Not everyone gets to choose where their IRA is invested. I was with a Fortune 100 company where our returns were half of what guru Dave Ramsey said we should be getting. We had choices within the plan but not OUR choices; just the choices the plan managers said we could have. Fortunately, retired now.Originally Posted by winelover
Sometimes life taps you on the shoulder and reminds you it's a one way street. Jim Morris
That would be about the same time that the lead becomes more valuable than the gold
New development regarding 401K’s, withdrawal penalties waived:
https://fortune.com/2020/03/27/401k-...ZgPTV4EocbZkTQ
GONRA retired in 2001. "Good Olde Vested Pension/401k" days. (Lucked out!!!)
Then, purchased 100+ acres to shoot Class 3 stuff on. Lateron, SHALE NATURAL GAS "DISCOVERED" on the land! (Lucked out again!)
Initially, "Natural Gas Royalty/Mailbox $$$" paid off my 100+ acres purchase $$$ + much more. (BUT, can't luck out forever! Fizzling out these days..... Oh Well.)
Like I said "The world is run by weasels."
How many people will see "withdrawal penalties waived" and think tax free! After reading about this I have mixed feelings about it. If used right it could be a great help to alot of people . But the 100,000.00 limit to me sounds like a tax trap. This is not free money, it is a lone that you have to pay back to your self over three years. If not payed back it will be considered income and taxed at your highest tax bracket.
If you are off work for a few months and know that at some point you will be going back to work and pull out 10,000.00 to cover bills you will have to have about 277.00 taken out of your pay each month for 36 months. If both you and a spouse are working this may be a good way to deal with a problem. Not free or cheap but could be done.
But some one is going to think this is tax free and pull the whole 100,000.00 out if thy even have that much in their 401 with out thinking that to pay it back in three years it will take about 2777.00 a month for 36 months. And this is on top of what you need to live on.
I read some were that there is some thing like 30 TRLLION $'s sitting in retirement savings that will not be taxed for a long time and or taxed over a long time. The thing is thy would like to use some of that tax money now. So thy come up with a plan to make it easer for you to get to your retirement saving by waiveing the 10% penalties so you can get the money you need , like I said it could help alot of people who plan it out and know thy will have it payed off in time.
But you can bet somewere thy have it figured out how many will take out more than thy can pay back in time and end up getting taxed on it on top of their other income putting it into a higer tax rate. This is the tax trap. Thy plan to pay for this bat bug thing by setting the people who are the most desperate and or most gullible to fail. Then every one who uses it the right way or who are just watching will blame the ones who get screwed the most for not knowing what thy are doing.
All so , as there is no tax for three years, who ever is in the White House will get the credit for all the new tax income.
On top of the whole thing thy are going to "let" you do it after you have just lost 30% of your savings so you have less left to grow when things start going up knocking the snot our of your retirement plans meaning more people having to work longer and and spending less time collecting benifits.
Like I said "The world is run by weasels."
Well this turned in to a rant , sorry about that. I guess I will take off my foil hat and go to bed.
Last edited by facetious; 04-02-2020 at 02:10 PM.
We go through life trying to make the best decisions we can based on the best infomation we can find, that turns out to be wrong.
Hey, facetious, I agree with you, and will add that people still believe the money they tuck away in their 401K’s is actually theirs...it isn’t! Most people never have control of that account even in retirement. You get what the gov’t tells you you can have. They force you to make taxable withdrawals at age 70.
Think about the common employer match: they put in half what you do, up to a certain percentage (with my company, it’s 8%). When the market crashes 50%, which half is left in your 401K, theirs or yours?
Either way, the employer match is really just insurance against market losses. What riles me is the employer always claims their contributions are part of your compensation, which justifies a lower salary. Genius!
Anyway, back to the 401k penalty-free loans. I’m going to take enough out to pay off my mortgage, we’ve already saved 2/3rds of the balance which is in the five-figure range. A 3-year interest-free loan on the borrowed amount is a no-brainer for us, as we want to be mortgage-free ASAP considering this decade is shaping up to be one for the record books, economically, for the U.S.
Deflation, followed by inflation, followed by hyperinflation and the collapse of the U.S. dollar.
R/Griff
FWIW, I recently received a letter from one of my banks stating the new start RMD is now 72 for those not yet 70 as of January 2019.
Winelover
If it isn’t your money then how are you taking it out of the account and using it to pay down your mortgage?Hey, facetious, I agree with you, and will add that people still believe the money they tuck away in their 401K’s is actually theirs...it isn’t! Most people never have control of that account even in retirement. You get what the gov’t tells you you can have. They force you to make taxable withdrawals at age 70.
Think about the common employer match: they put in half what you do, up to a certain percentage (with my company, it’s 8%). When the market crashes 50%, which half is left in your 401K, theirs or yours?
Either way, the employer match is really just insurance against market losses. What riles me is the employer always claims their contributions are part of your compensation, which justifies a lower salary. Genius!
Anyway, back to the 401k penalty-free loans. I’m going to take enough out to pay off my mortgage, we’ve already saved 2/3rds of the balance which is in the five-figure range. A 3-year interest-free loan on the borrowed amount is a no-brainer for us, as we want to be mortgage-free ASAP considering this decade is shaping up to be one for the record books, economically, for the U.S.
Deflation, followed by inflation, followed by hyperinflation and the collapse of the U.S. dollar.
R/Griff
East Tennessee
D/Griff: There is nothing wrong with what you are doing. Going in to this with eyes wide open and a plan is what these kind of financial tools are for. The same with 401-k's, IRA's and all the other saving plans.
The thing that gets me is how many people I have known that are in savings plans that don't want to take the time to learn how thy work. Thy don't want to learn about investing or how to manage it. And that are just the ones that got in to the 401-k much less a ROTH on the side. When I retired last year out of the 34 guys left there was 15 guys at most left that had a 401. The rest seem to think evey thing is a trick to take your money and in away it is but you still have to look at the bottom line and concentrate on your part. Some can not grasp the consept of deferred compensation with deffered compond growth or that when you take it out that it is the same as getting a pay check and have to pay tax on it. Try to explane a systematic withdrawal plan and why you don't just take it all a once, ( I mean just think of all the stuff you could do with all that money!) I stopped trying to talk about this kind of stuff with people years ago , most of the time their jaw drops and thy just stair at you like you just lobotomized them.
https://fortune.com/2020/04/01/what-...-stimulus-faq/
https://mail.google.com/mail/u/0/?ta...MCGJVJQNjNcFdM
Last edited by facetious; 04-02-2020 at 03:52 PM. Reason: adding some fun reading
We go through life trying to make the best decisions we can based on the best infomation we can find, that turns out to be wrong.
Exactly right, snow...it belongs to them, I’m taking advantage of the relaxed rules and using their money interest-free for a defined period to pay off an asset that we plan to turn into a cash-positive rental within five years, which we will own outright. The government itself takes advantage of historically low interest rates to refinance our national debt; more Americans should take a page out of their playbook and do the same.
I don’t believe there will be much of a Social Security safety net left by the end of this decade, so I am attempting to replace it with other income. You have to plan ahead, and I don’t plan to be working until I die, which is exactly what most American workers are now facing thanks to a profligate and idiotic Federal Reserve, which appears intent on becoming a commercial bank judging by the assets they’re purchasing and adding to their balance sheet, which will swell to at least 10 trillion dollars by the end of their so-called stimulus plan. That currency inflation will be felt in consumer prices sooner rather than later. The dollar’s purchasing power will slide and the value of everyone’s PENSION PLANS will go along for the ride.
R/Griff
Facetious: the pooch got screwed when American companies transitioned their pension systems from “defined benefit” plans to “defined contribution” plans.
Now, only GOVERNMENT employees have defined benefit plans, financed by socializing the costs across all taxpayers, themselves included (a.k.a. socialism).
The rest of us, well, we have shouldered more of the cost of their benefits as well as our own, especially in health insurance plans, over the last 4 decades. And here we are, private households largely insolvent because their plan A was social security and other government transfer (a.k.a. welfare) programs.
Apparently, we aren’t taxed enough, at least that is what government bureaucrats will claim as the bankruptcies start piling up this coming decade. Stand by for social upheaval when a critical mass of Americans finally wake up and face reality...we are living in a corrupt, bankrupt police state.
R/Griff
Pensions are featured prominently in this very informative video:
https://youtu.be/E7r7nTVmdLc
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