Discuss abt Roth IRA vs Traditional IRA vs 401k vs CD vs Mutual funds Investments

[ramram58]

Guys,

Let's discuss about Roth IRA vs Traditional IRA vs 401k vs CD vs Mutual funds Investments details.

As contractor, we mostly don't have 401k optional from employer. What are your investments or retire plannings ? How can we get tax benefits with Roth\CD\MF\TIRA?

As you all know, Our status is uncertain. What will happen to Roth\ CD\MF\ 401 k accounts, if we leave in 3 years or so ?.

FYI! I did my research , but I overwhelming with info. Please throw some lights here.

Thanks

[Scada]

ankul  nak telsindi telling..

So 401k is like PF in India.

Roth IRA ante - > you pay the taxes upfront for the amount going into 401k...so after retiremnet all amount you get from 401k is tax-free

Traditional ante -> you just invest the amount into 401k but after retirement what ever the amount you get in not tax free..you have to pay taxes..

I am doing Roth since opt lo less taxes and invest chese amount ki before maturity a tax kadtav..rough ga 401k ki YTD oka 10-15% min untadi..so at the end nuv a extra oche profit amount ki tax katavu, and last ki oche net amount tax-free

Tax benefits gurinchi no idea.

my company matches 5% and i contribute 6%...ante that 5% company  pay chestundo adi nak benefit a kadha..why to loose it..adi kakunda every year 10-15% increase itunai ..oka vela worst case lo back home ellipoina kuda..oka 20-30% cut chesi manaku 401k money istaru..a 30% cut ina kuda..nen 401k lo entha money ithe pettinano antha kante ekva worst case lo kuda ostadi..

Pro tip: Choose you own stocks in 401k by referring to Morning star report ..It pulled me from 7% to  ~10%

@Rushabhi  and other FT please throw some lighthouse 

[Dixitulu]

Is it a good idea to take loan from 401k to buy a house ( meaning down payment or buffer )

 

[ramram58]

38 minutes ago, Scada said:

ankul  nak telsindi telling..

So 401k is like PF in India.

Roth IRA ante - > you pay the taxes upfront for the amount going into 401k...so after retiremnet all amount you get from 401k is tax-free

Traditional ante -> you just invest the amount into 401k but after retirement what ever the amount you get in not tax free..you have to pay taxes..

I am doing Roth since opt lo less taxes and invest chese amount ki before maturity a tax kadtav..rough ga 401k ki YTD oka 10% untadi..so at the end nuv a extra profit amount ki tax katavu, and last ki oche amount tax-free

Tax benefits gurinchi no idea.

my company matches 5% and i contribute 6%...ante that 5% company edithe pay chestundo adi nak benefit a kadha..why to loose it..adi kakunda every year 10-12% increase itunai ..oka vela worst case lo back home ellipoina kuda..oka 20-30% cut chesi manaku 401k money istaru..a 30% cut ina kuda..nen 401k lo entha money ithe pettinano antha kante ekva worst case lo kuda ostadi..

Pro tip: Choose you own stocks in 401k by referring to Morning star report ..It pulled me from 7% to  ~10%

@Rushabhi  and other FT please throw some lighthouse 

Thanks for sharing your experience and suggestions Uncle 🙂

[ramram58]

LTT

[Hitman]

1 hour ago, ramram58 said:

Guys,

Let's discuss about Roth IRA vs Traditional IRA vs 401k vs CD vs Mutual funds Investments details.

As contractor, we mostly don't have 401k optional from employer. What are your investments or retire plannings ? How can we get tax benefits with Roth\CD\MF\TIRA?

As you all know, Our status is uncertain. What will happen to Roth\ CD\MF\ 401 k accounts, if we leave in 3 years or so ?.

FYI! I did my research , but I overwhelming with info. Please throw some lights here.

Thanks

ROTH IRA

Here are other Roth IRA benefits to consider:

• In 2019, Roth IRAs allow for contributions of up to $6,000 per year — or $7,000 if you’re 50 or older — and you can use it in addition to a 401(k). (Those limits are up from $5,500 and $6,500 in 2018.)

• You can withdraw the money you contributed without tax or penalty at any time, with no restrictions, because you’ve already paid taxes on that money. You may, however, be taxed or penalized if you withdraw your investment earnings. Doesn't this answers your question ? if you were to leave you can get all your contributions and Penalty only on earnings (any profits)..

• Once you hit 59½ and have held the account for at least five years, you can take distributions, including earnings, from a Roth IRA without paying federal taxes.

• You can use Roth IRA money to pay for qualified college expenses without an early distribution penalty, so you can use the account to supplement or as an alternative to a college savings account like a 529 plan. Keep in mind that only the penalty is waived — you may still owe income taxes on early distributions of earnings, even if for qualified college costs.

• You can open a Roth IRA at any age, as long as you have earned income (you can’t contribute more than your earned income).

• The account is not subject to the required minimum distributions typically required from a traditional IRA or 401(k) beginning at age 70½. This means you can use a Roth to pass money to your heirs.

[alpachinao]

401k vunna Roth IRA open cheyocha ? Roth IRA nunchi money withdraw or account early close chessi mingocha or better invest in etf or mutual funds?

 

[Hitman]

14 minutes ago, alpachinao said:

401k vunna Roth IRA open cheyocha ? Roth IRA nunchi money withdraw or account early close chessi mingocha or better invest in etf or mutual funds?

 

Yes, you can contribute to both a Roth IRA and an employer-sponsored retirement plan such as a 401(k), SEP or SIMPLE IRA, subject to income limits. However, each type of retirement account has annual contribution limits. For a Roth IRA, the maximum annual contribution for 2019 is $6,000 (or $7,000 if you’re 50 or older) or, if you earned less than that, the limit is your total taxable compensation for the year. You can contribute to a Roth at any age, even past retirement age, as long as you’re still earning taxable income. A working spouse can also contribute to a Roth IRA on behalf of a nonworking spouse. For a 401(k), the 2019 contribution limit is $19,000 ($18,500 in 2018), unless you’re 50 or older, in which case the limit is $25,000.

[meandhrakurradu]

All these investments are investing in stocks. Neku kavalsina time ki market down unte bokka paduddi

[alpachinao]

1 minute ago, meandhrakurradu said:

All these investments are investing in stocks. Neku kavalsina time ki market down unte bokka paduddi

Agreed on top 401k and Roth IRA both have penalty and tax for early close or withdraw

Before 60 yrs

[babu_bangaram]

1 hour ago, Hitman said:

ROTH IRA

Here are other Roth IRA benefits to consider:

• In 2019, Roth IRAs allow for contributions of up to $6,000 per year — or $7,000 if you’re 50 or older — and you can use it in addition to a 401(k). (Those limits are up from $5,500 and $6,500 in 2018.)

• You can withdraw the money you contributed without tax or penalty at any time, with no restrictions, because you’ve already paid taxes on that money. You may, however, be taxed or penalized if you withdraw your investment earnings. Doesn't this answers your question ? if you were to leave you can get all your contributions and Penalty only on earnings (any profits)..

• Once you hit 59½ and have held the account for at least five years, you can take distributions, including earnings, from a Roth IRA without paying federal taxes.

• You can use Roth IRA money to pay for qualified college expenses without an early distribution penalty, so you can use the account to supplement or as an alternative to a college savings account like a 529 plan. Keep in mind that only the penalty is waived — you may still owe income taxes on early distributions of earnings, even if for qualified college costs.

• You can open a Roth IRA at any age, as long as you have earned income (you can’t contribute more than your earned income).

• The account is not subject to the required minimum distributions typically required from a traditional IRA or 401(k) beginning at age 70½. This means you can use a Roth to pass money to your heirs.

you cannot open Roth IRA if your combined salary crosses a limit

[Hitman]

LTT

[k2s]

6 hours ago, ramram58 said:

Guys,

Let's discuss about Roth IRA vs Traditional IRA vs 401k vs CD vs Mutual funds Investments details.

As contractor, we mostly don't have 401k optional from employer. What are your investments or retire plannings ? How can we get tax benefits with Roth\CD\MF\TIRA?

As you all know, Our status is uncertain. What will happen to Roth\ CD\MF\ 401 k accounts, if we leave in 3 years or so ?.

FYI! I did my research , but I overwhelming with info. Please throw some lights here.

Thanks

401k - pre-tax contribution - saving for retirement

Roth IRA, traditional IRA - is after tax contribution - gains on them is tax free

CD vs Mutual funds - after tax contribution, - gains are treated as income and taxed 

[meandhrakurradu]

4 hours ago, alpachinao said:

Agreed on top 401k and Roth IRA both have penalty and tax for early close or withdraw

Before 60 yrs

Ya contractor aite doesn’t make sense to invest 

[proudtobeandhrite]

6 hours ago, ramram58 said:

Guys,

Let's discuss about Roth IRA vs Traditional IRA vs 401k vs CD vs Mutual funds Investments details.

As contractor, we mostly don't have 401k optional from employer. What are your investments or retire plannings ? How can we get tax benefits with Roth\CD\MF\TIRA?

As you all know, Our status is uncertain. What will happen to Roth\ CD\MF\ 401 k accounts, if we leave in 3 years or so ?.

FYI! I did my research , but I overwhelming with info. Please throw some lights here.

Thanks

As a contractor and wantingto leave in 3 years. MF is your only choice. Rest of all investments have penalties.

Long term Investment: 401k, IRA;  Roth would help with taxes since you pay the taxes before investing.  

Mid term - Long term investment: CD's.

Short to Long term investment: MFs