Thank you for watching! If you enjoyed this video, you should watch - The TRUTH About Your 401k That No One Tells You: ua-cam.com/video/4YdlcpxvF6c/v-deo.html
Minority Mindset can you make a video on steps you should take after filing chapter 7 bankruptcy and things you can do to build your credit .. Thanks Minority Mindset ..
Another thing to consider, which I’ve rarely heard mentioned: tax deductions and credits. I have 5 kids under age 18 right now. That’s 5 large tax breaks I have right now, that I won’t have when I retire. So you better believe I’m doing Roth 401k contributions right now. My taxes are depressed right now because of those deductions and credits, which lessens the tax burden on my Roth contributions.
Jaspreet . Just want you to know you are my favorite investment/ wealth planning badass UA-cam channel. Every single video is amazing. You explain everything perfectly and make the topics interesting and easy to follow. Thank you!!!!
I am employed by a major bank in the U.S. and they offer both Traditional and Roth 401k. It's almost 20 years and I'm so happy I chose Roth. Great video! Ty
@@theGrayArea2 im 17 1/2, I just dont see the point in making an account where my father could drain it at any second if he wanted to, and have to jump through hoops in 6 months to get him off it. And I want to invest in mutual funds and index funds, not an IRA
I just retired, but I am uncertain that my 401k and IRA will ensure a stable future. I have $900k set aside, I am seeking an approach that matches my risk tolerance and financial objectives. Please I need advice, should I invest in stocks or real estate ?
You should explore rosters of dividend aristocrats and select six to ten from the compilation. These esteemed companies boast of a remarkable history of consistently paying dividends for over 25 years. Furthermore, it is discerning to engage a financial advisor to help in crafting a meticulously structured portfolio.
I quite agree. Which is why I prefer to entrust my day to day investment decision to a financial advisor. With their specialized knowledge, it is highly unlikely for them to underperform. Their expertise is focused on harnessing the asymmetrical potential of risk while employing measures to safeguard against unfavorable outcomes. I have been collaboting with a financial coach for the past two years netting over $800k profit in all my portfolio holdings.
The adviser I am working with is Jason Herman Pierce, he is a risk manager, financial advisor and a professional trader. You can choose to use someone else, but his strategy works for me hence my results. You can google him to get all the necessary information.
Another angle to consider: You gotta know your bracket and for moderate income earners, there's very high value in the pre-tax savings since you are stretching the amount you earn at the 12% bracket. You can get up close to 70k earned income before you run out of easy runway. How? Maximum contribution to the 401k, HSA pretax investing and the 12k standard deduction. After that, you'll need taxable investment money to take advantage of other possible options such as charitable donations, tax loss harvesting, etc.
Good Morning Jaspreet! I think having both are good especially if you have an employer that matches. Never leave money on the table is a valuable lesson that I have been taught. I think I could do better with my Roth. I need to max it out. I am almost there, but I need to get there. Almost is not good enough!
Having both is only good because the employer match is tax-deferred, otherwise Roth all the way. Besides the fact that growth is tax-free, a Roth IRA has no RMDs. People who have really saved for retirement in a traditional can get kicked up into high tax brackets with RMDs even if they don't need the money. That screws up your medicare premiums and everything else.
@@RATM1971 agree. There's RMDs if peeps leave their money in a company 401k/457b plan Roth after they retire...if you get your money out of employer plan and rollover outside you must liquidate assets to rollover 401k Roth funds to an individual Roth...also must already have an established individual Roth account opened so can rollover into and best if done as early as possible because have to hold funds in Roth IRA for 5 years before able to withdraw. funds. Bit of strategic planning needed but then can rollover and reinvest!
What happens to the traditional 401k investment when you switch to a roth? Does the money get taxed and then transfers or does it all transfer in not taxed? Or does it not transfer at all?
Question: I haven't heard it mentioned in videos like this one, nor read it in the comments - Is a Roth 401k an option the employer gives folks instead of a traditional 401k, or is the method to find an independent investment firm that offers a 401k, then just put one's money in it after paying the taxes from the employer's paycheck?
Traditional IRA is really for people who start investing late and/or don’t expect much growth in the IRA. If you’re young and invest long term, go with Roth.
Not every is able to identify lucrative positions to earn from, Investing is a marathon. My best piece of investing advice is to talk with an investing professional. Get someone on your team who’s well enlighten on the global market and it’s conditions at all times.
Absolutely David, this is exactly why I opted for an account manager years ago. Adam Slater guides my investment decisions, he makes research on stocks that will generate massive gains, and does the heavy lifting for me, covering every facet of investing including stocks and crypto. His investing decisions has earned me profits in hundreds of thousands.
@@blood_sausage9620 when you turn 70 1/2 you have to start taking money out each year from your 401k account, whether you have traditional 401k or a roth-401k doesn't matter. The amount required to take out is *not* a set numerical value for every person (e.g $2,000 a year). I'd be lying if i said i remember off the top of my head how your required amount you need to take out once you reach said age is calculated(i used to know it off the top of my head) Roth-IRA on the other hand, you are not required to take money out at any age. Often people (including myself in the past) confuse this peculiarity of the roth-ira as being a characteristic of all roth accounts which isn't the case unfortunately. That said if i missed any or further clarification let me know💪
@@blood_sausage9620 my pleasure, and yes I always hope I'm lucky enough to make it there but I'm dubious of that. And the language can be the hardest part of learning something knew. The concepts of a new subject of acquisition typically is 100% easier after learning the language.
My husband uses a Roth 401k at work, and get a certain match. ANY time we contact the brokerage firm about ANYTHING, there is high pressure to switch to a traditional 401k, and to move out of our chosen funds into a target age fund. Nope, those aren't for us, we're happy with what we've got! Great info as always.
@@Dgon200 A targeted age fund would make more $$ for the firm in the form of fees, but I'm not sure why he's so convinced traditional is the way to go.
Always remember if you change jobs or retire you can roll over that account. At least then you can find a more competent advisor to manage it or just do it yourself.
@Minority Mindset I started watching this because I wondered if I could use part of my 401k for stock investments. When I saw the option, I started clicking through and it prompted me to convert my traditional 401k to a Roth 401k. Now I know the difference, I would actually prefer a Roth 401k but am unsure if my employer with continue to match my 4%. I guess I have to call l HR on Monday and get some questions answered. Oh, and you have a new sub here. Great work.
I have both also Roth 401k and 401k from Amazon. Seriously I've been googling trying to find out the difference a few months ago and by chance today I just came up on your video on UA-cam and by chance I say because wasn't looking for anything on the subject lol. I want to say thank you because I finally got my answer you made easy enough for me.
Traditional 403b. Is a way to think of this as just income in retirement. if you make or if you withdraw 100K a year that is what you pay taxes on. It is a question of lifestyle in retirement and having enough to live off earnings without touching the actual contributions portion once you stop working.
It's not only that though... say I only need $40k a year in retirement, but I've done great saving in my 403b and have a sizeable amount. I could hit 72 and be forced (via RMD) to withdraw $140k when I only need $40k. What will that do to my taxes? To my medicare premiums?
Sadly, mine was a pre-tax deduction so when I pulled out money, I had to pay tax on the entire amount. 😢 Rolled it over into an IRA before taking a distribution. I pulled out a large sum to purchase a rental property. Now I have to pay tax on the money I pulled out this year to pay the tax for what I took out last year. Live and learn. I should have bought the property inside of a self directed IRA.
Da Plan 1. 5 rental properties owned, 1 currently. Move headache to property mgmt when i retire. 2. 10% traditional ira 3. Max out Roth for wife and I 4. I'm in Iowa, so farmland in a location that will be in high demand 20-30 yrs down the road. 5. Create a trust for assets to pass along benefits to future generations.
We have a lot of old 401K standard $ but, now we are putting away all we can with ROTH! I think we are going to be lucky to have enough! We bought some Rental Houses a few years ago so, we are hopeful that will help!
@@TheFirstRealChewy They are doing better than I ever imagined they would do! One thing I’m lucky in> Not: Cards, Games, Sports, etc. but, I’m happy with this option!
Contribute to a traditional/401k during your highest earning years (for lowering to tax bracket, but contribute to Roth when you have lower income (like when you are in school, on maternity, etc). Also then convert everything to a Self-Directed IRA
That used to be my thought, until I started calculating RMDs and medicare costs. There is a reason many retirees convert all of their traditional IRAs/401ks to Roth and pay the taxes involved out of pocket upon retiring. If you have the option to do the Roth, do it sooner rather than later.
Sounds like it depends on the current tax rate. If you are taxed high at the moment then traditional is best. If next year you are taxed low, then Roth is best at that time. Reassess your situation when milestones appear which affect your tax rate.
Until a few years ago I was contributing to a 401K for several reasons, the main one being I didn't know about investing so never really touched the accounts until then. Sure wasted those valuable years spending every dollar on crap and contributing almost nothing to retirement (wasn't even receiving the full match).😮💨 I'm a different person today. I'm now contributing 100% to a Roth 401K. I'll switch back to contributing to a 401K closer to retirement.
I did traditional 401k when I was younger and single. Now that I have kids and TCJA is in effect I put it all in Roth. If rates go back up and/or when the kids age out of dependency I will switch back...
MM you mentioned that while we are not taxed on the amount that our Roth 401k earns, we are taxed on the amount our employers contributed over time. My question is how does the IRS keep track of that amount over the years so they can tax us correctly and how do we know that the IRS is taxing us correctly? I've had several different employers 401k Roths and some employers have changed the amount they match from year to year. Great video. It made me consider things that I dont think I've considered before.
Your 401(k) account should show two balances, one for your Roth 401(k) balance and the other your traditional 401(k) balance. The latter is taxable upon distribution.
Yes taxes if you convert from a IRA but no taxes on a regular investment account to a Roth assuming the taxes were paid. I thought the question was about fees though.
Seems like less hassles with regular 401k to get employer matching then invest in a regular Roth IRA with the brokerage company of your choice. Don't think most people will be in the high tax rate when it is time to distributions.
Compare total taxes paid instead of tax brackets. However, most should be fine with a 401K. Afterall, it's been working fine for many people for awhile now.
It's interesting to compare American Tax-Advantaged accounts with Canadian ones. It seems like Roth accounts are like our TFSA and traditional accounts are like our RRSP. Always love listening to your videos!
I invest up to the 4% match in a Roth 403(b) and the remaining retirement contributions go into a Roth IRA. I invest more in my HSA though. I love that thing.
I have both an IRA and Roth IRA. The IRA is a transferred 401K and I don't plan on adding any money to it and focusing on growing my Roth IRA. I have a 401K that I'm contributing to thru my job and if I leave that going into my IRA. I'm also investing in index funds in both my retirement accounts.
Just opened two traditional IRA and two Roth IRAs for my wife and I. I was pleasantly surprised to see that I could still contribute for last year since the tax filing date ended July15. I immidiately maxed out all our IRAs for a total of $24K unvested. Plan to max out the 2021 contribution as soon as January comes around. I hope I'm not making a big mistake.
$24k for both years and both of you is a good plan however half t-IRA and half Roth IRA is less than ideal. Do you have access to 401(k)s and are you in a relatively high or low tax bracket?
@@alrocky I'm in a lower tax bracket than I will be when I retire. I also expect to be in a much higher tax bracket in six years. I have a 401K type account currently in addition to the IRA i just opened.
@@AB-tu3mz Since you are in a relatively low tax bracket now and expect to be in a much higher tax bracket in six years you should both have Roth IRAs now for the next five years. If your income and budget allows you should contribute as much as you can into your 401(k) [$19,500[ and her 401(k) [$19,500]. You could go Roth 401(k) but it's I'd lean toward maxing the 401(k). If you could contribute $19,500 Roth 401(k) that would be great. You want to favor traditional 401(k) when at your highest tax bracket.
@@alrocky I'm no sure who you are or what you do, but that's great advice. I've been doing about 50% Roth 401K and 50% traditional 401K. Except for this year. I sold a house so I expect to be a higher tax bracket this year. For that reason, I am maxing out my 401K and opened traditional IRAs to put some more money in there. Thanks.
The important thing is to get into at least one or the other. As statistics show, people have a very difficult time saving money. A 401k requires very little effort...the money is invested without you lifting a finger, and you can't get to it very easily, meaning it will stay in your account, plus there is generally a match involved. A Roth requires you to write a check or set up direct payments, allows you access to the money, making it very tempting and easy to pull it out, defeating and eroding your retirement goals. We know how life gets in the way of our plans, many people intend to invest but somehow they never get around to it....a 401k is funded before you get your check. Taxes can change on the Roth also. The gov. is licking it's chops to tax the earnings, and don't think they wont pass a law to get to it. All the "free" stuff that is so casually tossed about, is not free to those who have to fund it. So you need to do something. The thing is you can do both. The more you save, the better off you will be. I have never complained about making money.
I cashed out the little I had on my 401k bought rental property and due to having more deductions paid very little to the fuzz. Also the property is worth a lot more now then the stocks ever would have been worth with limited choices in a company 401k.
i dont usually comment. your videos are awesome and it is crazy and a sign. I just stopped my pre-tax contributions after it hit me that I rather put in my taxed money. yes my take home will be less but I will adjust.
I set up a Roth 401k that invests my money in an index fund to keep expenses low. Now I'd like to know what to do, in the future, to reduce the taxes on the match from my job.
@@r4ym1n13 I just figured it out. The employer match can be rolled over into a traditional IRA then I would be able to do a tax-free direct transfer into my HSA.
Contribute 10000 + match 100000 over a 25 year career would be 400k only if you got a 5% return which is a rather low estimate there. The best advantage of the Roth over traditional is flexibility in retirement. If someone puts away 10K per year for 35 years and earns 7% which is a good estimate based upon the market's trend since inception you would end up with 1.5 M at the 35 year mark. 350000 of that money is the money you contributed and the other 1.15M is growth. Traditional saves on the highest tax bracket you are in for the 350000 which at the highest in the last 2 decades has been just under 40%. So you saved roughly 140K over 35 years assuming you are in the highest tax bracket, much less if you make say 50-100K. All of that 1.15M growth is taxable and if you decide to take 100K in a lump sum for some reason, you pay taxes on it. If you just try to live off of returns at say 4%, you'd recieve 60000 per year without touching the principle and any additional growth that is reinvested will also carry income tax burden when tapped. All that growth would be taxed. If you did Roth, you could take out any lump sum you wanted and not pay a cent of income tax. Also all returns you live off of for the rest of time is not taxed. If you die and it passes to a family member such as a child, there is no income tax burden. I'd say in this scenario the advantages of Roth in retirement are worth the 140K investment over 35 years.
I question your assumptions on the principal investment in the Roth 401k in this scenario. A 10% discount (100k to 90k) seems way too optimistic. Income Tax rates are closer to 20-33%
His example is valid but since he uses 10% tax bracket it favors Roth contribution. One "flaw" here is that the Roth contribution is only $1,350 (traditional was $1,500) so employee didn't take full advantage of employer match.
The example @ 8:54 makes it look like you can withdrawal your half first, tax free, and then later take out your employer’s contribution and pay the tax on that half then. I don’t think this is the case. When you take any withdrawal, half (in this case) of the money is subject to whatever the future rates are. So if you take out a total of $60k, $30k (your employers half) will be subject to taxation at that time. And this will be true for every withdrawal going forward.
@ 8:45 " *Roth* 401(k) ... $40k less less ... traditional 401(k)" This video has several errors: The top row should read $90,000 *Roth* 401(k) but he negligently omits *Roth* from chart. Another video mistake: @ 8:40 "total worth of your 401(k) is $360k now in your *_Roth_* 401(k)" He should have said $180k in Roth 401(k) plus $180k in traditional 401(k).
@@alrocky Yeah, I see it now. It would have been much clearer if he had written it out like you said. He infers it’s a Roth when speaking, but doesn’t have it written on the chart.
so i think you missed out on something here. The contribution from the match is taxed in an Roth IRA once you withdraw but the gains on the match are not taxed.
That's not correct. Your contributions are after-tax and the growth is tax-free. Your employer's match is tax-deferred as is the growth on that portion of the contribution.
I have a quick question that might not be related to this video: Is it better to invest in a global fund or one that follows the S&P 500? The US fund has higher highs, and higher lows compared to the global fund. Global one costs 0.11%, and the US one costs 0.21%. I don't live in the USA, so this is what I can choose from. Which one would be better to invest in? The way I see it is that it's the US stocks that weigh the most in the global fund. Some say US stocks are overvalued and that's why a global fund is better. Thoughts?
I have a Roth IRA already that I've funded the last couple years.. I will be starting a new career and will choose a Roth 401k with 3% company match because my income will be low to start.
@Jaspreet when you show 401K money they get compound interest rate over years and years. You missed to point out, let's say I pay normal tax today at 30%, and after compounding in 401K, the government increases the tax to 40%, doesn't the 401k benefits here?
I think what people fail to tell others it wether to do Traditional or Roth it’s very situational. For instances if you have no Tax dedications and or very little considering using Traditional may be better. Another one is if your in a high income tax state and you know your going to go to a no state income tax state that has a lower cost of living. Remember we get taxed on what we take out and generally you don’t take all your money out at once. That being said Roth accounts are amazing and it’s wise to put some money into a Roth account. I for one believe that you should think of tax diversification when you retire. Ideally if you can have a traditional, Roth, and an HSA account to pull from your covered in multiple ways. But like this has been said multiple times on this channel. Your mindset and lifestyle should be setting you up for success before hand. If you are building assets in the background and utilizing Retirment tools available for you. That way of thinking is what will set you up for a good life.
Hi Jaspreet, I have been watching your videos a few weeks ago it is very good information from you, my question is if there are some states where someone can move before retirement to avoid paying taxes on the traditional 401k?
I like this intro, keep this intro in all your videos. I think it’s very cool to have, but stick w the smash like button sound & the emphasized link “below”
Informative video!The ROTH 401K is a super awesome opportunity for those people who cannot otherwise contribute to a ROTH IRA because they earn to much money according to IRS rules. These people are ALLOWED to contribute to the ROTH 401K nearly $20,000 every year and then their distributions are TAX FREE! Awesome opportunity that EVERYBODY should be taking advantage of. Great video! 😎
I'm not planning on rolling my 401k into my Ira. I'm planning on retiring before 59 and you have the option of making withdrawals from a 401k at 55 if you retire then.
@@Andrew-it7fb I hope that your 401k administrator lets you withdraw your funds in increments at 55. Many require a lump sum withdrawal, which will hit you with high taxes.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing below the $100k mark and in the first 2 months, my portfolio was reading $234,800. Crazy right!, I decided to reinvest a huge percentage of my profit and it got more interesting.! For over a year we have been working together making consistent profit just bought my second home at the beginning of summer.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Bestjudy001 However, if you do not have access to a professional like Suzanne Gladys Xander, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
Many people will have lower expenses, and lower income, once retired. Lower income will equal a lower tax bracket, making a traditional 401K A better option.
@@charlesbickel4295 you don’t need as much income in retirement as you needed when you were raising a family, building your retirement, saving for college education for kids, and so forth. For most people, retirement income is less than what they earned during their peak earning years. This fact should put most people in a lower tax bracket during retirement then they were in during their peak income years, this making a traditional 401(k) plan more attractive.
You might take a look at the many RMD calculators out there and plug in your numbers for traditional. Also look at the Medicare premium calculators. Sure would suck to be in a high tax situation when you don't need the money that year.
Hey jaspreet, I’m 23 just learning about these. is it better to not do Roth IRA and 401k ? What if I use that money instead on other liquid investments ?
Those examples of high tax rates are extremely misleading. Nobody paid even half those rates throughout history, the actual rates people paid were much lower.
Roth IRA + Traditional 401k. I will use up my tax free money (roth) first, before taking out of the 401k money (401k). I will also try to delay pulling out from the 401k as long as I can until the mandatory minimum kicks in.
@@noooddle You are correct. *Juan* *Jaramillo* seems to have placed the cart before the horse. Also curious is that more than one person agreed with him.
I use a Solo 401K attached to my business entity and it is all in Roth. I understand that that is an advanced topic to the general overview you've provided here but I disagree with some of your premise. The real NO_SH_T Deal for employer sponsored plans is if you are contributing to an employer sponsored plan you should contribute the same amount to Roth as you would to a Traditional account. The benefit of a Roth, especially while your young and haven't hit the highest of career earning potential that your effective tax rate is already pretty low. If you decide to put 500/mth or 6K/yr in to an investment account your probably under a 20% effective tax rate which means you will only be sacrificing about 1000/year in taxes. Multiply that by 30 years and you've prepaid about 30K in taxes on a total of 180K invested over the same 30 years and it will grow to be in excess of 1M. Now if you decide you need 50K per year to retire on you will not pay any taxes on your 50K from Roth as opposed to pulling it from traditional (assuming you have the same effective tax rate you will need to pull about 62K to have 50K left over after taxes and in your first 3 years of retirement you will have paid the same amount or more in taxes as you did during the previous 30 years. ROTH IS ABSOLUTELY THE WAY TO GO! Also, I would advise anyone out there to investigate if their plan will allow in-plan Roth Conversion of that employer match in the Traditional account. again... it's probably worth the extra sacrifice of 500 or 1K a year in taxes now to get that money into Roth also.
Depends on age and individual tax situation, younger and/or lower earners should go for roth (because of longer growth time for compound interest), higher earners should go for 401k. Also, if you think you will have very little income in retirement (think 65 and older) (ie social security could be gone, or pension goes away) go for 401k in a middle income earning bracket (currently 22/24% and up). Also, if tax brackets change, it's also time to reevaluate your plan. There are so many factors, and you did a great job addressing the benefits and drawbacks of each option.
I like the part of future taxation but something else worst needs to be consider. Prior to 1983 social security retirement benefits were not taxed. The government needed more tax revenue so they starting taxing Social Security Retirement benefits in 1984. Some how I feel that eventually the civil servants that represent us will be changing the tax laws to include Roth accounts too.
I like a combination of a Traditional 401K and a Roth IRA. That way I can pull money out of both during retirement, but the Roth money will keep me out of a higher tax bracket.
They wouldn’t classify it as how much income a individual person makes like when your employed and pay taxes at the end of the year or not since the Roth was already taxed and it’s your money outright? Does potential compound growth outweigh the retirement taxes you could get with the traditional 401(k)? I suppose it depends on how much you project your portfolio to be when retirement comes around...
@@RATM1971 you do realize for most people RMDs are not a big problem. And if they will be a problem you obviously should adjust for this. RMDs should be considered in the equation but for many they will not be a problem
Great information. My work has a 401k with a 6 percent match. Not many investment choices. I started a Roth IRA ,but can only invest 7k per year (over 50 years old) per IRS guidlines. I invest the full 7 K per year in a dividend income portfolio. I am hopeful this will help me .
The more I think about it, especially if you are going to have a lot of money saved in your 401k, then the Roth 401k is the way to go. Because I may wish to to spend more in retirement, not less. And if that's the case, then I would pay more in taxes later than any deduction I would save today with a non-Roth 401k.
Plus when you hit 72 years old you are forced to take distributions from a traditional, whether you need it or not. Those distributions could have huge implications on your taxes and medicare premiums. Roth IRA does not have those distributions, for now at least.
A combination is best for most people. It's not either or decision. You simply use an online tax calculator and pretend you're retired because you want to take advantage of the lower tax brackets and standard deduction.
When choosing between the two you should account for everything. A lot of people think only about how much they pay now vs later based based in their desired withdrawal amount in retirement. However, taxes for all brackets can be higher, and there are other factors like rate of return on the investment, social security benefits, Medicare premiums, pensions, side hustles, RMDs, early retirement, big purchases, leaving money for beneficiaries, how much taxes you pay overall, etc. Looking poor on paper has its benefits.
Thoughts on my setup, please- Making $60k/yr gross. Goal is to bring taxable income down to $40,525 (top of 12% bracket) so none of my money is taxed at 22%. From $60k, standard deduction is $12,550, which means $46,450 taxable. So I put that $6k difference into traditional 401k and achieve a taxable income in the 12% bracket. (Federal, anyway). Then the remainder of contribution limit ($19,500 - $6000) into Roth 401k, as well as extra $6k into Roth IRA. I live frugally and I don't need that amount I'm putting away. Am I understanding tax brackets correctly, or any other feedback?
Thank you for watching! If you enjoyed this video, you should watch - The TRUTH About Your 401k That No One Tells You: ua-cam.com/video/4YdlcpxvF6c/v-deo.html
Minority Mindset didn’t see any videos linked below
Minority Mindset can you make a video on steps to doing a chapter 7 bankruptcy . To fix your credit score. Thanks Minority Mindset
Minority Mindset can you make a video on steps you should take after filing chapter 7 bankruptcy and things you can do to build your credit .. Thanks Minority Mindset ..
Can I hire you for my buiness taxes Jaspree?
Thank you 🙏🏻 I will have to be serious about my retirement
Another thing to consider, which I’ve rarely heard mentioned: tax deductions and credits. I have 5 kids under age 18 right now. That’s 5 large tax breaks I have right now, that I won’t have when I retire. So you better believe I’m doing Roth 401k contributions right now. My taxes are depressed right now because of those deductions and credits, which lessens the tax burden on my Roth contributions.
Agreed. Once I had kids I changed my contributions to Roth.
What deductions? Kids only give u 2000 tax credit that's nothing? Am I missing something
@@ziaulislam87 Well fill lucky, Because i was only getting about 800 a kid in early 2000s with 8% home interest rate and 4.00 a gallon gas 🙄
@ziaulislam87 That's a fair amount for middle and upper middle class people
Jaspreet . Just want you to know you are my favorite investment/ wealth planning badass UA-cam channel. Every single video is amazing.
You explain everything perfectly and make the topics interesting and easy to follow. Thank you!!!!
:)
Same here!
Thank you, Jaspreet! 👍👍
Totally Agree. I learn so much from Jaspreet. Thanks a ton.
I am employed by a major bank in the U.S. and they offer both Traditional and Roth 401k. It's almost 20 years and I'm so happy I chose Roth. Great video! Ty
Thank you 😪.
My advice to younger folks when it comes to investing is, just start.
Im a minor, I cant invest yet but im saving so I will have some to invest
@@philtheboi358 your parents could start a Roth IRA for you still and they’d be on account as well
@@theGrayArea2 im 17 1/2, I just dont see the point in making an account where my father could drain it at any second if he wanted to, and have to jump through hoops in 6 months to get him off it. And I want to invest in mutual funds and index funds, not an IRA
@@philtheboi358 understood
@@philtheboi358 wait then
I just retired, but I am uncertain that my 401k and IRA will ensure a stable future. I have $900k set aside, I am seeking an approach that matches my risk tolerance and financial objectives. Please I need advice, should I invest in stocks or real estate ?
You should explore rosters of dividend aristocrats and select six to ten from the compilation. These esteemed companies boast of a remarkable history of consistently paying dividends for over 25 years. Furthermore, it is discerning to engage a financial advisor to help in crafting a meticulously structured portfolio.
I quite agree. Which is why I prefer to entrust my day to day investment decision to a financial advisor. With their specialized knowledge, it is highly unlikely for them to underperform. Their expertise is focused on harnessing the asymmetrical potential of risk while employing measures to safeguard against unfavorable outcomes. I have been collaboting with a financial coach for the past two years netting over $800k profit in all my portfolio holdings.
I need advice on how to rebuild my portfolio and develop more successful tactice. Please who is the advisor you're using?
The adviser I am working with is Jason Herman Pierce, he is a risk manager, financial advisor and a professional trader. You can choose to use someone else, but his strategy works for me hence my results. You can google him to get all the necessary information.
@@EthanRaynolds
Thanks. I just googled him. He is quite the subject matter expert. I have book an appointment with him. Thanks again.
Another angle to consider: You gotta know your bracket and for moderate income earners, there's very high value in the pre-tax savings since you are stretching the amount you earn at the 12% bracket. You can get up close to 70k earned income before you run out of easy runway. How? Maximum contribution to the 401k, HSA pretax investing and the 12k standard deduction. After that, you'll need taxable investment money to take advantage of other possible options such as charitable donations, tax loss harvesting, etc.
I watched 3 videos on youtube trying to explain this to me. I finally got the difference when I watched you! TY
Same! Jaspreet does a great job!!
Good Morning Jaspreet! I think having both are good especially if you have an employer that matches. Never leave money on the table is a valuable lesson that I have been taught. I think I could do better with my Roth. I need to max it out. I am almost there, but I need to get there. Almost is not good enough!
Having both is only good because the employer match is tax-deferred, otherwise Roth all the way. Besides the fact that growth is tax-free, a Roth IRA has no RMDs. People who have really saved for retirement in a traditional can get kicked up into high tax brackets with RMDs even if they don't need the money. That screws up your medicare premiums and everything else.
@@RATM1971 agree. There's RMDs if peeps leave their money in a company 401k/457b plan Roth after they retire...if you get your money out of employer plan and rollover outside you must liquidate assets to rollover 401k Roth funds to an individual Roth...also must already have an established individual Roth account opened so can rollover into and best if done as early as possible because have to hold funds in Roth IRA for 5 years before able to withdraw. funds. Bit of strategic planning needed but then can rollover and reinvest!
I started with the Roth and went to traditional when I had higher income but I switched back to the Roth because tax rates are lower.
Smart woman!
What happens to the traditional 401k investment when you switch to a roth? Does the money get taxed and then transfers or does it all transfer in not taxed? Or does it not transfer at all?
@@reyreyes5182 doesn't transfer just stays there
Good plan.
Question: I haven't heard it mentioned in videos like this one, nor read it in the comments - Is a Roth 401k an option the employer gives folks instead of a traditional 401k, or is the method to find an independent investment firm that offers a 401k, then just put one's money in it after paying the taxes from the employer's paycheck?
Traditional IRA is really for people who start investing late and/or don’t expect much growth in the IRA. If you’re young and invest long term, go with Roth.
I always tell people, It's never too late to start investing. The best time to invest was always yesterday and the second best is always today.
Absolutely Emilio, particularly if the goal is to retire early and rich.
Not every is able to identify lucrative positions to earn from, Investing is a marathon. My best piece of investing advice is to talk with an investing professional. Get someone on your team who’s well enlighten on the global market and it’s conditions at all times.
Absolutely David, this is exactly why I opted for an account manager years ago. Adam Slater guides my investment decisions, he makes research on stocks that will generate massive gains, and does the heavy lifting for me, covering every facet of investing including stocks and crypto. His investing decisions has earned me profits in hundreds of thousands.
Investing is worth the hard work. If you don’t save and invest now, you won’t have anything to live on in retirement.
Roth is much better because there are no required distributions. If you live beyond the life expectancy, your traditional 401k or Ira will run dry 👎
Roth 401k also require minimum distributions at 70 1/2, But don't take my word for it.💪😉
@@Je.rone_ I don't understand, could you explain? I'm in both but I'm trying to figure which one is gonna be the main one, thank you
@@blood_sausage9620 when you turn 70 1/2 you have to start taking money out each year from your 401k account, whether you have traditional 401k or a roth-401k doesn't matter. The amount required to take out is *not* a set numerical value for every person (e.g $2,000 a year). I'd be lying if i said i remember off the top of my head how your required amount you need to take out once you reach said age is calculated(i used to know it off the top of my head)
Roth-IRA on the other hand, you are not required to take money out at any age. Often people (including myself in the past) confuse this peculiarity of the roth-ira as being a characteristic of all roth accounts which isn't the case unfortunately.
That said if i missed any or further clarification let me know💪
@@Je.rone_ thanks brother!! I need to learn this language haha. Living to that age alone is a great accomplishment these days🙏
@@blood_sausage9620 my pleasure, and yes I always hope I'm lucky enough to make it there but I'm dubious of that.
And the language can be the hardest part of learning something knew. The concepts of a new subject of acquisition typically is 100% easier after learning the language.
My husband uses a Roth 401k at work, and get a certain match. ANY time we contact the brokerage firm about ANYTHING, there is high pressure to switch to a traditional 401k, and to move out of our chosen funds into a target age fund. Nope, those aren't for us, we're happy with what we've got! Great info as always.
Why do they pressure you into switching into traditional... and a targeted age fund??
@@Dgon200 A targeted age fund would make more $$ for the firm in the form of fees, but I'm not sure why he's so convinced traditional is the way to go.
K H-C why would they pressure you to change to a traditional if it’s already a Roth 401k
Always remember if you change jobs or retire you can roll over that account. At least then you can find a more competent advisor to manage it or just do it yourself.
@Minority Mindset
I started watching this because I wondered if I could use part of my 401k for stock investments. When I saw the option, I started clicking through and it prompted me to convert my traditional 401k to a Roth 401k. Now I know the difference, I would actually prefer a Roth 401k but am unsure if my employer with continue to match my 4%. I guess I have to call l HR on Monday and get some questions answered. Oh, and you have a new sub here. Great work.
I have both also Roth 401k and 401k from Amazon. Seriously I've been googling trying to find out the difference a few months ago and by chance today I just came up on your video on UA-cam and by chance I say because wasn't looking for anything on the subject lol. I want to say thank you because I finally got my answer you made easy enough for me.
@Bd from the 213 well I actually have both of them still. At my age I don't know if I should just leave it like that
If you go with a Roth 401k, open a Roth IRA so it will be mature when you need to roll your money over.
"ROTH" "Thank you very much" Respectfully many blessings n Well being to you n your family.
Very good explanation. 👍 These are great if someone doesn't have time to spend watching the markets every day.
I was hoping you’d break down the difference in compound interest gains vs tax losses between tradition and Roth investments.
Traditional 403b. Is a way to think of this as just income in retirement. if you make or if you withdraw 100K a year that is what you pay taxes on. It is a question of lifestyle in retirement and having enough to live off earnings without touching the actual contributions portion once you stop working.
It's not only that though... say I only need $40k a year in retirement, but I've done great saving in my 403b and have a sizeable amount. I could hit 72 and be forced (via RMD) to withdraw $140k when I only need $40k. What will that do to my taxes? To my medicare premiums?
I contribute to both a traditional and Roth 401 through my employer. Also contribute to a Roth IRA outside of my employer
Good plan. I'm gonna try to do that and make my traditional Roth a divided account
Sadly, mine was a pre-tax deduction so when I pulled out money, I had to pay tax on the entire amount. 😢 Rolled it over into an IRA before taking a distribution.
I pulled out a large sum to purchase a rental property. Now I have to pay tax on the money I pulled out this year to pay the tax for what I took out last year. Live and learn. I should have bought the property inside of a self directed IRA.
Good comment
Yeah, those taxes do get you when you need to pull more than planned.
Da Plan
1. 5 rental properties owned, 1 currently. Move headache to property mgmt when i retire.
2. 10% traditional ira
3. Max out Roth for wife and I
4. I'm in Iowa, so farmland in a location that will be in high demand 20-30 yrs down the road.
5. Create a trust for assets to pass along benefits to future generations.
We have a lot of old 401K standard $ but, now we are putting away all we can with ROTH!
I think we are going to be lucky to have enough!
We bought some Rental Houses a few years ago so, we are hopeful that will help!
That will surely help unless the rentals are nit performing.
@@TheFirstRealChewy They are doing better than I ever imagined they would do!
One thing I’m lucky in>
Not: Cards, Games, Sports, etc. but, I’m happy with this option!
I am watching Jaspreet's video on valentine's day with his pink turban.
Contribute to a traditional/401k during your highest earning years (for lowering to tax bracket, but contribute to Roth when you have lower income (like when you are in school, on maternity, etc). Also then convert everything to a Self-Directed IRA
That used to be my thought, until I started calculating RMDs and medicare costs. There is a reason many retirees convert all of their traditional IRAs/401ks to Roth and pay the taxes involved out of pocket upon retiring. If you have the option to do the Roth, do it sooner rather than later.
Why isn't this channel called Sikh-ing Wealth?!?!
Damn bro 😂
Genius!
👐😂👐
This
Cousin Bunti approved
Sounds like it depends on the current tax rate. If you are taxed high at the moment then traditional is best. If next year you are taxed low, then Roth is best at that time. Reassess your situation when milestones appear which affect your tax rate.
Until a few years ago I was contributing to a 401K for several reasons, the main one being I didn't know about investing so never really touched the accounts until then. Sure wasted those valuable years spending every dollar on crap and contributing almost nothing to retirement (wasn't even receiving the full match).😮💨
I'm a different person today. I'm now contributing 100% to a Roth 401K. I'll switch back to contributing to a 401K closer to retirement.
I did traditional 401k when I was younger and single. Now that I have kids and TCJA is in effect I put it all in Roth. If rates go back up and/or when the kids age out of dependency I will switch back...
Great explantion amd sweet disclaimer.😂"I am not your attorney"😂
I always like when he says "I am an attorney, but I am NOT YOUR attorney" lol.
MM you mentioned that while we are not taxed on the amount that our Roth 401k earns, we are taxed on the amount our employers contributed over time. My question is how does the IRS keep track of that amount over the years so they can tax us correctly and how do we know that the IRS is taxing us correctly? I've had several different employers 401k Roths and some employers have changed the amount they match from year to year. Great video. It made me consider things that I dont think I've considered before.
Your 401(k) account should show two balances, one for your Roth 401(k) balance and the other your traditional 401(k) balance. The latter is taxable upon distribution.
My company offers both traditional 401K with a match, and a Roth 401K. I do both 👍
Need to add the effects of marginal vs effective tax as well as the effects of AGI based credits and deductions to your analysis.
Best explanation hands down!👏
Doing traditional now. Gonna switch to Roth soon as I pay off my debt.
@@EdgerDelgado Usually no if you stay with the same fund family
@@timm7098 Yes, you pay the taxes on the traditional If you decide to roll that account balance into a roth.
Yes taxes if you convert from a IRA but no taxes on a regular investment account to a Roth assuming the taxes were paid. I thought the question was about fees though.
I know I subscribed to you for a reason when you only had 1500 subscribers. Your videos had changed my life!
Seems like less hassles with regular 401k to get employer matching then invest in a regular Roth IRA with the brokerage company of your choice. Don't think most people will be in the high tax rate when it is time to distributions.
Compare total taxes paid instead of tax brackets. However, most should be fine with a 401K. Afterall, it's been working fine for many people for awhile now.
It's interesting to compare American Tax-Advantaged accounts with Canadian ones. It seems like Roth accounts are like our TFSA and traditional accounts are like our RRSP. Always love listening to your videos!
I have Roth 401K, employer match and 17 years more to go!
I invest up to the 4% match in a Roth 403(b) and the remaining retirement contributions go into a Roth IRA. I invest more in my HSA though. I love that thing.
Hey Jaspreet, I dont have anything to add to this, but wanna let you know you inspired me to start monetizing my side hustle!
I like your head wrap
I’m investing 30 percent of my income in a Roth 401k. I have it all in an index fund SnP 500. I get a 2 percent match
Man you are awesome you inspired me to create this channel i have only 22 subs now but i hope one day i'll succeed like you, thank you!!
I have both an IRA and Roth IRA. The IRA is a transferred 401K and I don't plan on adding any money to it and focusing on growing my Roth IRA. I have a 401K that I'm contributing to thru my job and if I leave that going into my IRA. I'm also investing in index funds in both my retirement accounts.
Thank you for putting in work on your videos. I am watching and liking your vids.
Just opened two traditional IRA and two Roth IRAs for my wife and I. I was pleasantly surprised to see that I could still contribute for last year since the tax filing date ended July15. I immidiately maxed out all our IRAs for a total of $24K unvested. Plan to max out the 2021 contribution as soon as January comes around. I hope I'm not making a big mistake.
$24k for both years and both of you is a good plan however half t-IRA and half Roth IRA is less than ideal. Do you have access to 401(k)s and are you in a relatively high or low tax bracket?
@@alrocky I'm in a lower tax bracket than I will be when I retire. I also expect to be in a much higher tax bracket in six years. I have a 401K type account currently in addition to the IRA i just opened.
@@AB-tu3mz Since you are in a relatively low tax bracket now and expect to be in a much higher tax bracket in six years you should both have Roth IRAs now for the next five years. If your income and budget allows you should contribute as much as you can into your 401(k) [$19,500[ and her 401(k) [$19,500]. You could go Roth 401(k) but it's I'd lean toward maxing the 401(k). If you could contribute $19,500 Roth 401(k) that would be great. You want to favor traditional 401(k) when at your highest tax bracket.
@@alrocky I'm no sure who you are or what you do, but that's great advice. I've been doing about 50% Roth 401K and 50% traditional 401K. Except for this year. I sold a house so I expect to be a higher tax bracket this year. For that reason, I am maxing out my 401K and opened traditional IRAs to put some more money in there. Thanks.
You put after tax investments in your traditional IRA? That defeats the point. I hope you converted them immediately?
It still sounds like a guess as to what will happen in the future , either way...
The important thing is to get into at least one or the other. As statistics show, people have a very difficult time saving money. A 401k requires very little effort...the money is invested without you lifting a finger, and you can't get to it very easily, meaning it will stay in your account, plus there is generally a match involved. A Roth requires you to write a check or set up direct payments, allows you access to the money, making it very tempting and easy to pull it out, defeating and eroding your retirement goals. We know how life gets in the way of our plans, many people intend to invest but somehow they never get around to it....a 401k is funded before you get your check. Taxes can change on the Roth also. The gov. is licking it's chops to tax the earnings, and don't think they wont pass a law to get to it. All the "free" stuff that is so casually tossed about, is not free to those who have to fund it.
So you need to do something. The thing is you can do both. The more you save, the better off you will be. I have never complained about making money.
Many employers offer a Roth 401k, so it's as little effort as a traditional 401k.
I cashed out the little I had on my 401k bought rental property and due to having more deductions paid very little to the fuzz. Also the property is worth a lot more now then the stocks ever would have been worth with limited choices in a company 401k.
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i dont usually comment. your videos are awesome and it is crazy and a sign. I just stopped my pre-tax contributions after it hit me that I rather put in my taxed money. yes my take home will be less but I will adjust.
I love your videos. They are so informative and easy to understand. Thanks so much for doing them.
Skih always such badass and smart people! never met one who doesnt provide such great life advice.
Chat me up ☝️☝️
I set up a Roth 401k that invests my money in an index fund to keep expenses low. Now I'd like to know what to do, in the future, to reduce the taxes on the match from my job.
You cant its pre tax
@@r4ym1n13 Doesn't mean that taxes can't be reduced. I never said reduced to nothing.
@@r4ym1n13 I just figured it out. The employer match can be rolled over into a traditional IRA then I would be able to do a tax-free direct transfer into my HSA.
Then use that money for medical expenses as I get older and it'll be tax free.
@@mthomas503 give me a link to this source please
Good video,easy to understand
Contribute 10000 + match 100000 over a 25 year career would be 400k only if you got a 5% return which is a rather low estimate there. The best advantage of the Roth over traditional is flexibility in retirement. If someone puts away 10K per year for 35 years and earns 7% which is a good estimate based upon the market's trend since inception you would end up with 1.5 M at the 35 year mark. 350000 of that money is the money you contributed and the other 1.15M is growth. Traditional saves on the highest tax bracket you are in for the 350000 which at the highest in the last 2 decades has been just under 40%. So you saved roughly 140K over 35 years assuming you are in the highest tax bracket, much less if you make say 50-100K. All of that 1.15M growth is taxable and if you decide to take 100K in a lump sum for some reason, you pay taxes on it. If you just try to live off of returns at say 4%, you'd recieve 60000 per year without touching the principle and any additional growth that is reinvested will also carry income tax burden when tapped. All that growth would be taxed. If you did Roth, you could take out any lump sum you wanted and not pay a cent of income tax. Also all returns you live off of for the rest of time is not taxed. If you die and it passes to a family member such as a child, there is no income tax burden. I'd say in this scenario the advantages of Roth in retirement are worth the 140K investment over 35 years.
I question your assumptions on the principal investment in the Roth 401k in this scenario. A 10% discount (100k to 90k) seems way too optimistic. Income Tax rates are closer to 20-33%
His example is valid but since he uses 10% tax bracket it favors Roth contribution. One "flaw" here is that the Roth contribution is only $1,350 (traditional was $1,500) so employee didn't take full advantage of employer match.
The example @ 8:54 makes it look like you can withdrawal your half first, tax free, and then later take out your employer’s contribution and pay the tax on that half then. I don’t think this is the case. When you take any withdrawal, half (in this case) of the money is subject to whatever the future rates are. So if you take out a total of $60k, $30k (your employers half) will be subject to taxation at that time. And this will be true for every withdrawal going forward.
@ 8:45 " *Roth* 401(k) ... $40k less less ... traditional 401(k)" This video has several errors: The top row should read $90,000 *Roth* 401(k) but he negligently omits *Roth* from chart.
Another video mistake: @ 8:40 "total worth of your 401(k) is $360k now in your *_Roth_* 401(k)" He should have said $180k in Roth 401(k) plus $180k in traditional 401(k).
@@alrocky Yeah, I see it now. It would have been much clearer if he had written it out like you said. He infers it’s a Roth when speaking, but doesn’t have it written on the chart.
so i think you missed out on something here. The contribution from the match is taxed in an Roth IRA once you withdraw but the gains on the match are not taxed.
"contribution from the match is taxed in an Roth IRA once you withdraw" --- That doesn't seem to make sense.
That's not correct. Your contributions are after-tax and the growth is tax-free. Your employer's match is tax-deferred as is the growth on that portion of the contribution.
I have a quick question that might not be related to this video: Is it better to invest in a global fund or one that follows the S&P 500? The US fund has higher highs, and higher lows compared to the global fund. Global one costs 0.11%, and the US one costs 0.21%. I don't live in the USA, so this is what I can choose from. Which one would be better to invest in? The way I see it is that it's the US stocks that weigh the most in the global fund. Some say US stocks are overvalued and that's why a global fund is better. Thoughts?
I have a Roth IRA already that I've funded the last couple years.. I will be starting a new career and will choose a Roth 401k with 3% company match because my income will be low to start.
Can you do more videos on options for Self Employed people and small business owners?
Thank you for making this video. It was very easy to understand and the visuals really helped.
Thanks for the explanation!
Thank you SO much for your informative videos! They are easy for me to understand 🙂
Great knowledge brother love ur videos
@Jaspreet when you show 401K money they get compound interest rate over years and years. You missed to point out, let's say I pay normal tax today at 30%, and after compounding in 401K, the government increases the tax to 40%, doesn't the 401k benefits here?
I think what people fail to tell others it wether to do Traditional or Roth it’s very situational. For instances if you have no Tax dedications and or very little considering using Traditional may be better. Another one is if your in a high income tax state and you know your going to go to a no state income tax state that has a lower cost of living. Remember we get taxed on what we take out and generally you don’t take all your money out at once. That being said Roth accounts are amazing and it’s wise to put some money into a Roth account.
I for one believe that you should think of tax diversification when you retire. Ideally if you can have a traditional, Roth, and an HSA account to pull from your covered in multiple ways. But like this has been said multiple times on this channel. Your mindset and lifestyle should be setting you up for success before hand. If you are building assets in the background and utilizing Retirment tools available for you. That way of thinking is what will set you up for a good life.
Roth IRA for me. Also I do contract work now but even when I had a standard 9-5 I had a Roth as my employers didn't have a 401K yet being a startup.
Currently in a roth pretty satisfied with it
what do you think about strategies for paying less taxes, cant you save on teaxes by using 401k and therefore having less income?
subscribed !
You are really knowledgeable love your personality and hustle
Hi Jaspreet,
I have been watching your videos a few weeks ago it is very good information from you, my question is if there are some states where someone can move before retirement to avoid paying taxes on the traditional 401k?
Yes!!! Thanks for the explanation!!!
Thanks for posting in the morning right before I head on my commute lol
MeowMerch Same! It’ll get me thinking through out the day 😄
MeowMerch honestly so convenient lol
MeowMerch I love your cat videos 😸😸
Resident Advisor thanks for checking meowwwtt 😻😻
I love the concept of this channel. The Hustle-mindset of today extends beyond identity. And this channel is taking a leadership role. Bravo 👏
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I like this intro, keep this intro in all your videos. I think it’s very cool to have, but stick w the smash like button sound & the emphasized link “below”
Not sure if this question was asked.
How do you do about changing you 401k to a Roth 401k?
Mine is an option within my 401k Plan..You have options for both Roth and traditional. I do not think all plans have that option.
@@skinlesspuppy22 okay, thanks I am going to check that out today.
Informative video!The ROTH 401K is a super awesome opportunity for those people who cannot otherwise contribute to a ROTH IRA because they earn to much money according to IRS rules. These people are ALLOWED to contribute to the ROTH 401K nearly $20,000 every year and then their distributions are TAX FREE! Awesome opportunity that EVERYBODY should be taking advantage of. Great video! 😎
When leaving your employer, transfer the Roth 401k over to a Roth IRA, all withdraws tax free at retirement age, the better investment.
Yes!!
Ideally yes, unless you have financial issues as 401ks often are protected from garnishment and iras may not be.
I'm not planning on rolling my 401k into my Ira. I'm planning on retiring before 59 and you have the option of making withdrawals from a 401k at 55 if you retire then.
@@Andrew-it7fb
I hope that your 401k administrator lets you withdraw your funds in increments at 55. Many require a lump sum withdrawal, which will hit you with high taxes.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing below the $100k mark and in the first 2 months, my portfolio was reading $234,800. Crazy right!, I decided to reinvest a huge percentage of my profit and it got more interesting.! For over a year we have been working together making consistent profit just bought my second home at the beginning of summer.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Bestjudy001 However, if you do not have access to a professional like Suzanne Gladys Xander, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@BrandonIvan-c6e Oh please I’d love that. Thanks!.
@@Bestjudy001 Suzanne Gladys Xander is her name .
Lookup with her name on the webpage.
Keep up the good work
Thank you so much! You explained this clearly!
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I’m doing both and my company matches 10%
Many people will have lower expenses, and lower income, once retired. Lower income will equal a lower tax bracket, making a traditional 401K A better option.
Tax rates will be higher. You should have income in retirement. If you don’t you shouldn’t retire.
@@charlesbickel4295 you don’t need as much income in retirement as you needed when you were raising a family, building your retirement, saving for college education for kids, and so forth. For most people, retirement income is less than what they earned during their peak earning years. This fact should put most people in a lower tax bracket during retirement then they were in during their peak income years, this making a traditional 401(k) plan more attractive.
I have higher expectations for myself, Roth is the way to go
You might take a look at the many RMD calculators out there and plug in your numbers for traditional. Also look at the Medicare premium calculators. Sure would suck to be in a high tax situation when you don't need the money that year.
I *really* enjoy the quality and variety of educational videos on this channel. All I can say is *keep* *it* *coming* ! :)
Reg 401k. 6% match + 5% in lieu of a pension. Total 17% into my plan.
What employer are you with that gives 6 %match + 5%? I’d love to come work for your employer
Hey jaspreet, I’m 23 just learning about these. is it better to not do Roth IRA and 401k ? What if I use that money instead on other liquid investments ?
Those examples of high tax rates are extremely misleading. Nobody paid even half those rates throughout history, the actual rates people paid were much lower.
Roth IRA + Traditional 401k.
I will use up my tax free money (roth) first, before taking out of the 401k money (401k). I will also try to delay pulling out from the 401k as long as I can until the mandatory minimum kicks in.
You really might want to talk to someone about this idea. I don't know your situation, but in general, that's a very weird strategy.
@@noooddle You are correct. *Juan* *Jaramillo* seems to have placed the cart before the horse. Also curious is that more than one person agreed with him.
It totally depends on your income. I already lost access to my Roth IRA because of income limits. Super wack!
@@InOrlando *backdoor* Roth IRA allows you to contribute to Roth IRA.
Why in the world would you do this? Have you run an RMD calculator?
I use a Solo 401K attached to my business entity and it is all in Roth. I understand that that is an advanced topic to the general overview you've provided here but I disagree with some of your premise. The real NO_SH_T Deal for employer sponsored plans is if you are contributing to an employer sponsored plan you should contribute the same amount to Roth as you would to a Traditional account. The benefit of a Roth, especially while your young and haven't hit the highest of career earning potential that your effective tax rate is already pretty low. If you decide to put 500/mth or 6K/yr in to an investment account your probably under a 20% effective tax rate which means you will only be sacrificing about 1000/year in taxes. Multiply that by 30 years and you've prepaid about 30K in taxes on a total of 180K invested over the same 30 years and it will grow to be in excess of 1M. Now if you decide you need 50K per year to retire on you will not pay any taxes on your 50K from Roth as opposed to pulling it from traditional (assuming you have the same effective tax rate you will need to pull about 62K to have 50K left over after taxes and in your first 3 years of retirement you will have paid the same amount or more in taxes as you did during the previous 30 years. ROTH IS ABSOLUTELY THE WAY TO GO! Also, I would advise anyone out there to investigate if their plan will allow in-plan Roth Conversion of that employer match in the Traditional account. again... it's probably worth the extra sacrifice of 500 or 1K a year in taxes now to get that money into Roth also.
Depends on age and individual tax situation, younger and/or lower earners should go for roth (because of longer growth time for compound interest), higher earners should go for 401k. Also, if you think you will have very little income in retirement (think 65 and older) (ie social security could be gone, or pension goes away) go for 401k in a middle income earning bracket (currently 22/24% and up). Also, if tax brackets change, it's also time to reevaluate your plan. There are so many factors, and you did a great job addressing the benefits and drawbacks of each option.
Gold!!
I like the part of future taxation but something else worst needs to be consider. Prior to 1983 social security retirement benefits were not taxed. The government needed more tax revenue so they starting taxing Social Security Retirement benefits in 1984. Some how I feel that eventually the civil servants that represent us will be changing the tax laws to include Roth accounts too.
Both & stock market and Treasury’s and precious metals
And real estate
Hopefully it’ll work out
I like a combination of a Traditional 401K and a Roth IRA. That way I can pull money out of both during retirement, but the Roth money will keep me out of a higher tax bracket.
They wouldn’t classify it as how much income a individual person makes like when your employed and pay taxes at the end of the year or not since the Roth was already taxed and it’s your money outright? Does potential compound growth outweigh the retirement taxes you could get with the traditional 401(k)? I suppose it depends on how much you project your portfolio to be when retirement comes around...
What about RMDs?
@@RATM1971 Have you looked into what the actual RMD rate would be when you hit 72 and beyond?
@@robertblake60 Extensively, have you? It can become an unmanageable tax and medicare premium situation depending on how your investments do.
@@RATM1971 you do realize for most people RMDs are not a big problem. And if they will be a problem you obviously should adjust for this. RMDs should be considered in the equation but for many they will not be a problem
Great information. My work has a 401k with a 6 percent match. Not many investment choices. I started a Roth IRA ,but can only invest 7k per year (over 50 years old) per IRS guidlines. I invest the full 7 K per year in a dividend income portfolio. I am hopeful this will help me .
Are you contributing at least 6% of your income to receive the 6% employer 401(k) match?
The more I think about it, especially if you are going to have a lot of money saved in your 401k, then the Roth 401k is the way to go. Because I may wish to to spend more in retirement, not less. And if that's the case, then I would pay more in taxes later than any deduction I would save today with a non-Roth 401k.
Plus when you hit 72 years old you are forced to take distributions from a traditional, whether you need it or not. Those distributions could have huge implications on your taxes and medicare premiums. Roth IRA does not have those distributions, for now at least.
A combination is best for most people. It's not either or decision. You simply use an online tax calculator and pretend you're retired because you want to take advantage of the lower tax brackets and standard deduction.
When choosing between the two you should account for everything. A lot of people think only about how much they pay now vs later based based in their desired withdrawal amount in retirement. However, taxes for all brackets can be higher, and there are other factors like rate of return on the investment, social security benefits, Medicare premiums, pensions, side hustles, RMDs, early retirement, big purchases, leaving money for beneficiaries, how much taxes you pay overall, etc.
Looking poor on paper has its benefits.
I am investing in stocks and invested in a military career, which I am able to collect a modest retirement from while I work and go to college.
Thoughts on my setup, please-
Making $60k/yr gross. Goal is to bring taxable income down to $40,525 (top of 12% bracket) so none of my money is taxed at 22%.
From $60k, standard deduction is $12,550, which means $46,450 taxable. So I put that $6k difference into traditional 401k and achieve a taxable income in the 12% bracket. (Federal, anyway).
Then the remainder of contribution limit ($19,500 - $6000) into Roth 401k, as well as extra $6k into Roth IRA.
I live frugally and I don't need that amount I'm putting away. Am I understanding tax brackets correctly, or any other feedback?