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Author: ascenzm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 741285  
Subject: 401K to Roth 401K conversions Date: 1/12/2013 8:21 PM
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Something to ponder.

I switched all new 401K investments to my 401K plan's Roth 401K option two years ago.
My thought is that current federal marginal tax rates are as low as they ever will be and will be higher when I'm retired. This goes against convential wisdom, but that is what I think will happen.

Mike


http://www.kare11.com/news/article/1005449/16/Is-a-Roth-401k...

A component included in the new bill passed to avert the 'fiscal cliff' is a provision allowing retirement plan investors the opportunity to convert traditional 'pre-tax' balances to a Roth 401(k) within their retirement plan.
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Author: JoshRandall Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666107 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/12/2013 10:14 PM
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My thought is that current federal marginal tax rates are as low as they ever will be and will be higher when I'm retired.

I have never invested in a Roth IRA because a bird in the hand is worth two in the bush. Plus you figure your current marginal tax rate will likely decrease if your total annual income is less than your current annual income. So you get a tax benefit now at a higher marginal rate and when you start receiving your withdrawals, your marginal rate will be lower.

Plus I don't trust Congress. When the fiscal reality they have been ignoring comes home to roost, they can just say, hey all of you folks that had Roth IRA and 401k, we simply cannot afford to have you receive your retirement money 100% tax free.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666126 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 12:14 AM
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Plus I don't trust Congress. When the fiscal reality they have been ignoring comes home to roost, they can just say, hey all of you folks that had Roth IRA and 401k, we simply cannot afford to have you receive your retirement money 100% tax free.

Me, either. Desperate politicians, backed into a corner, are likely to do anything, no matter how unbelievable it sounds now.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666127 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 12:56 AM
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Me, either. Desperate politicians, backed into a corner, are likely to do anything, no matter how unbelievable it sounds now.

At least, Roth IRA provides flexibility in being able to withdraw contributions without penalties (or taxes).

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666136 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 4:40 AM
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Desperate politicians, backed into a corner, are likely to do anything, no matter how unbelievable it sounds now.

At least, Roth IRA provides flexibility in being able to withdraw contributions without penalties (or taxes).

Yeah, that's the way it is today. When desperate for "revenue," however, that may not be the way it is tomorrow.

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Author: lowstudent Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666147 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 8:34 AM
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Plus I don't trust Congress. When the fiscal reality they have been ignoring comes home to roost, they can just say, hey all of you folks that had Roth IRA and 401k, we simply cannot afford to have you receive your retirement money 100% tax free.

, either. Desperate politicians, backed into a corner, are likely to do anything, no matter how unbelievable it sounds now.
_______________________

Let's see tax loophole, taken advantage of by folks that made more than they needed who were concerned about trying to not pay their fair shares?

Oh yeah, that sounds safe in today's America

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Author: JoshRandall Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666148 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 8:45 AM
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Plus if you convert your regular 401k/IRA to a Roth today and if you have a large chunk in your account, you have to pay a huge hunk of taxes NOW. Where are you going to get that money to pay the taxes due? When I max out on a regular 401k, I reduce my income by what, about $16,000? And if I also have a deferred comp., which I do, I take another $25,000 pre tax deduction, so my total income subject to taxation TODAY is reduced by $41,000 each year, invested tax free with no reporting of dividends or capital gains and invested in a well-diverisifed portfolio of mutual funds and bond funds. The compounding effect of that year after year alone, over time, has put us into a very good financial situation. Now when I begin to take money out, I'm going to take only what I need to live on. Hell, I will be one of the 47% who pay no taxes.

Roth is a con game the government lays on chumps. They want you to be enticed by the "fact" that sometime in the future, you won't have to pay any taxes on your retirement withdrawals while they get their tax money from you TODAY. And they can change their mind, they must change their mind when it becomes obvious that all of those folks who chose Roth IRA's are not being patriotic enough and aren't paying their fair share of taxes, They will admit they made a mistake and will find a way to begin to phase it out. Sounds ridiculous? Ok, but the property I have in Florida is prime real estate. I wouldn't lie to you about that.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666171 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 11:19 AM
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Let's see tax loophole, taken advantage of by folks that made more than they needed who were concerned about trying to not pay their fair shares?

Who's going to determine what someone "needs?" You? The President?

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666173 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 11:22 AM
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Plus if you convert your regular 401k/IRA to a Roth today and if you have a large chunk in your account, you have to pay a huge hunk of taxes NOW. Where are you going to get that money to pay the taxes due?

Uncle Sam takes his share for taxes from the "large chunk" in your IRA, so your chunk ends up being a whole lot less in your Roth IRA.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666179 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 11:39 AM
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Yeah, that's the way it is today. When desperate for "revenue," however, that may not be the way it is tomorrow.

Regardless of the investment (whether it is retirement accounts or insurance products), Congress can change the tax laws regarding the investment.

The options are to make the best choices based on current tax laws with the option to adapt as necessary or live in fear of possible changes trying to out guess Congress.

Roth IRA gives the flexibility to change if the tax laws change.

Roth 401K is not so flexible because you have to change jobs to roll it over to a Roth IRA.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666183 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 11:58 AM
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Plus if you convert your regular 401k/IRA to a Roth today and if you have a large chunk in your account, you have to pay a huge hunk of taxes NOW. Where are you going to get that money to pay the taxes due?

If you must get it from the IRA, then it is a bad choice to convert to a ROTH.

Since we aren't eligible for a deductible TIRA, we have been contributing to a TIRA and immediately converting to a ROTH.

There are no requirements to convert all of a TIRA or 401K. Any amount can be converted.

Now when I begin to take money out, I'm going to take only what I need to live on. Hell, I will be one of the 47% who pay no taxes.

Up until you turn 70 1/2.

When I max out on a regular 401k, I reduce my income by what, about $16,000? And if I also have a deferred comp., which I do, I take another $25,000 pre tax deduction, so my total income subject to taxation TODAY is reduced by $41,000 each year

If the deferred comp is a 409A, there are other risks. The balance of the account is an asset of the corporation, and you are a creditor of the corporation.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666227 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 6:06 PM
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Regardless of the investment (whether it is retirement accounts or insurance products), Congress can change the tax laws regarding the investment.

Claim: Bank robber Willie Sutton gave as his reason for robbing banks: "That's where the money is."

First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution of America, economists define wealth in terms of marketable assets, such as real estate and stocks/bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (see Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts (such as home mortgages and credit card debts), are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth -- also referred to in this document as "non-home wealth" -- which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."

[As telegraph pointed out], we also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income. (But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)


Wolff, E. N. (2004). Changes in household wealth in the 1980s and 1990s in the U.S. Working Paper No. 407. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.

Norris, F. (2010, July 24). Off the Charts: In '08 Downturn, Some Managed to Eke Out Millions. New York Times, p. B-3.

What percentage of the average American's wealth consists of retirement accounts? Enough that the Obama Administration is setting its sights on them. This is no longer in the realm of conspiracy but public record.

http://www.shtfplan.com/headline-news/government-sets-its-si...

A recent hearing sponsored by the Treasury and Labor Departments marked the beginning of the Obama Administration’s effort to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k plans, NSC is warning.

The hearing, held in the Labor Department’s main auditorium, was monitored by NSC staff and featured a line up of left-wing activists including one representative of the AFL-CIO who advocated for more government regulation over private retirement accounts and even the establishment of government-sponsored annuities that would take the place of 401k plans.

“This hearing was set up to explore why Americans are not saving as much for their retirement as they could,” explains National Seniors Council National Director Robert Crone, “However, it is clear that this is the first step towards a government takeover. It feels just like the beginning of the debate over health care and we all know how that ended up.” [...]

A representative of the liberal Pension Rights Center, Rebecca Davis, testified that the government needs to get involved because 401k plans and IRAs are unfair to poor people. She demanded the Obama administration set up a “government-sponsored program administered by the PBGC (the governments’ Pension Benefit Guarantee Corporation).” [...]

Such “reforms” would effectively end private retirement accounts in America, Crone warns.

“These people want the government to require that ultimately all Americans buy these government annuities instead of saving or investing on their own. The Government could then take these trillions of dollars and redistribute it through this new national retirement system.” [...]

“This effort ultimately is designed to grab the retirement nest eggs of America’s senior citizens. This new government annuity scheme, even if it is at first optional, will turn into a giant effort to redistribute the wealth of America’s older citizens,” explains Crone. “This scheme mirrors what I expect the President will try to do with Social Security. He wants to turn that program into a welfare program, too.”

Source: National Seniors Council

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666258 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 9:28 PM
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Claim: Bank robber Willie Sutton gave as his reason for robbing banks: "That's where the money is."

I don't understand the point of your post.

Roth IRAs are more flexible that TIRA. If laws change, a significant amount of the account can be withdrawn without penalties and taxes. If over 59 1/2, the entire amount can be withdrawn without penalty.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666264 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 9:47 PM
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If laws change, a significant amount of the account can be withdrawn without penalties and taxes. If over 59 1/2, the entire amount can be withdrawn without penalty.

So states the law NOW. If politicians change the law, they can also change this aspect of the law.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666265 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:01 PM
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vkg, here's a case in point:

A tax loophole contained in the Kemp-Roth Act (1981) was quickly exploited. For a time, wealthy people put millions of lump sum dollars into life insurance policies because of the (then and now) favorable tax treatment of life insurance policies. Per the Kemp-Roth Act, insureds subsequently took the gains tax-free. Uncle Sam recognized this and said, “Hey, where’s my cut?!”

The solution was to disallow big gobs of money to be put into life insurance policies. This was accomplished through the Tax Equity and Fiscal Responsibility Act (1982). TEFRA was created to generate revenue through closure of tax loopholes and introduction of tougher enforcement of tax rules. Uncle Sam, through Congressional action, said, “There…fixed that.”

Same thing here...Congress may rationalize that there's lots and lots of "revenue" to be gained from now-tax exempt ROTH IRAs. ("You didn't build that.") What can stop them from reconfiguring the tax laws so that they get what they think they need from a revenue rich target: your IRA?

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666266 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:02 PM
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So states the law NOW. If politicians change the law, they can also change this aspect of the law.


Yes, which is the reason that being able to withdraw funds without penalties or taxes gives flexibility to respond.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666271 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:07 PM
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So states the law NOW. If politicians change the law, they can also change this aspect of the law.

Yes, which is the reason that being able to withdraw funds without penalties or taxes gives flexibility to respond.

I don't know how I can be more clear. The law TODAY says you can withdraw funds without penalties or taxes. Congress can in the future change the law to make this no longer true.

I agree with JoshRandall: I don't trust Congress.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666278 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:17 PM
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Yes, which is the reason that being able to withdraw funds without penalties or taxes gives flexibility to respond.

I don't know how I can be more clear. The law TODAY says you can withdraw funds without penalties or taxes. Congress can in the future change the law to make this no longer true.

I agree with JoshRandall: I don't trust Congress.


Changes don't occur overnight. There is warning, and normally phase in time.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666284 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:24 PM
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Changes don't occur overnight. There is warning, and normally phase in time.

That was then. As you can see from the example I gave, Congress took back a tax advantage in record time.

When Congress is desperate, who knows what they'll do?

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Author: lowstudent Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666286 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:27 PM
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Changes don't occur overnight. There is warning, and normally phase in time.

That was then. As you can see from the example I gave, Congress took back a tax advantage in record time.

When Congress is desperate, who knows what they'll do?
______________________________

Heck we have under this administration ignored contract law. To think that stuff they can change legally is sacrosanct makes little sense.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666289 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:31 PM
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Heck we have under this administration ignored contract law. To think that stuff they can change legally is sacrosanct makes little sense.

There's no evidence that TEFRA was "phased in" or that "warning" was given.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666293 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:39 PM
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There's no evidence that TEFRA was "phased in" or that "warning" was given.


http://en.wikipedia.org/wiki/Tax_Equity_and_Fiscal_Responsib...

TEFRA was introduced November 13, 1981 and was sponsored by Representative Pete Stark of California. After much deliberation the final version was signed by President Ronald Reagan on September 3, 1982.


It was almost a year before introduction, and when it was passed.

The solution was to disallow big gobs of money to be put into life insurance policies.

It didn't disallow existing policies.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666297 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 10:58 PM
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There's no evidence that TEFRA was "phased in" or that "warning" was given.

Withdrawing a significant amount of funds out of a TIRA or 401K is going to trigger significant income taxes and possibility penalties. Panic is not the best option.

Don't put all your eggs in one basket, and handle changes that occur.

Roth IRA remains far more flexible than TIRA.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666301 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/13/2013 11:42 PM
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It was almost a year before introduction, and when [TEFRA] was passed.

Did you know about TEFRA before it was passed? Neither did I.

This appears to be a balanced summary of how government views Americans and their retirement accounts.

http://www.factcheck.org/2012/12/no-government-401k-takeover...

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666359 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:05 PM
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Did you know about TEFRA before it was passed? Neither did I.

It changed the laws regarding new contributions, but not existing accounts.

Is this posting to support your position that the government is attempting a takeover of retirement accounts? The conclusion is the opposite.

We asked if he had seen any other effort by the Obama administration to create a “national retirement system” that could lead to the government confiscating accounts, as the National Seniors Council claims. John responded: “I have seen no indication that this is an Obama administration goal.”

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666363 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:22 PM
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It changed the laws regarding new contributions, but not existing accounts.

You seem to think laws will always be that way, no matter desperate lawmakers become.

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Author: ascenzm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666367 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:31 PM
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Roth is a con game the government lays on chumps. They want you to be enticed by the "fact" that sometime in the future, you won't have to pay any taxes on your retirement withdrawals while they get their tax money from you TODAY. And they can change their mind, they must change their mind when it becomes obvious that all of those folks who chose Roth IRA's are not being patriotic enough and aren't paying their fair share of taxes, They will admit they made a mistake and will find a way to begin to phase it out. Sounds ridiculous? Ok, but the property I have in Florida is prime real estate. I wouldn't lie to you about that.

Josh


I earn too much to qualify for a deductable traditional IRA or a Roth IRA. The Roth 401K is the only way for me to get in on the Roth action for new contributions. Under the current Roth rules I like the idea of no RMD and no taxes due.

If the government does decide to tax the Roths, I'll be no worse off than if I'd gone ahead and put the money into a traditional non-deductable IRA (unless the crooks decide to also tax the basis which was already taxed in the year the wages were earned).

Mike

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666368 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:31 PM
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So states the law NOW. If politicians change the law, they can also change this aspect of the law.

Yes, which is the reason that being able to withdraw funds without penalties or taxes gives flexibility to respond.


A certain degree of anticipation may be needed - if you're in the situation of responding, it may already be too late.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666370 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:38 PM
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If the government does decide to tax the Roths, I'll be no worse off than if I'd gone ahead and put the money into a traditional non-deductable IRA (unless the crooks decide to also tax the basis which was already taxed in the year the wages were earned).

That's the problem...you don't know what the crooks are going to do in the future--especially when faced with the implosion of the country. Every day we see examples of librul obfuscation, justifying, flat out lying and creating new definitions for words.

Crooks can't be trusted. That's why they're crooks.

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Author: ascenzm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666371 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:41 PM
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“These people want the government to require that ultimately all Americans buy these government annuities instead of saving or investing on their own. The Government could then take these trillions of dollars and redistribute it through this new national retirement system.” [...]

“This effort ultimately is designed to grab the retirement nest eggs of America’s senior citizens. This new government annuity scheme, even if it is at first optional, will turn into a giant effort to redistribute the wealth of America’s older citizens,” explains Crone. “This scheme mirrors what I expect the President will try to do with Social Security. He wants to turn that program into a welfare program, too.”

CC


Indeed. I believe that this seizure will happen in my lifetime. Galeno, a former poster here, never cared for the idea of retirement accounts like IRAs/401Ks because of the lack of flexibility. I stopped IRA contributions two years ago and reduced my 401K (now Roth 401K) contributions down to 6% of gross salary so I can capture the maximum 3% employee match. Unless this country is returned to a Constitutional Republic I would advise any young person to not place all their savings into retirement accounts like 401Ks/IRAs. Build up a substantial non-retirement savings that you can access quickly.

Mike, whose portfolio is only ~ 45% retirement accounts

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Author: JoshRandall Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666374 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:57 PM
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Agreed, not everyone's situation is the same. For me, I maximize tax avoidance now and worry about later later. Our income is reduced by roughly $43000 due to tax deferred plans. That's a good amount to put away and it also allows me to pay much less in taxes today than if I chose non-deferral accounts. As I said, for me, a bird in the hand.....

To each their own. But I don't trust Congress, especially the libtards who eventually will have to find more ways to pay for the free stuff they give to more and more Americans. And they have to get it from those of us who invested wisely, didn't spend our money on things we didn't need, and who did it the right way. Given the political trend unfolding before our eyes and the changing demographics and the legitimization of government largesse for taking care of everyone's needs from cradle to grave, I think any tax break that you can get your hands on now is a wise move, and accepting any promise of a future tax benefit from a politican is not wise in any shape, manner or form.

The piper must be paid. I want to save, invest, and keep what I've earned and not rely on empty promises from politicians whose only function in todays' world, the only thing they think about when they wake up every day to do their job, is how can we find better ways to pick our pockets.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666375 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 12:59 PM
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You seem to think laws will always be that way, no matter desperate lawmakers become.

Tax laws will always change. 401Ks for the average employee were an accident, they weren't planned.

Panic withdrawls from 401Ks and IRAs are not an answer.

Neither is making 401Ks and IRAs your only investments an answer.

I predict that limits will be placed on Roth IRAs. Either through limiting rollovers or eliminating tax free income over a specified balance.

Along with the temptation to spend rollover amounts when changing jobs, the depression has forced many to use their retirement accounts for living expenses. 401Ks/IRAs haven't worked for many. Many companies have started auto-enrollment for 401Ks. Forcing employees to opt out rather than opt-in increases participation.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666377 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 1:15 PM
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“These people want the government to require that ultimately all Americans buy these government annuities instead of saving or investing on their own. The Government could then take these trillions of dollars and redistribute it through this new national retirement system.” [...]

“This effort ultimately is designed to grab the retirement nest eggs of America’s senior citizens. This new government annuity scheme, even if it is at first optional, will turn into a giant effort to redistribute the wealth of America’s older citizens,” explains Crone. “This scheme mirrors what I expect the President will try to do with Social Security. He wants to turn that program into a welfare program, too.”


I think it's only prudent not to place 100% trust in government action. Look where our government's actions have brought us--up to our eyeballs in debt.

However, a deeper analysis of the hearings on the Hill about what to do about Americans' poor retirement planning skills is less alarming--at least at this time.

http://www.factcheck.org/2012/12/no-government-401k-takeover...

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666380 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 1:20 PM
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vkg wrote: I predict that limits will be placed on Roth IRAs. Either through limiting rollovers or eliminating tax free income over a specified balance.

You see how bass-akwards this is? The hearings on the Hill are to discuss why/how Americans don't plan sufficiently for retirement. Then when Americans do all they can to maximize the plans that are currently in place to address this very problem, you're saying that limits will probabnly be placed on IRAs.

Don't trust politicians. Period. Desperados will do anything to cover their tracks. It's a short step to "vkg, pay Donna, who didn't plan well. Tom, pay Steve, who didn't plan well. CC, pay FMNH (egads!) who didn't plan well. Etc."

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666388 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 1:43 PM
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You see how bass-akwards this is? The hearings on the Hill are to discuss why/how Americans don't plan sufficiently for retirement.

Agreed, punish the successful because most can't plan.

It is still my prediction.

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Author: CCinOC Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666391 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 1:52 PM
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I think you're being naive. Governments are powerful. They consist of people of limited character who often get drunk on power. In the midst of unprecedented trials and tribulations, some elected representatives will invoke their power in unimaginable ways.

Instead of doing the responsible thing and using social constructs to encourage people to plan properly, here we are, with so few people ready for retirement it's scary. And still you expect our elected officials to behave responsibly when all hell breaks loose?

I sure don't. I expect them to behave twice as bad the boobs they're currently demonstrating themselves to be.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666394 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 1:59 PM
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You see how bass-akwards this is? The hearings on the Hill are to discuss why/how Americans don't plan sufficiently for retirement.

At any age, having all of your investments in retirement accounts is not good.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 666397 of 741285
Subject: Re: 401K to Roth 401K conversions Date: 1/14/2013 2:04 PM
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And still you expect our elected officials to behave responsibly when all hell breaks loose?

They will be looking for all assets, not just retirement accounts.

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