#401k #IBC #Investing
In this video, I give 3 reasons why you SHOULDN’T contribute to a 401k, and propose an alternative savings strategy you may never have heard of.
Chapters
0:00 Introduction
0:50 Taxes
1:00 Delaying the Tax
1:30 Lower Tax Myth
2:04 Lower Income Myth
2:44 The LIE
3:18 Government Program
3:47 Access & Control
4:26 Others Benefit
5:15 Saving vs. Investing
5:52 Government Confiscation
7:14 What To Do Instead?
8:52 Disclaimer
9:30 Summary and Conclusion
For more information on the Infinite Banking Concept ® Financial System (IBC), visit:
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Disclaimer: The Infinite Banking Concept® is a registered trademark of Infinite Banking Concepts, LLC. Maxwell McGuire, CPA is independent of and is not affiliated with, sponsored by, or endorsed by Infinite Banking Concepts, LLC….(read more)
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CPA EXPLAINS: Why NOT to Invest in 401k
When it comes to retirement planning, one of the most common investment options that people consider is a 401k. However, contrary to popular belief, a Certified Public Accountant (CPA) may advise against investing in this particular avenue for retirement savings. Why? Let’s find out.
1. Limited Investment Options: A 401k plan typically offers a limited range of investment options, usually restricted to a selection of mutual funds. This lack of diversification can limit potential growth and expose you to market volatility. As a result, your investment returns may not be as impressive as they could be if you had more investment choices.
2. High Fees and Expenses: Many 401k plans charge high fees and expenses, eating into your overall returns. These fees can include administrative charges, expense ratios, and management fees, which may significantly impact your retirement savings over the long term. When compared to other investment options, such as an Individual retirement account (IRA), these costs can be quite substantial.
3. Employer Control: One significant drawback of a 401k is that your employer controls the plan. They determine which investment options are available to you, and you have limited control over the investment selection and management of your retirement savings. This lack of control can be problematic if you wish to tailor your investment strategy to your specific needs and risk tolerance.
4. Penalties and Restrictions: A 401k comes with a set of restrictions and penalties. If you need to withdraw funds before the age of 59 ½, you will typically face an early withdrawal penalty of 10%. While there are exceptions under certain circumstances, this penalty can be a significant financial setback if unexpected expenses arise or you need access to your funds for other purposes.
5. Tax Considerations: Although 401k contributions are made on a pre-tax basis, meaning they reduce your taxable income for the year, you’ll have to pay taxes on your withdrawals during retirement. Depending on your tax bracket at that time, you may end up paying more taxes on your 401k distributions than you would have if you had chosen other retirement investment options with different taxation structures, such as a Roth IRA.
So, while a 401k can be a convenient way to save for retirement, it is not without its downsides. The limited investment options, high fees, lack of control, penalties, and potential tax implications make many CPAs caution against investing solely in a 401k plan. Instead, they may suggest exploring alternative retirement investment options, such as IRAs, Roth IRAs, or other low-cost index funds that offer more flexibility and control over your retirement savings.
Ultimately, it’s essential to carefully consider your specific financial goals, risk tolerance, and retirement objectives before deciding on any investment avenue. Consulting with a knowledgeable CPA or financial advisor can help you make an informed choice that aligns with your unique financial circumstances and aspirations for a secure retirement.
–Why is your tone so mysterious and why have you left so many unanswered questions regarding IBS and Whole Life Insurance?
–It sounds like you are really talking about insurance company annuities that are notorious for tying up your money for several years to recover the large commission they pay their salespeople who sign you up.
–Since you are critical of 401k fees and account access, what are the fees and account access surrounding your products?
–What do your products invest customers' money in that allows them to give them greater long term returns and safety than a 401K invested in diversified stock and bond mutual funds?
–How is customer money safer with a single insurance company than in a 401k invested in stocks and bonds of many companies? What happens to customer savings if that insurance company becomes insolvent? Is there something like FDIC or SIPC insurance to protect customer savings? Such customer risk does not exist for 401K money invested in diversified stock and bond mutual funds.
–How transparent are these products in showing customer account value? Can the customer see their account and its value each day as they can with a 401k?
–What's to prevent tax laws from being changed or some type of government confiscation being imposed on these IBS and insurance accounts as you claim is possible with 401k accounts?
—-Only if a person completely liquidates their traditional 401k during their retirement years will they be paying taxes on all of their tax deferred contributions and investment gains. Normally, they will be leaving some portion of their 401K to their heirs. That portion will continue to grow on a tax deferred basis. Thus, the originator, during their lifetime will never pay back all of the deferred taxes and their heirs will be paying taxes on money bequeathed to them from an account funded by someone else—the originator.
Great video! Thank you!
IBC is one big scam in my opinion.
I Have all three 401k traditional – 401k Roth- and a IRA.
As to points 1 and 2 would this apply to Traditional IRA"s as well?
I was so impressed with your arguments until you got to the end. IBC is a total scam.
I liked it until he started talking about infinite banking… I heard it's a scam.
Invested into a 401k and when I transfered it, it took away half of what I put in smh
Your chart on COVID convinced me to invest in my 401k.
Ok no I'm still doing my research but god damnit you silly Americans with your lack of critical thinking and reliance on blaming governments
Its good for some but me personally i just like having my money in a regular non retirement account the ability to pull my money out at any time is worth more to me than the potential tax benefits of a retirement plan.
Your thumbnail is pretty dope
I figured you were going to sell the infinite banking.Great you want people to give thier money to the insurance companies which are governed by crooks.
The tax rate maybe the same or higher at retirement, however the amount of money you earn will be higher because you invested "their money". If you choose to contribute no money into your 401k and invest into the sp500, it makes even less sense because you are going to get taxed again, long term gains. The government benefits greatly from this because your are making them a larger amount of money and you carry more risk.
At retirement I pay more tax more than I ever did working! Buy real estate as it is a asset. Why pay fund manager when the market the Demorats ruined and will not recover for a century!
I definitely am in the camp of thinking IBC is a scam, but I am high interested in seeking out your explanations and reasoning. I’ll be looking at your videos on this. As long as the reasoning is sound, I can be persuaded.
OK, so instead of 401k fees, pay whole life commissions. Great
Good video but had to stop watching a little over half way because of the "conspiracy and truth" grafic that you put up. I understand you have your opinions about covid but it's just kind of silly to bring it up in a educational video.
1. no, i did not invest for the tax savings- i wanted the companies match money 2. i don't plan on working in retirement 3. sadly, without the 401k most people will never save any money ,,You are exactly right on investment funds, and Control of the funds.. .Most 401k's have dismal investment options ( my 401k is in the 50 percentile in rank) ,,All mutual funds …Exactly,,,i keep telling my wife it's mine and the Governments money…..Looks like much , there going to take there share….I love my Roth IRA .. Great Video. Thanks
ROTH 401k cancels all this and it’s good to get the match (free money)
What makes you think that 401k’s would be on the table for the government to take any more than any other savings vehicle? They are going to seize my company 401k but not my brokerage account or my i bonds? And not my life insurance equity? Nice theory but I’m not convinced.
I believe keeping the work and retirement separate saves much hassle and expenses. Match contribution does not worth it. Just a good old brokerage account will do it.
401k can be a trap as much as a gift . A lot of people end up withdrawing early and taking penalties . Or take loans then leave /terminated by employer .
Roth 401k is the way to go!
You can have Roth 401k which negates a lot of your points. Most plan also offer stable value funds or money market funds which aren’t exposed to market fluctuations
I'm 63 and when I retire can I take a lump sum payment on the total I have in my 401k and use that to purchase whole life insurance? Can I draw income from the whole life insurance policy before I die?
Agree with a lot of what you said. I want to make more money retired. Tax rates will be higher. Some plans offer dog shit funds with high fees. But you lost me on the whole life and precious metals they are complete dog shit and have terrible ROIs. The only people who make money on whole life are the people selling it to idiots.
invest in whole life delays taxes as well unless you die or keep the policy going. It is not tax free. the nuances are important and completely left out
I hate and distrust the government more than anybody, but you lost me on the taxes. When I'm 59.5 and my only income is my taxable income threshold amount of 401k/IRA rollover to Roth, how am I getting taxed on that? I'm not getting taxed on it, at all. Same thing the next year and the next however many.