401k’s tax trap, beware.
Lots to like about 401k’s, but it may not be so rosy in the end for some.
401k distributions lead to taxable Social Security:
Medicare premiums go up because of 401k distributions:
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Good point. Taxes have no where to go but up in the future. Exactly why I just switched to a Roth 401K. Pay taxes now while tax rates are on sale.
ARE THERE ANY VIDEOS ABOUT THE ACTUAL TAXES? NOT A SINGLE VIDEO ONLINE ABOUT WHAT THE TAXES ARE FOR A 401K. The only thing I have is a 401k. I plan to start getting distributions in 2 years and I will NOT be eligible for SS for another 2 years so it will be my only source of income… all i want to know is do I have to pay the taxes up front? Do I have to send the IRS money every quarter? Why can't anyone answer this simple question without going into all this other bs.??
those with retirement accounts Rarely go to a lower tax bracket. Why would you reduce your standard of living just because you went into retirement? If a spouse dies that will usually put them in a higher tax bracket. There are certain situations where it is beneficial to have some assets in a 401(k) plan. The biggest reason to participate in a 401(k) plan is to take advantage of free money via an employer match. You can defer your taxes and reduce your current tax liability by participating in a 401(k) plan. Sometimes investors with very little cash can participate in retirement savings this way. When you contribute $75 or so from each paycheck the savings from withholding tax balances out against your contribution making your net take-home pay relatively unchanged. A 3rd reason to participate is for those who are poor savers. Retirement plans have restrictions on being able to use the money so contributions seem untouchable without incurring stiff penalties. Even a lower yielding 401(k) plan is better than having no savings at all. And lastly, retirement accounts offer creditor protection. They are not subject to garnishment, lawsuits or bankruptcies. If you do not fall into one of the previous 4 categories then there are usually better options to build wealth for retirement. Because of long term capital gains tax rates even a taxable account is probably better than a 401(k). Remember long-term capital gains are taxes 0%, 15%, 20%. Don't avoid paying taxes on your seed money now, only to be taxed on much more when you reap your harvest.
The problem also with 401k contribution is that it goes against your social security retirement benefits. Anything that is pre-tax from your paycheck like medical will lower your social security retirement benefits.
Trump dropped the taxes on the rich and screwed the middle class.
Unless you can max your 401k, there is little to to point to invest into a Ira Roth or traditional. The Reality is Roth Ira are only $6000 a year max, lol we are looking at 6% average returns moving forward do you really think that is going to be enough to retire on. The government will never increase the lower income tax brackets people they can’t tax someone making $30,000 at %50 most people will not have a million in retirement maybe like $500k 5% of that is only $25k do you really think in 30 years 25k will be taxed more then it is today!!! $25k I bet won’t be taxed at all you will be getting food stamps at that point and on Biden care!
If you only take a small amount out of your 401k at retirement age to increase your income,your not getting taxed on the whole amount,right? just what you withdrawal,so you could vary your income to look low. correct?
Keep the cross its America if someone don't like it they can leave
Big thumbs down on your video for the cross painting. It is an offensive item for non Christian Americans.
Love it! Keep up the great work!