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Errrrgh...I'd max out any retirement you can. You're almost throwing money away not to do that.
It not only comes out pre-tax (well, not every vehicle), but the GROWTH is tax-free. That adds up over the years.
My money goes into the 401k pretax....wouldn't it all be taxed coming out?
My money goes into the 401k pretax....wouldn't it all be taxed coming out?
What you take out is taxed, yes.
But everything you EARNED in those years is not taxed.
That will not be true of your other investments, which will be subject to taxation simply on what you earn.
What you take out is taxed, yes.
But everything you EARNED in those years is not taxed.
That will not be true of your other investments, which will be subject to taxation simply on what you earn.
This sounds wrong to me
If the money goes in pretax, you get the tax benefit NOW, not later, so you pay taxes when you take it out, both the principal and the gains.
If the money goes in posttax, then you don't pay taxes on the gains.
If the money goes in pretax, you get the tax benefit NOW, not later, so you pay taxes when you take it out, both the principal and the gains.
If the money goes in posttax, then you don't pay taxes on the gains.
You get the tax benefit now as the money goes in pre-tax.
You get the tax benefit all the while (in the sense that it grows and grows tax-deferred).
Nobody pays on the gains of their 401k while it's growing in the account.
You then pay taxes on the amount you withdraw later.
Errrrgh...I'd max out any retirement you can. You're almost throwing money away not to do that.
It not only comes out pre-tax (well, not every vehicle), but the GROWTH is tax-free. That adds up over the years.
The growth is not tax-free, it's tax-deferred, meaning you will owe tax on all growth when you eventually take withdrawals.
Only in a Roth is the growth tax-free.
I would also disagree with the notion that one is automatically throwing away money by not maxing out "any retirement you can." You ARE throwing away money by not taking full advantage of a COMPANY MATCH on the 401k, but beyond that, not necessarily.
invest the extra money in a taxable account. dont put money in a 401k above what the employer will match.
Like a general investing account right?
My plan is this now.
Match employer % for 401k
Pay bills (My CC is never high so I dont have to worry about paying off debt with that)
Pay mortgage without paying extra on it early
max out roth ira
keep putting away 400 a month for savings/emergency/money I will need sooner than later
put anything else towards a general investing account
The growth is not tax-free, it's tax-deferred, meaning you will owe tax on all growth when you eventually take withdrawals.
Only in a Roth is the growth tax-free.
I would also disagree with the notion that one is automatically throwing away money by not maxing out "any retirement you can." You ARE throwing away money by not taking full advantage of a COMPANY MATCH on the 401k, but beyond that, not necessarily.
Are,we being obtuse on purpose?
Currently I owe taxes every year on the money I make in my investment portfolio.
My 401k grows...any gains there are not taxed.
Big DUH on being taxed as I withdraw it later. No one is arguing that point.
Currently I owe taxes every year on the money I make in my investment portfolio.
My 401k grows...any gains there are not taxed.
Big DUH on being taxed as I withdraw it later. No one is arguing that point.
its a big duh but there you are saying "my 401k grows, any gains arent taxed." its a fake number you are looking at. its artificially bigger because you havent paid the taxes yet, but you will pay them and you will pay them at the income tax rate not the long term capital gains tax rate.
ive had this argument before and for me, the small benefit of the tax deferred investments isnt worth the risk and what you are losing.
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