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I think the govt needs to change some 401k rules because the way it is. Many are put off by the limitations.
I think they should add provisions to allow people to pay off their mortgage with 401k without the 10% penalty but just straight income tax. As long as they lived there for 5yrs+ to avoid people flipping and abusing it.
Another limit should be to allow people to pay for their kids college tuition without the 10% penalty, assuming your kids attends college before you can withdrawl penalty free. 529 plans are even worst than 401k.
Without limitations the money would be spent. Planning properly would take care of both the mortgage and college savings issue
I think the govt needs to change some 401k rules because the way it is. Many are put off by the limitations.
I think they should add provisions to allow people to pay off their mortgage with 401k without the 10% penalty but just straight income tax. As long as they lived there for 5yrs+ to avoid people flipping and abusing it.
Another limit should be to allow people to pay for their kids college tuition without the 10% penalty, assuming your kids attends college before you can withdrawl penalty free. 529 plans are even worst than 401k.
First off, you can typically tap your 401(k) in the form of a loan for a down payment. You just need to be really confident in your employment because if you lose your job, the entire balance is typically due.
But let's play through a scenario where you can just directly use it. It would lead to a housing bubble as more money became available. Prices would go up because people would just figure they can use their 401(k) to cover the extra costs. If housing prices only went up, then sure, maybe that would be ok because they would essentially be investing their 401(k) funds in real estate.
Except they don't always go up. And when forclosure hits, at least your 401(k) is protected. If you've cashed it out on a "dream" house and now you're about to lose the house, it's now taking your 401(k) with it.
Same thing with college tuition. Yeah, it's extremely hard to get student loans discharged, but what's completely impossible is getting a "refund" back into your 401(k) when junior's $100k degree in philosophy can't help get above a minimum wage job.
The problem isn't that it's too hard to get to the money in you're 401(k). It's that too few people realize the importance of saving for retirement, so restrictions are necessary.
I am currently paying $45 per month for 2 dumb phones ($20 for my dumb phone, $20 for my wife's dumb phone, and $5 for the plan), plus taxes and fees. Since you asked for including taxes, that is $56.98 per month. It includes just talk and text, no data. They do not allow you to have this plan with a smart phone.
If my wife and I upgraded to smart phones, Verizon would charge us $40 per smart phone, and the cheapest plan (500 MB) is $20. That would mean $100 per month plus taxes and fees ($40 for my smart phone, $40 for my wife's smart phone, and $20 for the plan). Getting a plan that would actually be useful would cost even more. And this doesn't even take into account the cost of the phone. Even with that 500 MB plan, that is more than double what I am paying, plus the cost of the phone, and I would need to reduce my 401K contribution in order to afford it.
Not sure why my zip code is relevant. But I live an in extremely high cost of living area, if that is why you are asking.
OK great.
I'm on Verizon too. Sorta. I left Verizon post-paid due to costs and them wanting insane amounts of money (back then) for two smartphones. $140+taxes!
I found Net10 (Straight Talk is a sister company). If you bring your own phone, you get the best of both worlds. For two lines, unlimited talk/text and 5gb 4G* data each, we pay $88 ($8 of it in taxes) after taxes a month with Net10, on Verizon.
If you don't need 5 gb of data each, there are lessor plans, and the service will work great in 11779. One of the cool things about Net10 is the (mostly) lack of taxes on the lines. You can even circumvent most of those, dropping each line down to $0.75 in taxes a month using an Oregon addressed prepaid credit card (super easy to set up).
To get unlimited talk/text and 500 mb data each, will run around $68/month after taxes. To get 1.5 gb data each, will run around $78 after taxes. The only caveat is the 4G data is limited to 6 mbps down and 1 mbps up +/-. The AT&T side is much quicker, as is Cricket. But still way better than 3G!
I transferred my number to Net10 from Verizon. I still dialed *228 to activate (with my 3G phones I used to have), and *86 to check voicemail. I tether using PDANet for hundreds of mb per month. When using Net10s Verizon service, you must purchase either a used Verizon branded phone or a net Net10 Verizon phone. This insures you'll get Verizon service. I suggest the Samsung Galaxy S4 mini. Great phone, replaceable battery, small in size.
Slightly off topic, but people often mention a navigation app as a good use of a smartphone (something I can't do with my iPod touch, since I wouldn't have a continuous WiFi signal while driving). My question is, how do people use a smart phone for navigation while driving. You can't hold the phone while driving. So, how do you do it? I'm not asking about apps, I'm asking about how it is physically done? Thanks.
I use a popular app named Waze. Once you program in your destination, it operates with voice commands. My car has Bluetooth as well, so with the phone connected to the car, the Navigation directions from the phone pause the music and come over the speakers for a second. I've used it in cars without Bluetooth and you just listen to the commands and follow the directions. They do make suction cup mounts for your phone for the windshield as well.
My car even has factory navigation in it, but I find myself using my Iphone more since it's always updated with the latest roads, and points of interest. No need to update. Plus another perk of the app (over factory vehicle navigation) is that users can alert other users of road hazards, police speed traps, potholes, or other hazards. And since it's getting data from other users as well, it can calculate the best routes around traffic and give you very accurate time of arrival information.
My next car will NOT have factory navigation since I just use my phone instead now. It's a lot more use friendly and informative.
The limit for 401k contribution from the employee + employer is $53k this year (only $18k from the employee). He's probably making after-tax 401k contributions.
I know this point was put to bed, but there are many ways to acheive a >50k yearly contribution to employer sponsored retirement accounts. After-tax 401k contributions are just one way.
The employer could "match" in a deferred compensation account (such as a 401a), where the contribution is based on a percentage of salary up to a certain limit, not a percent-match. I receive >100% contribution this way, although (again) it is not a match. That money ends up in my account whether I contribute to our other retirement plans or not.
Some government employees have access to a 457 plan where they can defer up to another 18k in pre-tax income. Obviously, the only people who can afford to max both to 36k (401k and 457 plans) are high earners.
You've lost all credibility at this point. It is not illegal to contribute more than $17,000 per year to your 401k. There are three rules (that I'm aware of) that allows you to exceed $17,000. They have been discussed in this thread.
Generally when I find someone has made an error on a complex tax question, I don't say "You've lost all credibility at this point."
I am currently 36, married, but no kids yet. I currently max out my 401K, but I have to live a relatively austere lifestyle in order to do so. As you may have read from other threads, I am still using a basic phone, and I am starting to want a smart phone.
The dilemma is that I have 2 major fears, which unfortunately have opposite solutions….
If the cost of a smartphone makes the difference between your two savings strategies, you have a problem that can only be fixed by getting a higher-paying job.
As a investment adviser my advice to almost everyone is to contribute the maximum to a 401(k) that is legally allowed. And then save some of your after-tax income.
Social Security will be there, perhaps with some cuts for high income earners. If you don't expect to be a high income earner, SS will be just fine.
Same with Medicare. Expect some service cuts. Obamacare, despite its flaws, is the law of the land and guarantees that a private insurance company will issue you a health care policy until you turn 65 and Medicare takes over.
As someone else said, no senior citizen ever said they wish they had saved less money.
my favorite strategy is put enough in to the 401k to get your match , then do your own ira , either traditional or roth , then go back and add to the 401k.
your ira will be better choices and lower costs as well as give you roth or traditional options.
my favorite strategy is put enough in to the 401k to get your match , then do your own ira , either traditional or roth , then go back and add to the 401k.
your ira will OFTEN be better choices and lower costs as well as give you roth or traditional options.
fixed it for you.
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