Comments on: The 411 of the 401(k) http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/ The Wesabe blog Thu, 14 Jan 2010 18:37:20 +0000 http://wordpress.com/ hourly 1 By: The Wonders of the Roth IRA « Wesabe: Your Money. Your Community. http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4714 The Wonders of the Roth IRA « Wesabe: Your Money. Your Community. Wed, 18 Nov 2009 04:05:39 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4714 [...] Wonders of the Roth IRA By Marc Hedlund In August, I wrote a post detailing the benefits of the 401k, one of the best ways to begin building wealth at early age. The other? The Roth IRA. Like the 401k, [...] [...] Wonders of the Roth IRA By Marc Hedlund In August, I wrote a post detailing the benefits of the 401k, one of the best ways to begin building wealth at early age. The other? The Roth IRA. Like the 401k, [...]

]]> By: Alexander Gieg http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4398 Alexander Gieg Wed, 17 Sep 2008 12:41:30 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4398 Sorry to nitpick, but please take care with the difference between "your" and "you're": a) "invest you're money" - I *AM* not money, I *AM* a person. b) "that you're company" - Neither *AM* I a company. Remember: "'re" is a contraction of "are". Other than this: nice article. I'm not American nor living in USA, but it's very interesting to know how banking works over there. Sorry to nitpick, but please take care with the difference between “your” and “you’re”:

a) “invest you’re money” – I *AM* not money, I *AM* a person.

b) “that you’re company” – Neither *AM* I a company.

Remember: “‘re” is a contraction of “are”.

Other than this: nice article. I’m not American nor living in USA, but it’s very interesting to know how banking works over there.

]]> By: Women of personal finance spotlight: Allese Thomson from Wesabe here to answer your questions http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4393 Women of personal finance spotlight: Allese Thomson from Wesabe here to answer your questions Wed, 10 Sep 2008 16:21:01 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4393 [...] The 411 of the 401(k) [...] [...] The 411 of the 401(k) [...]

]]> By: Jason http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4395 Jason Tue, 02 Sep 2008 12:34:01 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4395 @kat With regard to taxation of 401k and Roth IRA, my understanding is that it has to do with your income bracket. You want a balanced tax picture when you retire so as to minimize the amount of taxes you have to pay. When you're young, it costs a lot to live. Your car and home are not likely paid off, you have expenses for children and commuting, etc. etc. When you're older, you can live on less money. At the same time, your taxable income is lower as you're drawing a portion of your income from your Roth IRA (which is post-tax investment). So, you're only paying taxes on your 401k withdrawals. I'm not an accountant, an advisor, or a tax-professional. This is just my rough understanding. @kat

With regard to taxation of 401k and Roth IRA, my understanding is that it has to do with your income bracket. You want a balanced tax picture when you retire so as to minimize the amount of taxes you have to pay. When you’re young, it costs a lot to live. Your car and home are not likely paid off, you have expenses for children and commuting, etc. etc.

When you’re older, you can live on less money. At the same time, your taxable income is lower as you’re drawing a portion of your income from your Roth IRA (which is post-tax investment). So, you’re only paying taxes on your 401k withdrawals.

I’m not an accountant, an advisor, or a tax-professional. This is just my rough understanding.

]]> By: Dave http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4397 Dave Tue, 02 Sep 2008 05:46:21 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4397 Nice article. Next you might tackle the fees to look out for when picking funds within your 401k. My company offered 10 funds with 8 having load fees above 2%. Many times companies aren't offering great options in thier plans so it's something to be aware of. Nice article. Next you might tackle the fees to look out for when picking funds within your 401k. My company offered 10 funds with 8 having load fees above 2%. Many times companies aren’t offering great options in thier plans so it’s something to be aware of.

]]> By: kat http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4396 kat Thu, 28 Aug 2008 17:52:01 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4396 What a great article, thanks! I'm a retirement newbie too. I *did* contribute enough to get the employer match at my last job, but that's as far as I got. Now I'm at a job that doesn't offer matching (we have a pension plan, so the 403(b) -- which is, afaict, the same thing as a 401(k), only for educational institutions -- is on top of that). What I would really love to see is a rundown of Roth IRA and how it compares. I think I read somewhere in a Groups discussion that, if your employer doesn't offer matching, Roth IRAs are better, but I don't know why. The tax thing confuses me too. If you're paying the tax on them eventually anyhow, why does it matter if you pay it before or after? In fact, why is it even better to put off paying taxes on that money? To put it another way... isn't it better to pay before (and get taxed on $100) than to pay after the investment has grown to $1000? I mean, wouldn't you end up paying more? What a great article, thanks! I’m a retirement newbie too. I *did* contribute enough to get the employer match at my last job, but that’s as far as I got.

Now I’m at a job that doesn’t offer matching (we have a pension plan, so the 403(b) — which is, afaict, the same thing as a 401(k), only for educational institutions — is on top of that).

What I would really love to see is a rundown of Roth IRA and how it compares. I think I read somewhere in a Groups discussion that, if your employer doesn’t offer matching, Roth IRAs are better, but I don’t know why.

The tax thing confuses me too. If you’re paying the tax on them eventually anyhow, why does it matter if you pay it before or after? In fact, why is it even better to put off paying taxes on that money? To put it another way… isn’t it better to pay before (and get taxed on $100) than to pay after the investment has grown to $1000? I mean, wouldn’t you end up paying more?

]]> By: Jason http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4394 Jason Thu, 28 Aug 2008 13:39:46 +0000 http://blog.wesabe.com/2008/08/27/the-411-of-the-401k/#comment-4394 Keep in mind that although you don't pay taxes on the money before it goes into your 401k, you do pay taxes on it later when it comes out. When you really start to consider your retirement planning, you want to keep that in mind. There are ways to reduce your retirement tax burden, for example: have some amount of post-tax investment, such as a Roth IRA (that's another retirement tool you should research). Keep in mind that although you don’t pay taxes on the money before it goes into your 401k, you do pay taxes on it later when it comes out. When you really start to consider your retirement planning, you want to keep that in mind. There are ways to reduce your retirement tax burden, for example: have some amount of post-tax investment, such as a Roth IRA (that’s another retirement tool you should research).

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