Definitely get the money out of the 401K and into a self directed IRA-many credit unions have them, and considering your age & health, stocks are likely NOT the place you want your retirement, especially since interest rates are higher than they have been in decades. This is the issue I faced with my recently deceased mother's IRAs & 401Ks-greedy, basically stupid financial advisers left 80% of what she had in the stock market, much of it in INDIVIDUAL STOCKS! Needless to say, her 401K turned into a 201K before I could liquidate them! The time to go hard into the Wall Street casino is when one is young & can wait out the downturns-when retired & an unknown, likely short time is left, less risky investments are a better idea. The good news is the "financial advisors" don't get any $$$ when you invest in a less risky, self managed instrument (that also WON'T charge you ridiculous fees for withdrawals!)!
Withdrawal from 401K Account?
- Thread starter Jdeere562
- Start date
This is exactly why you want a fiduciary advisor vs a commission based advisor.
This kind of assumption only make sense if you have no other income. A lot of people start out dead broke early in their career and becomes well off when they retire, those guys would have the opposite problem when they retire vs paying off their loans earlier in their years.
Your tax burden is based on reportable income.
Depending on timeframe, the tax brackets and rules may have changed, like the recent changes that affected many middle class tax payers.
That's kinda the bottom line.
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- Jun 2, 2002
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- 4,203
I would personally start rolling your 401k money over into Roth IRA's. Pay your annual taxes on the taxable amount that you withdrew to fund the Roth and not worry about paying taxes on your money when you withdraw from the Roth IRA.
You're limited to how much you can roll over each year but start with your smallest 401k money and start chipping away at it. There is no limit to the greed of the U.S. Government so expect them to take their "fair" share.
When you're gone you will pass these IRA's over to your children as inheritance IRA's and they'll have 10 years to cash them out.
Please spend what you want and enjoy your life. Don't sit and try to squeeze every nickel out of a penny. Every sunrise is a blessing so enjoy them as much as you can.
You're limited to how much you can roll over each year but start with your smallest 401k money and start chipping away at it. There is no limit to the greed of the U.S. Government so expect them to take their "fair" share.
When you're gone you will pass these IRA's over to your children as inheritance IRA's and they'll have 10 years to cash them out.
Please spend what you want and enjoy your life. Don't sit and try to squeeze every nickel out of a penny. Every sunrise is a blessing so enjoy them as much as you can.
I don’t like to equate paying higher taxes as a sign of wealth. It is a side effect of high income and that’s all.
Too funny!
I plan on giving the keys for my 2018 Subaru Forester to the Granddaughter, in a few weeks for high graduation! I bought it brand new and it is very well maintained. 60,000 miles on it now and good as new.
I stopped driving a while back. I have her borrow it every two weeks or so, just to burn out fuel and give it some exercise. Otherwise it would just sit around.
Very responsible young lady and is joining the air force this fall.
Well, it can be both. You can pay high taxes on your income level but not become wealthy due to asset mis-management. Or unforseen issues like health, divorce, who knows what...
But income ultimately has to pay the tax man his cut, right? Even it is paid by your heirs...
By the way, I know of a lot of Silicon Valley people who rode the high income wave, drove German cars, dressed at Macys and Nordys, but never became wealthy. The real Bozos were the ones who sold their stock for short term fun. Put off buying a house... You may have noticed I abhor short term thinking.
I see your point.
My point was simply that folks with some money, who give it to friends/family are very often the ones who go broke. That is a classic and well known trap. One need only look at how many lottery winners go belly up, mistakenly believing there is enough to give away. (Note: 70% of lottery winners go broke within a few years)
why dontcha switch the 401k to it to a self managed IRA account where the admins dont fee you to death.
My parents were using Raymond James when they died. Previous generation not knowing how to handle this stuff, I think RJ was getting about a 1% management fee. First thing happened when I inherited those funds was to self direct them..
my opinion is about 80% of Americans live right up to and slightly beyond their income... lot of them are one paycheck away from debt default
gathermewool
Site Donor 2023
That is likely on top of the maintenance fee, which may also be exorbitant. This guy needs to see a financial advisor. I see no reason to have multiple accounts, either.
I don't know the number, but it is pretty high. Scary high... I drank myself into homelessness. I NEVER wanna be there again.
Education needs to teach personal finance, starting in grade school. Give kids a fighting chance.
No sir! Heirs get the stepped up value of assets at the time of death of the benefactor. If you bought BRK A stock for $10 a share in the 1960s and your heirs inherited it today and sold it for $490,000 a share they wouldn't owe a cent in income taxes.
But if you are referring to ordinary (not Roth) IRAs and 401ks, you are completely correct.
I probably misunderstood you comment. But for others who may have as well ...
401K is all pre-tax money likely accumulated over 35-45 years, so It's taxable as ordinary income coming out.
(since I will be starting SS later this year, I have been doing a lot of reading on the significant tax burden in retirement)
Social Security is making "back door" big bucks by never moving the tax bracketing used in determining taxable portion of retirement benefit income - for well over 35 years since the tax law was written. I have read that any taxes collected on SS benefits goes back to the SS pot - not Federal general fund; so those taxes help keep it afloat.
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I found this fantastic tax calculator online, and you just plug in your numbers and get quite an accurate tax estimate:
1040 Calculator Estimates Your Federal Taxes
Use this calculator to estimate your total taxes as well as your tax refund or the amount you will owe in taxes.
www.aarp.org
True, that's why we have minimum distributions. And there is the death tax, but one should be so lucky as to incur that.
In CA, with house values, the step up has benefitted many heirs.
But you have a point.
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The wife and I were within inches of pulling out 401Ks, but things have shifted and we're making money again. Our investors and agents are working hard to throw our money into the right place. Currently, this is the highest it's ever been. So we'll wait a bit longer
school wont teach you, nor will people take the opportunity their job gives them regarding company matches on 401k, or will they chip into a IRA, or can you get them to stop using credit cards.. the whole economy revolves around debt..
but the internet is a wonderful thing, if a person wants to research things.. you find the guy who reads the business section of the newspaper before he reads the sports or the front page... that is the guy to listen to.
ROTH is my friend and will be to the end. I hate paying tax to pay a tax, so this is the only way to go. pay it once let grow then use it to pay school and property tax plus insurance. I hope to get the rest of what's left in my conventional 401 converted to Roth. So for anyone out there who can get a Roth 401 where they work consider doing it.
