UnThreaded | Threaded | Whole Thread (48) | Ignore Thread Prev | Next
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75776  
Subject: Re: Poll: Did your 401k recover from the 2008 de Date: 12/27/2010 6:40 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
madbrain: "I didn't separate out the earnings on 2009 and 2010 personal and matching contributions. If I made zero additional contributions in those two years, the return would have been lower, and I wouldn't be as close to recovery. I can estimate that by assuming the same rate of return and deducting the contributions. Something to add to my spreasheet later on."

Ok. I am not tyring to make your life more complicated.

"In the later part of 2010, I made a lot of contributions to money market account that have basically no return. This is the case for a good chunk of the after-tax 401k contributions. That is partly because I intend to roll them over to a Roth IRA next year, and I want to minimize the taxes at the time I do the rollover. It's actually better to have low/no earnings on them. [I want to come back to these two statements] My employer lets me do 1 or 2 annual in service withdrawals for the after-tax contributions. The other reason is because I was very invested nearly 100% in equities and it's not a bad thing to have a few % of my assets less at risk."

The latter sentences suggest that you thought about the issue and have good reasons for doing your calculations that way you did; those reasons were not readily apparent in the initial posts and looked like you might have a "Beardstown Ladies" problem.

That is partly because I intend to roll them over to a Roth IRA next year, and I want to minimize the taxes at the time I do the rollover. It's actually better to have low/no earnings on them."

Why not invest in very agressive stocks and if they decline in value then you have even fewer dollars of tax to pay?

IOW, I do not believ that argment as framed has much merit. In the context where the total dollars available outside the rollover amount to pay the taxes on the rollover amount is limited, I can see wanting to keep the rollover amount limited, but that is because of the limited funds available outside the rollover amount to pay taxes and wanting to avoid using any of the rollover funds to pay taxes because of the penalty associated therewith and not because it is good on an absolute basis to have "low/no earnings".

The goal for most rational people in the USA is not to pay the least amount of taxes, but to have the most dollars available after taxes are paid.

If not, I have a fool-proof method for paying no taxes and an offer (that no one has ever accepted to date) to pay less in taxes.

Regards, JAFO
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (48) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Clorox Isn't Cleaning Up
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement