manamiold wrote:
Blah Blah Blah Blah wrote:How do you know he didn't put his money into his personal IRA? Personal IRAs are a better choice than bad 401(k)s.
He's not eligble to put his money into a personal IRA - his company offers a 401K therefore, if he wants to put money into a tax deferred retirement account, it MUST be in that 401K. Unless, of course, he likes to be penalized and taxed on that money.
He could open a Roth
iifii wrote:
Good luck there wrote:If the guy's issue were the vesting schedule, he would have said that, not the completely clueless "investing is kind of a gamble" comment.
No, this is what you are clueless about. Saying it's kind of a gamble is not clueless at all. Some people have a different opinion on risks and rewards than you. Like I said before, he may have other plans for his 5% that are more rewarding or let riskier than investing in that work plan.
NO. He is turning down 5% of his salary in free money. He is not going to get a better deal than that anywhere. Risk has nothing to do with it, he could have it in cash if he wanted, so his 'kind of a gamble' comment IS clueless.
I haven't been in the position to put money into a 401k until recently. I just joined a company that offers a matching 401k, but I know that I'm not going to stay for the required three years that it takes to vest, so I'm not going to put money in it.
I've been putting money in a Roth IRA. I was under the impression that I won't be taxed on this in the future. That seems good to me. So if I put in 5,000 a year for ten years = 50k. Let's say it doubles by the time I retire. Then I can take it out tax free when I'm older. If I had instead put that money into a 401k, that would be taxed. I'm expecting soon to work at a job that will have a pension, so my income won't be that low when I retire. So my theoretical 401k might be taxed a bunch.
He's probably investing in real estate making 3 or 4 times What he could in the market and doesn't want that money tied up. He'll probably retire at 40 while you are still banging your head against your cubicle wall waiting until you turn old so you can get your precious 5% match without incurring big penalties.
Smart. Hopefully he's investing in gold (sure fire investment) instead of the stock market roller coaster.
igiveup wrote:
I haven't been in the position to put money into a 401k until recently. I just joined a company that offers a matching 401k, but I know that I'm not going to stay for the required three years that it takes to vest, so I'm not going to put money in it.
I've been putting money in a Roth IRA. I was under the impression that I won't be taxed on this in the future. That seems good to me. So if I put in 5,000 a year for ten years = 50k. Let's say it doubles by the time I retire. Then I can take it out tax free when I'm older. If I had instead put that money into a 401k, that would be taxed. I'm expecting soon to work at a job that will have a pension, so my income won't be that low when I retire. So my theoretical 401k might be taxed a bunch.
It's a risk either way, my man. You're paying taxes on money today that you don't have to. Personally, I'll avoid paying any tax I can today because I don't know what the future will hold. What if the government in the future decides to institute a VAT and de-emphasizes revenue from the income tax? Then you're supposed tax-free withdrawals from your Roth effectively become taxed, don't think it can't or won't happen. There will almost certainly never be outright 'confiscation' of wealth in this country but there is more than one way to skin a cat. Something to think about.
Good luck there wrote:
If the guy's issue were the vesting schedule, he would have said that, not the completely clueless "investing is kind of a gamble" comment.
Per other posts, people are pretty clueless about their retirement stuff. We just don't know.
Per another post, OP's beloved 401k funds can be quite costly, some of them surprisingly so in my company's program. Plenty of money to be made with the employee not particularly aware of the fund costs.
I'm very interested to know why this person's not very smart personal decision matters so much.