401k?

[509lifted]

ok so since im not union and my company doesnt offer a 401k i am gonna be starting up a ira or whatever it is called and i have search online but couldnt find the exact way to do so, so any help would be much appreciated.

 

[adsm08]

Get ahold of a company like MetLife or ING, tell them you wish to start on IRA, and then set up an account.

The nice part about doing it that way is that it is all post-tax money going in. If you make pre-tax contributions to a retirement account you pay taxes as you withdraw money at retirement, including on all the interest it has earned. You make post-tax deposits and you pay no taxes on the withdraws at retirement.

 

[509lifted]

wow thanks adsm see thats the info i need cause i didnt know about the tax part on it and couldnt understand it

 

[adsm08]

The tax part is really simple. You get taxed on your retirement money once. You get to choose if you get taxed when it goes in, or when it comes out. You pay a lot less it you pay taxes when it goes in.

Disability insurance works the same way FYI. So if you get your own disability insurance pay it with after tax money so that the 66% of your wages it pay out is more in line with your take-home pay.

 

[naford]

The type of IRA you want is determined by what you want to do today with your money. If you want to deduct the contribution today off your taxes then you would go with the traditional IRA. A Roth IRA is not tax deductible today but the interest and principle is not taxed when it is withdrawn. Both can be withdrawn after age 59.5 without penalty. Like I wrote the regular IRA would be taxed at your tax rate when it's withdrawn. Usually that would be at a reduced rate. What I would do is to go online and read read read. Just Google Ira versus Roth Ira.

 

[Tominator]

The tax rules are changing this year. You need to talk to a professional.

 

[snake]

Any brokerage house (almost) can do IRA's. You can even use TD Ameritrade or other discount broker. Be sure and ask about annual fees because some people will gouge your eyes out (can you say Merrill lynch?) Yeah- stay away from THOSE thieves...

 

[morsetaper2]

I have had a variety of IRA's, Roth IRA's, & 401-k's since about 1982. So I feel I'm pretty qualified to offer some very basic advice. I would open an IRA or a Roth IRA at an outfit like Vanguard or Fidelity that offers a whole host of index funds to choose from.

If where you work, there is a 401-k, or a profit sharing plan, you may not be able to take a tax deduction for a traditional IRA. But if not, you can likely get the deduction. You just didn't provide enough information

If a 401-k is available to you put the maximum you can into it and it will reduce your taxes.

Roth IRA.... taxes are only going to go up. So I think a Roth deserves a look at.

I'm 53 yrs old. I currently have a 401-k plan at work, which I contribute the maximum amount permissible. And I also contribute the maximum amount permissible into a Roth IRA. And I have a traditional IRA that I've had for many years. Retirement for me is 10-15 years out.

I'm going to assume you are young, 20's? Maybe early 30's? My advice...Contribute as much as you can to your 401-K if your employer offers one. If not contribute to either a traditional IRA, or a Roth IRA.

401-k: The $$ you contribute to a 401-k is subtracted from your income. Then the taxes on your income are calculated on your income less the 401-k contribution. example. You make $40,000/yr. You put $8000 into your 401-k. On your tax return, you only pay taxes on $32,000. You pay taxes on the $$ you w/d in retirement at the prevailing rates.

Traditional IRA: You may be able to get a tax deduction for your contribution similar to that of a 401-K but not nearly as generous. You contribute money that's already taxed. Its taxed again when you w/d in retirement.

Roth IRA: You contribute money that has been taxed. You pay NO taxes when you w/d in retirement.

My opinion is younger folks that don't have a 401-k plan available to them are best served with a Roth IRA. Taxes are only going to go up. A Roth allows you to dodge the taxes.

Take a good hard look at opening a Vanguard Acct. Lowest fees around. And contribute, if you are just starting out, to a "Total Stock Market" Index fund.

My $.02

 

[509lifted]

morsetaper2 thanks i will look into the roth ira and yea i am 19 so i wanna start young so i have money to retire on since my company doesnt offer a 401-k

 

[adsm08]

yea i am 19 so i wanna start young so i have money to retire on since my company doesnt offer a 401-k

It's too bad that a lot more people don't/didn't think like this and plan on depending on social security for their retirement. That is a big part of our current economic crisis. Kudos to you.

 

[ZMan]

I do my Roth IRA through Primerica, no complaints. You don't need a union to have a 401k, you just have to have a good boss. My boss is very generous with our 401k.

 

[509lifted]

yea adsm i wanna provide for myself not live off the state like most and yea my boss is a tightwad with his money and oesnt even offer medical but the pay is good and is a top notch company to get into for a job

 

[morsetaper2]

If you are 19 and concerned about contributing to your retirement... It gives me great faith in the younger generation. I contributed $2000 to open my first IRA in 1982 at about age 22. I've always been a saver and have managed to save and plan for the future. I have no pension. But I'm going to be quite comfortable in my retirement, because I got started saving early. The earlier you can get started the better. Compound interest is your friend when you start saving early.

The stock market is a game, do your best to understand it, don't be risk adverse at your young age. Those who know can ride the waves, those who don't get the undertow. You can't possibly figure it out and understand it all. But in time you will. Its far more important to be that squirrel and save that cash. Start saving an put it away into a Roth IRA.

Its a very complicated subject. And as a newb its overwhelming. Save as much as you can, as early as you can, and try to educate yourself on investments. At your age, a "Total Stock Market" index fund is going to be the best place to park your $$... and put it into a Roth IRA.

My recommendations:

VTSMX: Vanguard Total Stock Market Index (Total Diversified US Stock Market Index)

VTWSX: Vanguard Total World Stock Market Index (Total Diversified World Stock Market Index)

Either of the above would be great choices. Both are volatile, but over time, at your young age, will fare you well.

ML

 

[naford]

Like I wrote read, read, and read some more. The book I read many years ago was The Only Other Investment Guide You'll Ever Need by Andrew Tobias. I'm sure he has an updated version of this book. But he talks about mutual funds with front loads, rear loads, fees and all kinds of money issues. Now I find my self reading the local paper especially the consumer reporter. She would be called a liberal by some TRS members but she is right on the money when she helps somebody that has just been screwed. She was supposed to have a article about fees the banks charge for internet bill paying. I haven't seen it yet. I use other sources some make sense some don't. If I told you I'd have to kill you.

One other thing for general investment. The utility companies used to have and some still do have a plan where you invest small amounts but they do dividend reinvestment every month.