with more invested. And so if I retire low income in the low $20k per year, that's a lot more pretax money working for me from the 22% late year margin, then distributed mostly at the 10-12% tax rate.
@@dustinjones8887 I didn't include this in my original post since I wasn't sure if this is what you meant, but increasing your contribution during high income periods doesn't necessarily change your tax bracket. The total end of year number is what determines your taxes. Example: You make $50,000 in a salaried position and contribute $833 a month consistently throughout the year, that would be $10,000 worth of contributions. Alternatively, let's say you make $50,000 a year, but your work picks up a lot in the summer, and you get paid more during that time than the rest of the year. So, for your four higher income months, you contribute $1,000, and $750 a month the rest of the time, again for a total of $10,000. You pay the exact same amount of tax in each of these scenarios. When during the year the money is made is irrelevant, all that matters is the end of year total. So in both scenarios, all contributions would be made with dollars in the 12% marginal bracket, not the 22% bracket. Now, say you're approaching the end of the year, and after running the numbers (factoring in your deductions and pre-tax contributions) you notice, "hey, I'm $2,000 above the 12% bracket, so these $2,000 are going to be taxed at 22%." In that scenario, if you could squeeze and up your total contributions another $2,000, that would save 10% taxes on those $2,000 dollars. But again, it comes down to the end of year totals.
I'm 50 with only 100K invested in retirement accounts, but I'm receiving $7K per month in pension and disability from the military. I'm currently investing 25% of my work pay and maxing out my ROTH. Do I count extra payments on my house as an investment? Expect to have it paid off in 11 months by paying an extra $1300 per month. Plan to quit working after the house is paid off.
If you plan on staying in the house after retirement, I wouldn't count it as an investment. You might take into consideration that you will no longer have the house payment, but for income/appreciation purposes, the house you live in has no value unless you sell it.
This sucks. I try to reply to a comment on my comment from Alan over 8 times and it just won't go through. It has happened enough times and it only happens when I have something really important to say and it takes me a lot of time to type it out just to loose it all.
@@Alan-jk1yi It won't let me post my reply with my message onto this comment either. Do you have Discord? It would let me say this I think but not my reply.
@@Alan-jk1yi Part 3 I feel really behind. I'm 22 and if I got my license at 18 and started making more money like this then and not until like just around a year ago I started working at Jimmy John's maybe a little less and if I did that and didn't use the little money I had then to get a gaming pc that I needed or so I thought that I needed I could probably have the cash on top of my eminency fund and on top of these investments I have to be able to buy a house right now already if I didn't make that mistake. But yeah your 100% right though I need to focuses more on the saving and investing as much money as I can. I really like the ABLE account because if I could at some point have enough invested I could access that earlier if I can acclimate enough money to retire early and if I decide to if that makes sense or at least that would be a option. I wish I didn't make that mistake then and didn't get so much less behind than I could have been.
@@Alan-jk1yi Part 2 so I decided to stop putting money in those because I don't want to take the risk of investing money for that for the short term like that. I will have to fix my net worth for this month once I can get access to those things I couldn't get the info for yet.
@@SWilliams655 I can definitely understand how that makes sense !! I have a bit of a commute to work so I enjoy some of the longer episodes, personally. Sometimes they really split the hairs of some of this stuff. Good to know how it can all work together. I'm a student to the game. I digress
@@StaticFlow_ yeah before Covid I had an hour commute so would listen to Dave Ramsey everyday. Probably would listen to these guys too but I work from home now. So not as much dead time.
If I'm doing 4 percent pre-tax in my 401k and decided to switch it to Roth 401 k, will that affect my tax filings next year to a LARGE tax hit ? My family makes 87, 300. Thanks.
Have a question. I maximize my contribution to my 401k amounting to $19’500. But when I change my contribution to roth 401k. They said its not allowed. And i said according to money guy. If i maximize my 401k then i can still contribute to my roth 401k. And they said its not the case. I can only contribute either one of them until it maximize my $19,500 total contribution. Any advice? I appreciate for your respond. Tnx
They are correct, you can you can only contribute $19,500 per year TOTAL, regardless of whether it's Traditional, ROTH, or some combination. I believe you misunderstood what the money guys said. If your employer makes contributions into your account, they can go above that $19,500, but your contributions can not. Some plans are set up so that you can do after-tax contributions (not to be confused with ROTH), and those CAN go above $19,500, all the way up to $58,000 total. They are tax deferred, but there is no other tax benefit to doing this unless your plan allows for mega backdoor ROTH conversions.
@@Alan-jk1yi i guess im just confuse. Coz i keep hearing them after you contribute $19,500 on your pre tax 401k. You can still contribute to your roth 401k with no limit or i think they said $27,000 extra.
@@ferdiesagun8074 I'm not sure what you're referring to. 401ks are capped (this year) at $19,500, regardless of whether you do ROTH, traditional, or both. Like I said earlier, after-tax is the only way you can go above $19,500, but that's only if your plan allows it, and after-tax isn't ROTH. Now, you can also put $6,000 into an IRA, which can be either ROTH or traditional. And if you happens to also have access to a 457 plan, you can also contribute up to $19,500 to that plan. Those are the only two other common retirement plans that you might be confusing, but they are completely independent of 401k's.
@@ferdiesagun8074 457's are offered primarily through government jobs. There's no way to get access to one unless your job offers it. 457's can have both pre-tax, and roth options. And just to clarify, all retirement plans (IRAs, 401k's, 457s, HSA's, and a few other more niche accounts) are tax deferred. Tax deferred means you don't pay taxes while your investments are growing, as opposed to investing in an after-tax brokerage account, in which you would have to pay taxes on any capital gains every year.
@@dirtydan6098 Nevermind, i actually understand it now (kinda). It seems that u can use the After tax 401k once you've maxed out your 401k. The AFTER TAX 401K max can go up to 58k between u and the employer. Something like that 🤔. I had to watch other videos. I'm still watching them now.
We understand the beauty of Roth. Could congress change the law and make it completely useless in the future? I think even so, they will honor grand fathered contribution. This is my only concern with Roth.
I'm gonna give yall the benefit-of-the doubt because the subscriber number in the background tells me this video is actually really old. But it is so strange to hear somebody sick just hanging out and talking like it ain't no thing...
To all you 20 somethings, you guys rock! Take advantage of all this TH-cam information Gen X didn't have access to in our 20s and 30s. I'm doing well, but oh if I could go back in time...
This. Resist the urge to live large in your 20s. Continue to live like a broke college kid for the first five or 6 years after college, then just live comfortably within your means after that, and you will pretty much have the last 30 or 40 years of your life already set up on autopilot.
Yes, ditto on this!
i'm 32 and been investing in my 401k since I graduated college at 21, just passed the 400k mark and climbing!
Preach!
@@azhp42069 Sean how much have you been investing if you don’t mind me asking ?
LOVE my Roth 401k. This is the first year I'll be maxing it out. I was too concerned in my younger years (20s) with paying off debt that I didn't focus on investing. I know...I didn't handle it the best. I should have leveraged the low interest debt a bit more. Being 32 now though, I'm glad I'm really starting to get it, because I feel like I'm spraying jet fuel into my investments. At the start of 2020, my balance was 26k, but now I can proudly say that with a lot of effort and concentration and finally having debt paid off, my balance is somewhere around 73k! I'm so happy with the progress I've made and I only think it's going to continue to get better. Let's go everyone! Let's be smart with our money!
Time for the mega backdoor Roth
32 years old here too. Definitely some regrets but now I’m kicking it into gear as well. We’ve got this!!!
@@travis1240 I've been contemplating opening up a 401k for my side hustle so that me, as a business, can make traditional contributions into it, to get closer to that 57,000 number. I'm not quite sure which route I'd prefer right now.
@@dustinphillips3041 Nice! I'll take realizing it now versus realizing mid 40s, for sure. Just have to work with what we got. Now to kick things into overdrive! Haha
Traditional all day long. Traditional IRA, tradition 403b, traditional 457. Zero Roth.
My older brother got me into all of this information before I was even old enough to open a 401K account. At the time the age was 21 to start a 401k, now I am 24 with over 100k in assets, and about to own my second house. Thankful for all of this information! You can never get too much of it.
I don’t get it. Every time I watch this channel I want to save my entire check. Lol. Love this channel.
Me too!
Great knowledge bomb. Wish TH-cam was around 30 years ago.
I just wanted to say that I really enjoy watching the both of you. Your mannerisms, as well as your knowledge, makes this channel one of my absolute favorite to watch. Thank you 😊
Your channel is exploding! Over 100k more subscribers since this video 6 months ago. Thanks for sharing this life changing advice with the world!
Someone needs to hear this important message of mine I realized lately In this 21st Century,Almost 45% of people in the world have been Mislead and discouraged from taking step that could have changed their life in general ( from worst to better) and gained them 101% of financial Stability.
The greatest decision I’ve ever made in my life was investing in digital assets market.I earn profit of $7500 every 3days after reinvesting with expert Thomas Anderson,he’s of good help to newbies focusing and working hard on their financial goals.
🇺🇸His availability is on was- -app⬇️
🀄️ ① ⑨④⑨⑧⑥⑦②③,④,⑦
Thanks 😊,This is the kind of information that we don't get from most You-tubers, I will get in touch with him right now 🤝.
I reinvest consistently in digital assets,through the administration of Thomas Anderson a financial expert.I operate an exclusive package and so far I' ve almost *$450k* started with *$19k* .
My company does allow the mega backdoor roth contribution makes me want to max it out!
this is the best video you have ever done. thank you so much for the information. I have recommended you to everyone that I think wants to learn about such things. again, thank you.🥰😇
I guess I'm a financial mutant. Almost at 5x income in 401k when I hit 40. Started early and had a great company match.
Im 30 I just started investing a year ago i have a roth 401k which im putting 500 a month in and plan on putting 50% or more of every raise towards it and I also have my own account on robinhood, I'm glad to see that my intuition and natural way of investing is right on track with your financial order of operations, and watching your videos just backs my method up thanks for the inspiration guys and keep pumping out this great content 👍
True, save ur money, invest. Best to do it younger!
I was advised, both 401k and Roth IRA are tools on handling taxes when you are ready for retirement. Although, it would be good if all you had to do was withdraw from Roth IRA (no taxes) but that usually won't happen because of the 6k limitation. Although, there is a Roth 401k which has a higher limit. If you are lucky enough to have one of those, add to that as well if you can.
I remember my mother driving me through a neighborhood as a child. She said- “you’ll live here if you don’t go to college”. I have an MBA and make $160k/yr… I can’t afford that neighborhood
Some people also buy insurance products too such as universal life insurance or an annuity.
What is the link to the 401k fee analyzer you guys recommend?
Is this a re-run? I noticed the sub counter behind them is way off.... like a year or 2
It's a mashup of several previous episodes.
12:08 "Systematize the Savings". If thats not a t-shirt I dont know what is
On a mega backdoor Roth transaction what do you do with the portion of the after tax that accrued earnings while sitting in the 401k plan. Assuming that the employer provided a breakdown in the contribution rollover check. Can you leave that potion in the contributory IRA and put the rest in the Roth?
Hey money guy team, whats your opinion on 3x leveraged stocks that track the snp500 (like upro). If i do plan to hold it in the long run and we're all confident that in the long term it'll grow, does it make sense to buy into these leveraged stocks?
My bs employer has a three year vesting period. That's ridiculous. And they don't start matching until the end of year one
That’s pretty common
That sucks. Not a safe harbor plan. Maybe the IRS will force some changes.
How is it bs that employers want to retain employees. They don't want people that work for a year than quit.
3 year vesting is very common
I’m mad they didn’t teach me this in high school
2021 i got my first 401k as a self employed person
I think the IRA is better than any 401(k) plan because the investment options in the IRA is flexible than the company sponsored 401(k) plan. The 401(k) may have the brokerage window and a higher contribution limit, providing that the employer has a match, but it depends how it is set up by the employer.
What is that number thing on the top shelf that always changes?
The number of subscribers they have. It changes throughout this video because it has 401k clips from many of their videos.
If your 20 you are literally mining diamonds, assuming 10percent return, every dollar equals $72.89 dollars, and you only need to invest 3.81 dollars a day to become a millionaire at 65!!! So stop drinking that premium Starbucks coffee. I became a millionaire at 34 years!!!!
The only problem I have with the Roth Ralph and Pre-Tax Patty assumptions is, if Pre-Tax Patty is only able to save $8000 a year in pre-tax dollars to her 401k, if she were to put that same investible income into a Roth, it would not be $8K as it would have been taxed. Hence the per year figure for the Roth would be less. The way the example is done in the video is assuming that both users are able to save the equivalent $ in each plan, which in theory is nice, but not applicable for many and thus not a true apples to apples comparisson for a large number of investors.
They accounted for that by giving pre-tax Patty after tax investments equivalent to the tax savings she got from making the traditional contributions ($1760 a year using their assumptions). So the ROTH scenario was investing a total of $8,000 per year, while the Traditional scenario was investing a total of $9,760 per year.
1 hour?! Woot !
Hey I have in-service withdrawals as an option Should I regularly rollover my 401k balances to their respective Roth and t IRA equivalents, to have more freedom of investment choices?
If you can do in service roll-overs, I believe the only benefit a 401k gives over an IRA is liability protection (and maybe 401k loans, but hopefully that's not something you'd ever need to do). If you get sued, who ever is suing you could come after what's in your IRA, but I believe 401k's are protected from that. I believe there are also some scenarios where you can withdraw from a 401k early if you retire before age 59 1/2.
Hi Mr Nathan
Start to max out 58k this year
Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers
Book by Ellen E. Schultz
Would love to hear their thoughts about this book and it’s implications for how defined contribution plans became the norm
assuming tax rates are somewhat stable, regular vs. Roth only matters if there will be a difference in your tax rate between now and when you retire. If you are high tax rate now, but expect low rate in retirement (deliberate low rate withdrawal) then regular would be better? Roth is better if you are low rate now, but expect to retire with a fat retirement income. The caveat is that if you are low rate, then you probably don't have much to put in, unless mom and dad is chipping in.
The math can get complicated, but Traditional actually beats out ROTH for most people, most of the time. As long as your yearly withdrawals are lowish (I don't know the exact math, but let's say under $100,000) Traditional probably beats ROTH. ROTH only starts beating traditional when the account balances start getting really high (interestingly, the example they gave in the video is actually fairly close to that tipping point). Which is not to say that you shouldn't do ROTH. If you properly balance traditional withdrawals and after-tax capital appreciation, you can be living off of $50,000 tax-free in retirement before even touching a ROTH account (with current tax laws at least).
I wish I had access to a 401k at my job. At least for the match. I use my Roth and ABLE though.
@Lordeverfall100 In my Roth I have all VTI. I used to max my Roth but then I learned what ABLE accounts are and I put 5k a year in there and put some money in my Roth IRA now instead. In my ABLE account I have DFQTX because there were no low fee index funds aviable or anything and that was the best thing aviable in my ABLE account.
@Lordeverfall100 Do you think it may be wise if I stop putting more money in my Roth IRA for now sense the ABLE money also grows tax free but you can access it any time for ABLE qualified expensive. Have you seen there ABLE episode? By the way if I stopped putting money in Roth I would just add that much contributions to my ABLE is what I meant.
@@wyattpotter2103 This sounds like something that would need to be discussed with someone more familiar with able accounts than I am, but my understanding is they are structured the same way as ROTH accounts, correct? If that's the case, it might be a good idea to put the money into a traditional IRA rather than a ROTH IRA. That will get you a bit of a tax break, and give you more diversified tax buckets to pull from. You get the standard tax deduction each year when you're withdrawing the money and if all your assets are ROTH, you are essentially paying taxes on the contributions AND losing out on the standard deduction.
Simple example: You invest $1,000 with a 20% total tax rate for both the contribution and withdrawal.
Roth: 20% taxes get taken out, so you invest $800. It grows x10 to $8,000, and you withdraw $8,000 tax free.
Traditional: You pay no taxes putting it in, so you invest $1,000. It grows x10, and you withdraw $10,000, but pay 20% taxes. Except, you have the standard deduction of $12,550 taken right off the top, taking your taxable income down to $0. So in reality, traditional has beaten ROTH by $2,000 because of the standard deduction.
Now, this can get messy depending on current tax rates, future tax rates, and much money you can contribute now and withdraw in retirement, but point being, having everything as tax-free might not be as perfect as it seems at first glance. I don't know what your income is, but since you have no pre-tax savings, I'd say the traditional IRA might be a better move than the ROTH IRA.
@@Alan-jk1yi They are like a Roth in terms of everything you take out is tax free however you can take them out any time for ABLE qualified expensive which is very veg of what that actually meant. As in like anything to help make living with the disability better bacilcy you can take that money out tax free for like housing food cars and vacations anything 529 related as well along with like HSA relatable expenses and stuff to make living with the disability better meaning you could use it for vacations and stuff as well. The first 5k a year you put in one of those accounts you get a tax deduction on as well as being able to use that money tax free any time. Honestly from what you said of you get the standard tax deduction each year through the end of that first paragraph really confused me on what you meant. That seams like a smart idea but honestly I'm really confused by what you said. I make around like 45k a year or so and a lot of that money is tip money that I get as physical money driving for Jimmy John's and not nearly as much of that is paid in a direct deposit to me. Thanks for explaing that though even though I didn't really understand it.
@@wyattpotter2103 The ABLE account should take top priority since you get a tax deduction going in and and tax free coming out. Everything after that is the question.
What I meant by standard deduction is, when you file your taxes, the government gives you a certain amount that you can take right off the top of your income and consider tax free. This year, that amount is about $12.5K.
So, if you make $45k a year, when you file your taxes and claim the standard deduction of $12.5k, that subtracts $12.5k from what you have to pay taxes on, meaning you only owe taxes on $32.5k. A $5k pre-tax ABLE contribution would act the same way, and lower what you owe taxes on further to $27.5k. A pre-tax contribution to a traditional IRA would lower it even further, by how ever much you contribute.
You will also get that standard deduction when you withdraw the money in retirement. The down side of traditional IRAs and 401k's is you have to pay taxes when you take them out, but if you factor in that standard deduction, if you have no other taxable income, you can withdraw up the standard deduction amount from a traditional pre-tax account, and owe no taxes on that withdrawal. Basically, under those circumstances, it's acting similarly to that first $5k in an ABLE account; you put the money in tax-free, and then withdraw it tax-free as well.
It's admittedly a bit complicated, since you have to play around with the numbers a fair bit. But worrying about the particular account and exactly which is most tax efficient is a bonus on top after you have the hard part done. The actual saving part really matters much more than which account you put it in. If you can save a good chunk of your money every year into something that gives reasonable returns, you'll be good no matter which account you choose. Getting comfortable with the saving part first will benefit you much more in the long run than worrying about exactly which account is best. ROTH or tradition, doesn't make a huge difference either way, just pick one, and invest in it, and you can worry about which account is best later once you have the saving part down pat.
I’m 25 at the moment, earning a degree from a program that has 90%+ job placement by graduation with an average starting salary of around 100k. I want to maximize my saving potential so that my son and I are set up for the future. My current plan is to max out a Roth IRA and a Roth 401k (if employer offers), build my 3-6 month emergency fund, and then pay off my student loans with the monthly payments. Is this a good strategy or should I more aggressively tackle debt first before hyper saving?
Depends on what the interest rate on you debt is and how much you have. If the return on your investments is higher than the interest rate on the debt, then you should invest, especially since you're 25 and have many years of compounding interest ahead of you. If you'll be making $100k a year, you should max out the IRA and 401k regardless of whether you prioritize debt or not. If the interest rate on the debt is low, don't get in a hurry to pay it off.
Also, probably a good idea to to invest at least some of you 401k in traditional even if a Roth option is available. Having at least enough in retirement to max out the two lowest tax brackets with withdrawals from traditional is a better overall value than Roth. Once you reach that, then jumping to Roth might make more sense. Maybe.
I remember this one. Isn’t this a rehash?
Yes. The subscriber count and their outfits change in the video. This seems to be an edit with their best tips on 401ks
Yep, older one. They spliced together a bunch of videos about 401k to create a bit of a catch all video.
They literally say that in the introduction
Great video! 👍🏼 hope in the future you guys can give a comparison of saving in an IRA vs Regular Brokage account. For example if planning to invest in Index Funds long term until retirement. Thanks in advance🙏
If it's intended for long term, then the only correct answer is max out the Roth IRA before starting on a regular brokerage. Both use after tax money, but the Roth is tax free on the growth, while the brokerage is not. Simple as that, Roth is objectively better, as long as you can commit to not needing the money until age 59 1/2.
The brokerage is more liquid, but you can always withdraw what you put in tax and penalty free from the Roth IRA, as long as the account has been open at least 5 years. So the IRA has a good amount of liquidity too if you really needed it.
I have about 2.5 years to get $115k saved to be on track. Hard to keep up with the moving goalposts of income. When I started saving about ten years ago, my income was half what it is now.
Yeah a steadily rising income kind of throws a wrench in all of those formulas. At age 30 I make double what I made at 25, which was double what I made at 20. Putting a multiplier on my current pay gives me a portfolio benchmark that would have basically only been possible if I had perfect financial discipline starting at age 20 (which I did not). That's why they're just benchmarks though. You have to adjust for your own situation.
Total 401k limit this year is 58k and not 57k.
I put 10% into Roth, company puts 10% into traditional. Is it possible to transfer company contributed funds into my Roth? Or does it have to remain in traditional? I understand company contributions have to go into a traditional initially, but can it be moved into Roth later?
First of all, 10% company contribution, VERY nice.
I don't think there's any way to do that inside the 401k itself, but if your 401k allows in-service rollovers, you could always roll the Traditional assets over into a ROTH IRA (and pay the taxes to do so). However, it's probably better not do that, as having at least some (and maybe even a lot of) pre-tax assets isn't a bad thing. If you factor in the standard deduction, it's actually possible to withdraw a lot of your pre-tax assets very cheaply, making them even better than ROTH as long as the withdrawals don't go above a certain point.
If I put enough in my traditional 401k to bring my taxable earnings under 120k can I still max out my Roth IRA?
Yes, but you can also do the backdoor Roth
Shirt change at 8:20!
I need some serious professional advice on what I should do with my old 401k with my former employer. I just started a new job and my current employer offers a traditional 401k with a Roth 401k component with Fidelity. My old 401k is managed through Vanguard but I haven’t rolled it over into this new 401k plan yet because I truly believe my old investment funds will still perform better than these new funds even if I’m not actively contributing to the old plan. Also currently my employer has paused employer matching into 401k until “sometime” in 2022. Should I consider rolling my old 401k into a Vanguard IRA (already have one with brokerage account privileges)? Should I max out my new 401k even without employer match?
I'm no professional, but I can offer my opinion. Not sure how your specific 401k's are setup, but Vanguard and Fidelity are both generally very good, low fee custodians. So if you have similar investing options, you'd probably be fine either way. Rolling the Vanguard 401k into an IRA probably wouldn't hurt anything, just keep in mind you lose the legal protection of a 401k (they have some protection if you get sued, IRAs do not). It's also possible to withdraw from an old 401k starting at age 55 rather than the typical 59 1/2 penalty free, so if you're planning to be an early retiree, you might want to leave it as is.
As for whether you should contribute to your 401k even without a match; yes. The tax benefits are still powerful even without a match. Again, this is assuming you have good investment options in your Fidelity 401k. If you somehow have a Fidelity 401k with terrible options, then you can always look into whether in-service rollovers are allowed on your 401k. If so, you can always invest in the 401k, then roll it over to an IRA. It's a hassle, but better than losing out on the tax advantages for almost $20,000.
@@Alan-jk1yi Thank you for responding to my question with such valuable advice! I started contributing to my new 401k yesterday with a heavier weight towards the Roth component and a smaller weight on the pretax side. I went through the step by step process to roll my old 401k into my pre existing Vanguard IRA but it seems like all my investment fund assets would be dumped into a money market account. This is not something I want to give up so I'll just continue to observe the performance of the new 401k for the next 3 months.
@@cheerios4canaries Yes, if you rolled your 401k, it would get liquidated into all cash. But you could always just immediately reinvest it once it's in the new account. My 401k is also through Vanguard, and it's very good. If you are happy with it, I don't see any reason you'd necessarily need to roll it over.
Other than being able to possibly do roll overs, conversions and receiving profit sharing... what is the advantage of contributing to an after-tax 401k versus investing in a traditional brokerage?
Compared to Roth/Trad IRA, 401k has Employer match (if offered) and ability to take loans. Also when money is taken out before you see it in your checking account it makes savings automatic that makes a big difference mentally. Compared to regular brokerage, there are tax advantages. If you are talking about after tax 401k ( Roth 401k ), gain is tax-free just like Roth IRA. If you dont have employer match maxing out HSA and IRA before 401k is better option.
@@ellieappa the gains are not tax free only deferred
@@ellieappa after tax 401k and Roth 401k are different accounts
Deferring taxes would still be advantageous
@@chemquests agreed
Question. In a trad 401k, can you change your % contributions in the middle of the year, so you can contribute more pre-tax in your higher tax bracket late in the year when you go up to 24% tax bracket after $40k (I think)? My employer only lets us make changes once a year for the insurances, but not sure if I can go onto Fidelity and change to higher % in the summer.
I have changed my contribution amount multiple times in a year for both a 401k and a 457b. I'm not sure if the same would go for all providers. Changing insurance is usually just a short window near the end of the year.
@@marc8919 - That's good to know Thanks! I'll have to look into that. That can really save on over all taxes teamed with contributions and distributions, esp if plan to retire low income.
Minor correction, going above $40,000 will push you into the 22% marginal bracket, not the 24%.
Your insurances can be changed during the open enrollment period, once a year unless there is some qualifying life event (getting married, having a kid, and various other things). The 401k is separate, as it isn't (typically) managed by your employer. You can usually change your contributions as often as you like, though there is usually a lag time between making the change and it actually going into effect. Though I don't see any benefit of changing your contribution percentage unless you got a raise or a big bonus.
@@Alan-jk1yi - Yeah I'm sure I could've missed the %'s. But the reason I'd like to do that, is the trad 401k is contributed pre-tax. So if I get into the 22% ranged mid year and raise my contributions % substantially, that's less money taxed at 22% with more invested. And so if I retire low income in the low $20k per year, that's a lot more pretax money working for me from the 22% late year margin, then distributed mostly at the 10-12% tax rate.
@@dustinjones8887 I didn't include this in my original post since I wasn't sure if this is what you meant, but increasing your contribution during high income periods doesn't necessarily change your tax bracket. The total end of year number is what determines your taxes.
Example:
You make $50,000 in a salaried position and contribute $833 a month consistently throughout the year, that would be $10,000 worth of contributions.
Alternatively, let's say you make $50,000 a year, but your work picks up a lot in the summer, and you get paid more during that time than the rest of the year. So, for your four higher income months, you contribute $1,000, and $750 a month the rest of the time, again for a total of $10,000.
You pay the exact same amount of tax in each of these scenarios. When during the year the money is made is irrelevant, all that matters is the end of year total. So in both scenarios, all contributions would be made with dollars in the 12% marginal bracket, not the 22% bracket.
Now, say you're approaching the end of the year, and after running the numbers (factoring in your deductions and pre-tax contributions) you notice, "hey, I'm $2,000 above the 12% bracket, so these $2,000 are going to be taxed at 22%." In that scenario, if you could squeeze and up your total contributions another $2,000, that would save 10% taxes on those $2,000 dollars. But again, it comes down to the end of year totals.
I'm 50 with only 100K invested in retirement accounts, but I'm receiving $7K per month in pension and disability from the military. I'm currently investing 25% of my work pay and maxing out my ROTH. Do I count extra payments on my house as an investment? Expect to have it paid off in 11 months by paying an extra $1300 per month. Plan to quit working after the house is paid off.
If you plan on staying in the house after retirement, I wouldn't count it as an investment. You might take into consideration that you will no longer have the house payment, but for income/appreciation purposes, the house you live in has no value unless you sell it.
@@Alan-jk1yi that’s a great point, thanks for your reply
I do believe because I'm a believer person 💙💙❤️❤️💯💯
Pet can be millionaires if u start saving when your younger!
Pets?
@@jeffk4710
Mistype, but all the same😂
This sucks. I try to reply to a comment on my comment from Alan over 8 times and it just won't go through. It has happened enough times and it only happens when I have something really important to say and it takes me a lot of time to type it out just to loose it all.
I saw the beginning part of your reply in a notification on my phone, but can't see most of it. Sorry about that, no clue why it's doing that.
@@Alan-jk1yi It won't let me post my reply with my message onto this comment either. Do you have Discord? It would let me say this I think but not my reply.
@@wyattpotter2103 Maybe it's too long? Try cutting it in half and posting it as two separate posts.
@@Alan-jk1yi Part 3 I feel really behind. I'm 22 and if I got my license at 18 and started making more money like this then and not until like just around a year ago I started working at Jimmy John's maybe a little less and if I did that and didn't use the little money I had then to get a gaming pc that I needed or so I thought that I needed I could probably have the cash on top of my eminency fund and on top of these investments I have to be able to buy a house right now already if I didn't make that mistake. But yeah your 100% right though I need to focuses more on the saving and investing as much money as I can. I really like the ABLE account because if I could at some point have enough invested I could access that earlier if I can acclimate enough money to retire early and if I decide to if that makes sense or at least that would be a option. I wish I didn't make that mistake then and didn't get so much less behind than I could have been.
@@Alan-jk1yi Part 2 so I decided to stop putting money in those because I don't want to take the risk of investing money for that for the short term like that. I will have to fix my net worth for this month once I can get access to those things I couldn't get the info for yet.
What happens to 401k if the individuals dies
Goes to your beneficiary
@@90kevin20 I heard it will be used to pay off your debit
@@victoriae337 they might be able to take for any liens but credit cards can't take that as far as I know
You guys are fun to watch but would watch more if you kept some of these videos shorter. Even your short clips are still 15 min+.
Right, Since your able to understand all the nuances of all these investment vehicles and tax strategy's in 2 minute videos. Makes sense.
@@StaticFlow_ you can split them up focusing on certain things. Instead of needing to watch a full hour.
@@SWilliams655 I can definitely understand how that makes sense !!
I have a bit of a commute to work so I enjoy some of the longer episodes, personally. Sometimes they really split the hairs of some of this stuff. Good to know how it can all work together. I'm a student to the game. I digress
@@StaticFlow_ yeah before Covid I had an hour commute so would listen to Dave Ramsey everyday. Probably would listen to these guys too but I work from home now. So not as much dead time.
If I'm doing 4 percent pre-tax in my 401k and decided to switch it to Roth 401 k, will that affect my tax filings next year to a LARGE tax hit ? My family makes 87, 300. Thanks.
401k is babe!
Comment.
Have a question. I maximize my contribution to my 401k amounting to $19’500. But when I change my contribution to roth 401k. They said its not allowed. And i said according to money guy. If i maximize my 401k then i can still contribute to my roth 401k. And they said its not the case. I can only contribute either one of them until it maximize my $19,500 total contribution. Any advice? I appreciate for your respond. Tnx
They are correct, you can you can only contribute $19,500 per year TOTAL, regardless of whether it's Traditional, ROTH, or some combination. I believe you misunderstood what the money guys said.
If your employer makes contributions into your account, they can go above that $19,500, but your contributions can not. Some plans are set up so that you can do after-tax contributions (not to be confused with ROTH), and those CAN go above $19,500, all the way up to $58,000 total. They are tax deferred, but there is no other tax benefit to doing this unless your plan allows for mega backdoor ROTH conversions.
@@Alan-jk1yi i guess im just confuse. Coz i keep hearing them after you contribute $19,500 on your pre tax 401k. You can still contribute to your roth 401k with no limit or i think they said $27,000 extra.
@@ferdiesagun8074 I'm not sure what you're referring to. 401ks are capped (this year) at $19,500, regardless of whether you do ROTH, traditional, or both. Like I said earlier, after-tax is the only way you can go above $19,500, but that's only if your plan allows it, and after-tax isn't ROTH.
Now, you can also put $6,000 into an IRA, which can be either ROTH or traditional. And if you happens to also have access to a 457 plan, you can also contribute up to $19,500 to that plan. Those are the only two other common retirement plans that you might be confusing, but they are completely independent of 401k's.
@@Alan-jk1yi ok tnx. Mybe our company plan is allowing it. Where can i access a 457 plan? Is this a pre tax or tax deferred?
@@ferdiesagun8074 457's are offered primarily through government jobs. There's no way to get access to one unless your job offers it. 457's can have both pre-tax, and roth options.
And just to clarify, all retirement plans (IRAs, 401k's, 457s, HSA's, and a few other more niche accounts) are tax deferred. Tax deferred means you don't pay taxes while your investments are growing, as opposed to investing in an after-tax brokerage account, in which you would have to pay taxes on any capital gains every year.
your subscriber count if off by 100k on the book shelf
Older video. They tried to take a number of videos related to 401k and splice them together.
I'm still confused 😢. Anybody recommend any videos on this topic (Mega/backdoor Roth conversions)? If so, pleaseeee post below
So you make over $140,000 (single MAGI) or $206,000 (married MAGI) ????
@@dirtydan6098 Nevermind, i actually understand it now (kinda). It seems that u can use the After tax 401k once you've maxed out your 401k. The AFTER TAX 401K max can go up to 58k between u and the employer. Something like that 🤔. I had to watch other videos. I'm still watching them now.
We understand the beauty of Roth. Could congress change the law and make it completely useless in the future? I think even so, they will honor grand fathered contribution. This is my only concern with Roth.
Traditional beats Roth though.
I'm gonna give yall the benefit-of-the doubt because the subscriber number in the background tells me this video is actually really old. But it is so strange to hear somebody sick just hanging out and talking like it ain't no thing...