Struggling to make decision

[unclemick]

DCA'd - dollar cost averaged. In my case the largest amount permitted under my employer's 401k plan automatically deducted from each paycheck.

heh heh heh

[jazz4cash]

Quote:

Originally Posted by DollahBillYall 1. I can't leverage/invest in other biz with it (loan cost is 8%, max 50K, double taxation) 2. I may be in a higher income bracket when I retire 3. I want to retire earlier than 60, as well as does my wife, or at least have the option to try to 4. have a burning desire to make more *5. our accounts are serperated as well as our age 6. no liquidity, no liquidity 7. edited

Just my opinions...........
1. The "real" cost of a 401k loan is the "oppourtunity cost". The loan proceeds come from selling assets in the plan, so if you take a loan from a stock allocation that goes up 12%.......the "cost" for your loan is 12%. I would only take a loan from the fixed income portion of my portfolio which earns ~5%. The 8% "interest " that you "pay to yourself" has no significance, as far as I am concerned. There are mixed opinions about the double taxation issue and I am in the camp that believes it is also insignificant. A 401k loan should usually be a last resort anyway, but I also see it as a means to xfer assets out of the 401k.

2. Being in a higher tax bracket is a good thing! Least of your worries....you could always employ some alternate strategies like muni funds, etc.

3. 401k lets you withdraw with no restrictions or penalties at age 55 or better if you terminate employment. You can also do a 72t SEP Plan at any age.

4. Don't get burned.....keep exploring your options

5. Study all the fine details of your plan.....read the prospectus. Find out if you can do in-service rollovers into a self-directed IRA. Seperate plans is probably better than a joint plan.

6. I saw your other post ref liquidity for real estate...........that seems to be a huge issue for you. That other post struck me as odd because real estate is the most frequently leveraged asset around. This IS retirement money. It would only make sense to use leverage for something that was a pretty sure bet. Thats why IRS won't let IRAs be used as collateral. Your best "leverage play is the 401k loan from the fixed income portion of your asset allocation.

If you are maxing out, why not cut back to whatever gives you the full company match (if you get one)........that's the bare minimum. The next level is the maximum contribution that won't drop you into a lower tax bracket. That could free up some funds for alternative investments. I think you will not find a better retirement vehicle than 401k, but thats not in any way to suggest you should only do 401k.

Good luck and stay patient!

[WRBT]

Quote:

If you are throwing in money at a lower tax bracket into your 401(k).. then you might want to cut back on your contributions... One of my friends does not make much and was putting in some 15% money (taxed at 15% if she had not put in 401.. or for her 403).. I told her to STOP contributing to that and fund the ROTH or just put in a taxable account that you control... IMO, if you are only saving 15%, it is not worth putting in a tax advantaged account when you more than likely will pay a higher rate when you retire... this is just me..

I don't think this is necessarily the case. To greatly oversimplify: the money being put in the 401k would have been taxed at one's highest tier of taxable income, but much of it comes back taxed at lower (or zero) tiers.

[Arc]

Quote:

Originally Posted by Ed_The_Gypsy You two must read more. A book a week would be better. (I have found that at the library, the really good books are either always out or stolen. If you have to do so, BUY THEM! If they are good, you will want to go back and re-read them from time to time anyway.)

I agree - if its a good book, I buy the audio version - with an hour commute, I've listened to "The Millionaire Mind" no less than 12 times - as well as some other goodies.

[Alex]

Quote:

Originally Posted by DollahBillYall Who the heck wants to retire at 59.5 or later?

I know quite a few people with very high net worths who continue to work well into their 80's. It is really about individual preference. Look at Warren Buffet, he's in his mid 70's and continues to work because he enjoys it. Not everyone is stuck in jobs that they don't like. Sometimes you are lucky and find work that is fulfilling in other ways outside of money.

[spideyrdpd]

Plus Warren doesnt even spend his money...

You only get double taxation on the interest of the money you borrow from the 401k. I dont see it as that big a deal.

I dont get why these people want you to read all those books? Since they say just diversify into about a half dozen index funds.
Oh and you can read the books at borders and not buy. If your buying search for a coupon. You can also request books at the library....