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Old 10-31-2009, 06:30 PM
 
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the lack of required distributions are a plus and you can actually save more because you can get more bang for the buck from the roth because the 4 or 5,000 you can put in the roth plus the money you prepay the taxes with are more then you can do with a traditional ira .

whether your in a higher bracket or a lower bracket is a toss up, i dont count that very much in my planning, for me its the estate planning thats a big plus
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Old 03-12-2010, 02:37 PM
 
Location: Tampa, FL
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Although the current market has recovered slightly, many 401ks are well below the owner's cost basis, so converting during a trough is better than converting when the market is high.

I'm not concerned so much about heirs (have not direct heirs) - but more concerned about getting the taxes out of the way now instead of 20-30 yrs from now.

I'll likely convert my 401k to a Roth over the course of 4-5 yrs to keep the tax bite manageable.
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Old 03-12-2010, 05:00 PM
 
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Quote:
Originally Posted by BucFan View Post
Although the current market has recovered slightly,....
Slightly??

Not only is the S&P 500 up 58% in the last 52 weeks, it just closed at 1150, which is its highest level since October 2008.

I think that is more than a slight recovery.

In fact, although I wasn't prescient enough to avoid the market collapse, I was smart enough to recognize buying opportunities near the lows last March and April and bought several DOW components when they were in the single digits. (I did completely miss out on the rebound of the financial sector, however.)

As for your other point, if you're not concerned about heirs, I don't know whether converting to a ROTH offers much of an advantage, if any, if you're already near retirement age. I realize that there are two schools of thought on that issue, but I've made the decision not to convert. YMMV
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Old 03-12-2010, 06:19 PM
 
Location: Tampa, FL
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If you've dollar-cost averaged into an SP500 type index fund, you're probably well under your cost-basis, no matter what the market did over the short term (1 yr). Since most investors for retirement are likely to be longterm investors, that short term recovery doesn't mean as much -




I'm 46, but have access to my 401k since I retired from my work - and I'm allowed to roll it over/convert to a ROTH. I suspect that in 15-20 yrs, the market will be much higher than it is today (hopefully), so paying the taxes now during a low market is enticing to me. I expect with our current national budget deficit, our income taxes will be much higher in two decades - something else to consider. I do know that my income should be low as I don't expect to drawing in a salary in my 50-60s - at least that's the plan now.
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Old 03-12-2010, 06:42 PM
 
Location: Tampa, FL
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Boston-based Fidelity looked at the 401(k) account performance for some 766,000 workers who continued to contribute to their accounts and remained invested from the end of 1999 through the end of 2009.

Fidelity reports 10-year 401k account performance - Boston.com (http://www.boston.com/business/articles/2010/02/17/fidelity_reports_10_year_401k_account_performance/ - broken link)
.........."Their retirement account balances increased an average of 150 percent during the decade, climbing from $65,800 to $163,900."

However, 75 percent of that growth was attributed the account holder adding new money and matching employer contributions. The remaining 25 percent came from market performance, said Michael Doshier, vice president of workplace investing for Fidelity.
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Old 03-13-2010, 12:06 AM
 
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Quote:
Originally Posted by BucFan View Post
Fidelity reports 10-year 401k account performance - Boston.com (http://www.boston.com/business/articles/2010/02/17/fidelity_reports_10_year_401k_account_performance/ - broken link)
.........."Their retirement account balances increased an average of 150 percent during the decade, climbing from $65,800 to $163,900."

However, 75 percent of that growth was attributed the account holder adding new money and matching employer contributions. The remaining 25 percent came from market performance, said Michael Doshier, vice president of workplace investing for Fidelity.
Am I missing something, or does that not say that even when you factor out employees' adding new money to their accounts, their 401(k)s still increased in value over the past 10 years? Doesn't that post completely contradict your contention that most employees are "well under" their cost basis?
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Old 03-13-2010, 01:52 AM
 
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s&p 500 includes no dividends i believe in its calculation which accounts for 30% of the markets growth... its also not smart to have had all your 401k money in just one asset class namely large company stocks (tthe s&p 500).... a 25% each mix of stocks ( nothing more then a total market index fund ) ,cash , long term bonds and gold averaged over 9% a year over the the last decade.

they also have to consider in rebalancing into the equation.. if you rebalanced near the lows last year it makes a bigger difference then not having a plan and just letting everything sit.


i know im at all time highs right now between rebalancing a few times and adding more at the lows.....
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Old 03-13-2010, 08:30 AM
 
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if you got the money to do a roth conversion and your collecting social security at 62 then listen up.

you would be better served paying back the ss at 70 , get almost double the ss payments for you and your spouse with the money. then take a deduction for paying back the ss and use it to apply all that nice negative income you will end up with for the year and use it for a free roth conversion.


double the ss payment and an almost free roth conversion..whats better then that
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Old 03-13-2010, 12:51 PM
 
Location: Tampa, FL
27,798 posts, read 26,235,889 times
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Quote:
Originally Posted by MadManofBethesda View Post
Am I missing something, or does that not say that even when you factor out employees' adding new money to their accounts, their 401(k)s still increased in value over the past 10 years? Doesn't that post completely contradict your contention that most employees are "well under" their cost basis?
Yes it does - but it is hard to believe that's the case, especially since most people don't actively manage their 401k, much less know where they're putting their money in the 401k. I'm very surprised to see that 25% gain with the major correction that has occurred and the relatively poor decade for the market since 9/11.
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Old 03-13-2010, 02:36 PM
 
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i dont know anyone who has a 401k that isnt in control themselves where the money goes. these financial failures just choose not to take an interest , learn the basics and then ask there useless buddy what to do. i see it in my own company

all anyone had to do is buy any diversified equities fund with 1/2 their money and an intermediate bond fund with the other and rebalance once a year. if they did nothing more they would have done just fine,..

but they dont , they follow their just as ignorant friends and bail at the lows and buy more when they should be rebalancing and taking money off the table.

then they blame everyone and everything for their poor investment record

listen you all have to do what lets you sleep at night but stop blaming everything and everybody for your lack of knowledge and ability to carry out your own working plan..

just throwing money into equity funds without rhyme, reason or a stratagy isnt a plan.


you dont have to time the markets, you dont need software and charts or the alighnment of the planets. all you need is to cover the different asset classes, rebalance every year no matter what and enjoy your life.

when i first started investing just before the market crash of 1987 i knew nothing... i decided since i already had an account at fidelity i would find an independent newsletter who used fidelity funds and use their brains until mine was up to speed.

well that was in 1987 and today i consider myself a savey investor but you know what?

i still use the same newsletter... why? not because they pick just the right up coming funds, nope they dont. i do it because they know at any given time what a fund is holding and i end up with a diverse portfolio with no duplications in sectors or stocks.

but the main reason is i know i still need someone to hold my hand at times and force me to stick with the plan. its human nature to want to bail and run when things are sinking around you..

they force me to hold the line, to rebalance and to committ to exchanges in different funds just when i feel like im arrainging the deck chairs on the titanic.

well here we are 23 years later thru wars, disasters and market crashes and im still up 1200%.........


tracking the s&p500 is only a small part of the markets and equities are only 1 asset class. theres a world of stuff out there and everything has its day in the sun and its day in the toilet... a good working plan includes it all.


thats what its all about my friends.

Last edited by mathjak107; 03-13-2010 at 02:59 PM..
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