401k contributions: pre/post tax and roth.

[mittman84]

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max out you tax advantaged accounts before contributing post tax. The benefit you get in not paying taxes on it all is HUGE

[/ QUOTE ]Aren't my tax advantaged accounts in post tax contributions (Roth)?

[Badger]

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max out you tax advantaged accounts before contributing post tax. The benefit you get in not paying taxes on it all is HUGE

[/ QUOTE ]Aren't my tax advantaged accounts in post tax contributions (Roth)?

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Yes, but if they weren't in tax advantaged accounts you'd have to pay taxes again when you cashed in on them (STCG) like I mentioned before.

[Jimbo]

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What is my best recourse on finding the rules on early withdrawals (say 55 for example)?

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That would be me. [img]/images/graemlins/smile.gif[/img] I just retired (again, but that is a long story) at age 54. I turn 55 this year and had a 401K. Here are the IRS rules on retiring at age 55 (actually in the same year as you turn age 55):

If you terminate employment at the company where you have your 401K you may withdraw the funds with no 10% early withdrawal penalty in one of two ways.
1) Lump sum, you pay taxes at your regular income rate but as I mentioned above no 10% penalty
2. You can do the averaging withdrawal (dependent on your company's plan specs) where you get a percentage of your total 401K value distribution every year based on your projected lifetime formula as used by the IRS. If you choose this method you are still taxed at your regular income rate, no 10% penalty and must take this distribution for a minimum of 5 years before you are able to access the balance of your funds.

Jimbo

[catalyst]

Not to hijack, but I am in a somewhat similar position. Employer matches 6% to a standard 401k, I am currently contributing 10%. Would I be better off contributing this excess 4% to a Roth IRA?

[prohornblower]

Yeah

[Shoe]

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Not to hijack, but I am in a somewhat similar position. Employer matches 6% to a standard 401k, I am currently contributing 10%. Would I be better off contributing this excess 4% to a Roth IRA?

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General rule of thumb: Invest just enough to maximize your employer's match, then max out your Roth IRA next. After that, you can either contribute more to your 401(k) or self-direct those funds elsewhere, whether it be individual stocks, real estate, something else. Each situtation is unique though based on your personal situation.

['Chair]

w/ regards to the employer match on a Roth 401k contribution...

http://www.financial-planning.com/pu...050214101.html
There is, however, a twist to the Roth 401(k)s. Employees will place an after-tax amount in contributions to the Roth 401(k). But the employer match for the contribution--up to 3% of income at most companies--will go into a separate regular 401(k) account. This would enable the company to deduct its cumulative match contributions up front from its corporate income taxes.

Essentially, employees would get the benefit of not having to pay taxes on withdrawals from their contributions from the Roth 401(k). But they will have to pay income taxes on withdrawals from the company's contributions, including the earnings that have built up over the years.

[TheMetetron]

I wish I had an employer match.

[IdealFugacity]

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w/ regards to the employer match on a Roth 401k contribution...

http://www.financial-planning.com/pu...050214101.html
There is, however, a twist to the Roth 401(k)s. Employees will place an after-tax amount in contributions to the Roth 401(k). But the employer match for the contribution--up to 3% of income at most companies--will go into a separate regular 401(k) account. This would enable the company to deduct its cumulative match contributions up front from its corporate income taxes.

Essentially, employees would get the benefit of not having to pay taxes on withdrawals from their contributions from the Roth 401(k). But they will have to pay income taxes on withdrawals from the company's contributions, including the earnings that have built up over the years.

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That's still better than income taxes on the whole pile (for me @ 22 yrs old anyway)