Yeah, and how would an annuity affect your taxes?
Yeah, and how would an annuity affect your taxes?
- 456
Are you kidding? How many boomers turn 65 every second?
As they retire the work force is reduced and not growing
at the rate at which it is being reduced.
This means that with less workers the government has to fund programs. So they will have 2 tax the hell out of us.
Not only that but where's the money going to come from
to fund these programs?
Another stiumu-LESS package
- 1,473
I asked my CPA if I should open a Roth IRA vs single 401 K and not worry about tax or deductions. He said that the single 401k cont is giving me % 30 percent return since that is my tax bracket.
I'd suggest you get a new CPA
Seconded. Or (since he obviously doesn't know what the hell he's talking about) have him refer you to all clients that have similar questions so they can get real answers.
- Thread starter
- #16
- 10,809
Good god that is completely wrong!!!! Run from that guy if thats what he really said!
However, he most likely said that the 401k (since its taken out pre-tax) would give you 30% more on your take home pay.
In other words; to match a $1000 401K pre-tax contribution, the after-tax equivalent would be $1300. So in theory, you are able to contribute 30%(ish) more to your pre-tax account on a dollar for dollar basis.
But lets not forget that your 401k will be taxed as income during retirement. The Roth will not.
It ultimately depends on your tax brackets as to whats the most beneficial... the problem is that no one knows for sure what their salary/tax bracket will actually be at retirement!!
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Everyone assumes that taxes will go up in the future, but we need to keep in mind that it doesn't necessarily mean INCOME taxes. If we (one day hopefully) end up with a flat sales tax or Cain's 9/9/9 or something similar in the future, all those Roth accounts aren't going to be looking too good.
- 1,473
Good Point. You can still have deductions are retirment as well maybe you have a rental property or somethign that helps you lower the tax. I am leaning toward the single 401K plan.
- Thread starter
- #19
- 10,809
Good Point. You can still have deductions are retirment as well maybe you have a rental property or somethign that helps you lower the tax. I am leaning toward the single 401K plan.
There is no reason not to do the Solo-401K.
If you like the idea of post-tax (Roth) you can always do a Roth 401K!!
I work in the 401k market and you would be stupid to opt with the IRA before setting up the 401k.
What your accountant did not tell you are the benefits of having the SoloK over the IRA. (other than any pretax vs. posttax splitting of hairs)
With a SoloK you have one main advantage over the IRA; you can contribute a hell of a lot more!!
The limit for IRAs for 2011 is $5k if your under 50 and $6k if your over age 50.
For 401Ks the limit is $16,500. If your over 50 its $22k.
But thats not all. With the 401K you can set up a profit sharing plan with it. And SoloKs have special profit sharing provisions.
You can contribute up to around a combined 70% of your total profits by throwing on the profit sharing plan with the SoloK.
Another benefit of the SoloK is that its held in a trust which is protected from creditors & lawsuits.
Most states do not provide the same protection to IRAs (most offer some protection but its capped at a very low amount usually; 100% of the 401k is protected)
If your looking for a traditional equity based 401k, then look to Mutual of Omaha, Lincoln Financial, & Guardian.
They are some of the most competitive with SoloKs. (MoO is my favorite)
The asset fee for a SoloK will be right around 1% depending on how much assets are held in it.
But depending on your age, dont discount setting up a SoloK with a TPA and holding FIAs and/or VAs with income riders on them.
This would avoid any asset fees, and most TPAs would charge $300-$600 per year to maintain a SoloK.
liquidgraph
New Member
- 7
Roth 401k is better. Taxes are bound to rise in the long-term. Better to pay them off now.
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